President Trump imposed tariffs on an additional $200 billion worth of tarrifs Chinese goods coming into the U.S., continuing an ongoing trade war between the two countries.

The new import taxes begin next week and will rise to 25 percent at the end of 2018.

According to Reuters, smart watches from Apple and Fitbit, as well as some consumer safety products, such as bicycle helmets and baby car seats, are exempt from the new tariffs.

The latest U.S. move could generate a tit-for-tat response from Beijing, which has said it would welcome new trade talks with Washington, but also suggested it would not engage in more negotiations if the U.S. imposed the tariffs.

In the statement announcing the new tariffs, Trump warned that “if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”

In recent months, Washington and Beijing imposed 25 percent tariffs on $34 billion worth of goods headed across each other’s border.

Earlier Monday, White House economic adviser Larry Kudlow told the Economic Club of New York that the U.S. is “ready to negotiate and talk with China any time that they are ready for serious and substantive negotiations towards free trade to reduce tariffs and non-tariff barriers, to open markets, to allow the most competitive economy in the world, ours, to export more and more goods and services to China.

Trump declared on Twitter that the tariff increases he has imposed have boosted the U.S. economy, the world’s largest.

“Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country –and yet cost increases have thus far been almost unnoticeable,” Trump tweeted. “If countries will not make fair deals with us, they will be “Tariffed!”
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With his popularity ratings in freefall, French President Emmanuel Macron is counting on a rebound in family purchasing power to keep voters from turning against his reforms.

Macron’s government has lined up several tax cuts taking effect in the coming months that should boost the closely tracked measure of disposable income in France.

It could hardly come at a better time for Macron, with many voters saying the former investment banker has spent his first year in office cutting taxes for the wealthy and big companies.

More purchasing power was the single biggest priority in voters’ eyes, well ahead of cutting unemployment or the tax burden, according to a Kantar Sofres poll released on Sunday.

Squeezed by tax hikes on petrol and tobacco as well as oil price-driven inflation, household spending has floundered this year whereas it is traditionally the single biggest source of growth, accounting for 52 percent of economic output.

But next month workers will see a cut in payroll tax they pay to fund jobless insurance and the health system, followed by a cut in a city tax for all but the wealthiest in November.

“We are gradually going to improve French workers’ purchasing power,” Finance Minister Bruno Le Maire told LCI television on Monday. “We are going to make work pay better. The French are going to see the fruit of these policies in the coming months.”

Consumer relief

With a solid parliamentary election behind him, Macron faced little resistance in his first year in office to a major overhaul of the labour code and the scrapping of the wealth tax.

But it earned him a reputation as a “president of the rich” that has been hard to shake off. A summer scandal over his bodyguard beating May Day protesters has further dented his image, and a popular environment minister resigned live on radio over frustration that Macron’s agenda was not green enough.

With his popularity ratings at all time lows, Macron needs to rebuild political capital before he launches what are set to be contentious reforms to unemployment insurance and the pension system next year, while also trying to cut public spending.

In addition to tax cuts this year, Macron’s government has pledged to scrap payroll tax next year on overtime work and profit participation schemes in small firms.

The central bank said in its latest economic outlook on Friday that the stars were aligned for a rebound in purchasing power starting at the end of this year and into 2019.

“We’re expecting about 200,000 [job creations] this year, that should translate into purchasing power for the French,  especially with inflation due to fall,” Bank of France governor Francois Villeroy de Galhau told Europe 1 radio.

The government is counting on the rebound to help the economy grow 1.7 percent next year. While the central bank is optimistic about the outlook for disposable income, it is only expecting GDP growth of 1.6 percent.

Meanwhile, despite the planned tax cuts, questions linger over whether households will actually feel any better off.

From January, taxes will be automatically deducted from people’s monthly pay slip, leaving those who are not already on a monthly plan – about 40 percent of taxpayers — with smaller net take-home pay.

Meanwhile, since the government’s measures to boost purchasing power mainly benefit workers, retirees are likely to be left out. Additionally, while the government has said it will raise the state pension next year it will do so by less than the rate of inflation so as to save money.
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A top economic adviser to President Donald Trump said on Monday he expects U.S. budget deficits of about 4 to 5 percent of the country’s economic output for the next one to two years, adding that there would likely be an effort in 2019 to cut spending on entitlement programs.

“We have to be tougher on spending,” White House economic adviser Larry Kudlow said in remarks to the Economic Club of New York, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year.

Kudlow did not specify where future cuts would be made.

“We’re going to run deficits of about 4 to 5 percent of GDP for the next year or two, OK. I’d rather they were lower but it’s not a catastrophe,” Kudlow said. “Going down the road, of course we’d like to slim that down as much as possible and we’ll work at it.”

He stated that the biggest factor for revenue was economic growth rate. A quicker pace of growth will bring in more revenue, Kudlow said, and Trump’s economic policies were aimed at boosting the U.S. growth rate.

Kudlow also said he did not expect Congress would be able to make the Trump administration’s recent individual tax cuts permanent before the Nov. 6 midterm congressional elections.

