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Part consultancy, part thinktank, part social enterprise, Halcyon helps you prepare for and respond to personal, organisational and societal change.

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To be a catalyst is the ambition most appropriate for those who see the world as being in constant change, and who, without thinking that they control it, wish to influence its direction - Theodore Zeldin

What's Changing? - Trade



Please see below key recent developments concerning trade:


August 2018

  • The recently announced tariffs that the US is imposing on Mexico, the EU, and China are expected to affect companies across multiple industries, from food production to motor vehicles to construction and more. Executives around the world are discussing what the trade war means for their companie - CB Insights analysed what they're saying.
  • Figures released by the OECD report that a large repatriation of earnings by US parent companies has contributed to a substantial fall in global foreign direct investment (FDI) outflows. These figures show that in the first quarter of 2018 global outflows fell by 44% from $US242bn to $US136bn. 


July 2018

  • Jean-Claude Juncker tried to ease trade-war tensions. The European Commission president visited the White House, where he lobbied for both sides to work out a plan to reduce tariffs. Trump reported that he felt “something very positive” would come of the meeting.

  • Economist George Magnus that the global consequences of a trade war may soon become much more serious. One major investment bank has suggested that in a more aggressive trade environment, the world economy could become as recessionary as it became after the Lehman crisis, with a hit to US and Chinese growth of between 2.25-2.5 per cent, and to the EU of about 1.5 per cent.

  • Will the increased trading opportunities in non-tangible commodities such as data and services create new opportunities for global trade growth, asked Chatham House? Will technologies such as blockchain be able to streamline trading processes or will regulatory barriers halt technological adoption and resultant trade volume? And will the rules governing trade be able to adapt?

  • The EU and Japan signed a major trade deal in Tokyo. Eliminating 99% of tariffs, it’s the largest trade deal ever negotiated by the European Union. Japan also had meetings with Trans-Pacific Agreement members, which could result in additional member states added. For EY, the importance of this deal lies in its coverage; one-third of the global economy, and 600m people. EU firms export $100bn in goods and services to Japan annually.

  • China issued a 1,300-word rebuttal to the latest US tariffs list…That followed the US saying it was considering tariffs on an additional $200 billion worth of Chinese imports, which Beijing said would “seriously worsen” the global trade environment and hurt multinationals and average customers around the world.

  • Meanwhile, added Quartz, Chinese exports accelerated in June, rising 11.3% from a year earlier and beating forecasts of a 10% increase. The commerce ministry said last month that exporters were front-loading shipments to the US to get ahead of expected tariffs.

  • China warned the US against its proposed extra tariffs on US$200 billion of goods, reported Quartz. The commerce ministry said the measures would be “completely unacceptable” and China would respond. US businesses in China fear Beijing’s threats could mean anything from consumer boycotts to stricter inspections to delays in deal approvals.

  • Since 1948, the WTO and its predecessor, the General Agreement on Tariffs and Trade, worked to increase the volume of global trade and create a level regulatory playing field that would limit unfair trade practices. However, recent movement in the international trade space has prompted some of the strongest proponents of multilateral trade agreements to become some of the prime movers against greater integration in the global trading system. Meanwhile, the rise of China has shifted the balance of global trade towards emerging markets. In light of these changes in the international trade arena, Chatham House asked how must global trade rules evolve to deal with new challenges - e.g. is the WTO still fit for purpose or is broader international reform needed

  • According to EY, China and EU efforts to increase trade ties are part of a wider initiative to ensure that international trade isn’t disrupted due to the US administration’s trade policy direction. The EU and China have iterated that they want to ensure a multilateral trade approach continues across the world.

  • China said the US is “opening fire on the world” with its threatened tariffs. Beijing warned it will respond the instant the Trump administration’s tariffs on $34 billion of Chinese imports go into effect.

  • Direct Chinese investment into the US has fallen by more than 90 percent, to just $1.8 billion, in the first half of 2018 compared to the same period last year, according to the Rhodium Group.

