Overseas Headlines- January 17, 2019

United States:

Trump’s Tariffs Are Producing Billions, But China Isn’t Paying

President Donald Trump is right to say that his tariffs are generating billions of dollars for the U.S. But China and other countries aren’t paying them as he’s suggested. According to data from U.S. Customs and Border Protection, more than $13 billion in duties imposed by the Trump administration were assessed on imported goods as of Dec. 18. Actual collections could lag and be lower because of refunds and other factors, but Treasury Department reports show receipts from all customs duties have risen sharply since the tariffs took effect. While Trump has suggested on Twitter and in public comments that tariffs are somehow being charged to or paid by China and other countries, trade economists say that’s generally misleading. U.S. importers of record are responsible for the duties, and ultimately U.S. businesses and consumers could pay through higher costs, they say. Trump is “suggesting this is bringing in lots of new revenue and all of the burden is falling on the Chinese,’’ said Phil Levy, senior fellow on the global economy at the Chicago Council on Global Affairs and a former senior economist for trade for President George W. Bush’s Council of Economic Advisers. “I think that’s mostly false.’’



Erdogan Gets Emergency Powers Over the Turkish Economy

President Recep Tayyip Erdogan was granted emergency powers that give him broad authority to act when Turkey’s financial stability is deemed to be under threat. Parliament voted late Wednesday to authorize Erdogan to take all the necessary measures in case of a “negative development” that could spread across the entire financial system. It also approved the formation of the Financial Stability and Development Committee that will work to coordinate efforts against risks to financial stability and security, according to the law, set to go into effect following the president’s approval. Turkey is strengthening its defenses six months after the lira’s crash rippled through the economy. The currency crisis and the consequent spike in borrowing costs are proving nearly as damaging as a failed coup attempt two and a half years ago, which required a state of emergency that wasn’t lifted until last July. Under the law, “the president is authorized and responsible for implementation of all measures beyond the powers” of members of the Financial Stability and Development Committee, which will be formed under the supervision of the Treasury and Finance Ministry. Long known for his unorthodox view that rate hikes only lead to faster price gains, Erdogan is assuming broader powers ahead of municipal elections in March as the country careens toward its first recession in a decade. Turkey’s economy is still reeling from the currency meltdown that the authorities blamed on a foreign conspiracy amid a diplomatic crisis with the U.S.



China Confirms Vice Premier Liu Will Visit the U.S. From Jan. 30

China’s chief trade negotiator is headed back to the U.S. at the end of the month for the next round of talks, the Chinese government confirmed. “At the invitation from U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, Vice Premier Liu He will visit the U.S. on Jan 30 to Jan 31 for trade negotiations,” Ministry of Commerce Spokesman Gao Feng told reporters in Beijing on Thursday. ” They will work together to further implement the important consensus reached by the two state leaders. ” Liu is a top economic aide to President Xi Jinping and is in charge of the talks with the U.S. This would be his second trip to Washington to talk trade, after he appeared to reach an agreement in May, only for Trump to back away from it. This time, Liu travels to Washington with a more challenging domestic economic backdrop which makes it even more pressing to strike a deal. On top of the uncertainty generated by the trade war, recent economic data has been poor, with worsening factory sentiment, deflation risks and falling exports. Authorities have responded with various stimulus measures, but those may prove insufficient to brake the slowdown at a time when international conditions are also deteriorating. The decline in December’s exports was due to slowing global demand, the comparison with strong results a year ago and fading front-loading effects, Gao said, talking about exporters shipping products early to avoid being hit with higher U.S. tariffs.


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