- Concern over trade war triggering a global recession
- UK Prime Minister May to set out new Brexit details after June meeting
By Denzil Rickerby
The economic calendar was barren yesterday, so the trade war took centre stage. According to the Wall Street Journal, Chinese President Xi Jinping is ready to ‘punch back’ at the US over its approach to a trade war. President Xi told a group of 20 mostly American and European multinational chief executives that Beijing plans to strike back, with Xi now settled on an unyielding approach. The story cites regulatory hurdles, iPhones, GM cars and Yuan weakness as possible avenues, whilst giving preferential treatment to those companies whose countries are not involved in a trade fight.
After months of rhetoric and threats, the trade fight seems to be coming to a head, with Europe imposing tariffs on $3.3 billion of American products in response to US barriers on imports of aluminium and steel. That triggered threats of further tariffs on European cars from President Trump. Trump’s administration has also proposed restrictions on foreign investment in U.S. technology which would not just be confined to China, according to US Treasury Secretary Steven Mnuchin. Although White House trade and manufacturing adviser Peter Navarro sought to downplay Mnuchin’s remarks, saying that the restrictions on investments in US technology companies would just target China. This escalation of rhetoric has led to a risk off move and as a result equities markets came under pressure. There is now a real concern a trade war could trigger global recession.
Over to Europe and according to a poll most Germans support finding an EU solution for managing migration, as advocated by Chancellor Angela Merkel, over a national approach pushed by her interior minister – strengthening Chancellor Merkel’s weak political hand.
Prime Minister Theresa May told President of the European Council Donald Tusk that Britain would set more details on its vision for a future relationship with the bloc after a June 28-29th Summit. This comes as lobby groups representing business interests from the US, Canada, Japan and India have told the British government to solve the Brexit issue urgently or put more than £100bn worth of trade at risk.