  • As mentions of tariffs on earnings calls reached an all-time high, CB Insights analysed which companies are concerned by the looming trade war and which ones could benefit from it. (See also CB Insights' Public Company CEOs Have Never Talked About A Trade War As Much As They Did Last Quarter.)


June 2018

  • EY published a new report as part of  ts European Attractiveness Survey series. The 17th and latest report explores the foreign direct investment (FDI) activity in Europe. It focuses on the reality of foreign investment in Europe in 2017, the game changers for foreign investments in 2018 and the perceptions of Europe’s future attractiveness. The findings reveal an inflection in the pace of FDI inflows, influenced by four powerful game changers remaking the European rulebook on cross-border investment.

  • According to Our World in Data, there are dozens of official sources of data on international trade, many of which do not agree with one another. Even if you focus on what seems to be the same indicator for the same year in the same country, discrepancies are large. For example, for China in 2010, the estimated total value of goods exports was $1.48 trillion according to World Bank Data, but it was $1.58 trillion according to WTO Data. That's a difference of about 7%, or a hundred billion US dollars.

  • China pumped money into its economy. China’s central bank announced that, starting July 5, it will reduce the amount of funds local banks need to hold by 0.5%. The move is expected to free up some 700 billion yuan ($107.6 billion) for national and local banks, as fears of a prolonged trade war with the US grow.

  • Globalists should learn the zen of trade, believes Quartz, arguing that too many free traders are focused on how they think the world should be, instead of how it is.

  • The rise of China has shifted the balance of global trade towards emerging markets, even after the failure of the Doha Development round has limited the buy-in of emerging markets to the global trade system, and the rise of trade in services has made regulation of non-tariff barriers a controversial frontier for international regulation. In light of these changes in the international trade arena, how must global trade rules evolve to deal with these new challenges? Is the WTO still fit for purpose or is broader international reform needed, asked Chatham House?


May 2018

  • The US can eliminate its trade deficit or run the world’s dominant currency - but not both, argued Quartz,  as America provides the rest of the world with liquidity and a safe place to store assets.
  • Trade between the US and China is the most unbalanced it’s been in decades, warned GZEROMedia. In key industries, Chinese firms have matched or even surpassed their US competitors. The Chinese government is also dead set on dominating industries that it sees as crucial to winning the future, like advanced manufacturing and artificial intelligence. For many in the US government, China’s growing technology prowess doesn’t just undermine American industry, it’s a threat to national security.


April 2018

  • The EIU expects the ongoing trade dispute between China and the US to escalate further in 2018, threatening the strong global economic performance seen recently. The dispute, which intensified in late March 2018, has the potential to cause significant economic pain to both sides. Despite ongoing negotiations, the positions of the two parties are entrenched, and the EIU expects bilateral economic tensions to persist, resulting in some of the tariffs proposed by the two countries coming into effect.
  • The US-China trade dispute is set to worsen in the coming months. The Economist Intelligence Unit expects both sides to enact a second round of tariff increases that will affect a total of around US$80bn in bilateral trade. However, a threatened third round of tariffs is less likely to be introduced. This means that the dispute will stop short of mutating into an outright "trade war" that would have damaging, spillover effects for the global economy. Nevertheless, bilateral economic tensions will persist, and will increasingly shift to non-tariff barriers.

  • China’s vulnerability on trade is not what it was. In 2006, Chinese trade amounted to 65.2 percent of GDP. In 2016, that number had fallen to just 37 percent. That’s still higher than the US (27 percent), but China now has less reason to shy away from a trade fight if its government feels it must persuade Trump that trade wars aren’t “easy to win.”
  • Shaping Tomorrow highlighted fears of a global trade war that are rattling stock markets around the world after President Trump threatened to impose tariffs on China and Xi threatened to respond in kind. 

Sources: EIU, GZEROMedia, Shaping Tomorrow