“I don’t think it will get through the whole Congress” before the election, he said, but added that making the personal tax cuts permanent “is a good message” and disagreed with forecasts that they would further increase budget deficits.
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Nigerian President Muhammadu Buhari on Friday accepted the resignation of Finance Minister Kemi Adeosun, who said she stepped down over allegations of using a forged certificate to avoid participation in the country’s mandatory one-year national youth service scheme.

Adeosun, a top cabinet member and a former investment banker who promoted the government’s policy to boost growth following a recent recession, said in a statement that she believed she was exempt from the service scheme but felt bound to resign because of the administration’s “focus on integrity.”

Allegations that Adeosun had used a forged exemption certificate to avoid participation in the youth service scheme surfaced in recent months in the Nigerian media. Adeosun did not comment on the claims initially, prompting criticism from her opponents.

In her statement on Friday, Adeosun said her understanding was that she was exempted from the scheme because she had moved back to Nigeria from Britain, where she was born, after she had passed the required minimum age.

“I have, today, become privy to the findings of the investigation into the allegation made in an online medium that the Certificate of Exemption from National Youth Service Corp (NYSC) that I had presented was not genuine,” she said in her statement. “This has come as a shock to me and I believe that in line with this administration’s focus on integrity, I must do the honorable thing and resign.”

The claim that Adeosun had used a forged exemption document was first reported by Nigerian online publication Premium Times.

Adeosun was appointed by Buhari to manage the finances of Africa’s biggest economy in November 2015. Her flagship policy was a bid to improve tax collection and shore up the country’s finances by cracking down on mismanagement by government agencies.

Adeosun also oversaw a strategy of restructuring Nigeria’s debt portfolio into longer term maturities by borrowing more offshore and less at home to lower costs.

Buhari took office in 2015 after an election campaign largely fought on his vow to fight corruption, but his detractors have accused him of failing to investigate allies accused of wrongdoing.

The presidency approved that the minister of state for budget and national planning, Zainab Ahmed, would oversee the Finance Ministry with immediate effect, it said on its official Twitter account.

The west African country emerged from recession last year, but growth remains sluggish and largely dependent on higher oil prices, despite the stated aim of Buhari’s administration to increase non-oil revenues.

The government’s handling of the economy is likely to be a campaign issue in February’s presidential election in which Buhari plans to seek a second term.
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More than half of all workplace tasks will be carried out by machines by 2025, organizers of the Davos economic forum said in a report released Monday that highlights the speed with which the labor market will change in coming years.

The World Economic Forum estimates that machines will be responsible for 52 percent of the division of labor as share of hours within seven years, up from just 29 percent today. By 2022, the report says, roughly 75 million jobs worldwide will be lost, but that could be more than offset by the creation of 133 million new jobs.

A major challenge, however, will be training and re-training employees for that new world of work.

“By 2025, the majority of workplace tasks in existence today will be performed by machines or algorithms. At the same time a greater number of new jobs will be created,” said Saadia Zahidi, a WEF board member. “Our research suggests that neither businesses nor governments have fully grasped the size of this key challenge of the Fourth Industrial Revolution.”

The “Future of Jobs 2018” report, the second of its kind, is based on a survey of executives representing 15 million employees in 20 economies. Its authors say the outlook for job creation has become more positive since the last report in 2016 because businesses have a better sense of the opportunities made possible by technology.

The WEF said challenges for employers include enabling remote work, building safety nets to protect workers, and providing reskilling for employees. However, the report found that only one in three respondents planned to reskill at-risk workers.

Despite net positive job growth, the WEF anticipates a “significant shift in the quality, location, format and permanency of new roles. Businesses are to expand use of contractors for task-specialized work, engage workers in more flexible arrangements, utilize remote staffing, and change up locations to get access to the right talent.

The report said nearly half of all companies expect their full-time workforces to shrink by 2022, while nearly two in five expect to extend their workforce generally, and over one-quarter expect automation to create new roles in their enterprises.

Germany’s powerful DGB trade union association warned against too rapid change in the world of work.

“People, whether they’re workers or consumers, will only accept and tolerate the consequences if technology serves them — and not they it,” Reiner Hoffmann told daily Welt in reaction to the WEF report.
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Aid money urgently needs to be redirected to the poorest countries in order to reach the United Nations’ goal of ending extreme poverty by 2030, according to a report.

The London-based Overseas Development Institute (ODI) says middle-income countries receive more aid than the 30 poorest nations. It also warns that at least 400 million people will still be living on less than $1.90 a day, despite government pledges to eliminate all extreme poverty.

In northern Ethiopia, teams of workers dig irrigation channels through orchards and grain fields. Such projects have turned arid plains into fertile farmland, which has quadrupled agricultural production.

The report from the ODI credits Ethiopia’s “Productive Safety Net Program,” launched in 2005, with lifting 1.4 million people out of extreme poverty. It also enabled Ethiopia to avoid another famine during severe droughts in 2010 and 2015.

In contrast, neighboring Uganda has seen extreme poverty levels rise recently, after a rapid reduction in previous years.

“One of the reasons is because climate change is starting to have an impact in that country,” said Marcus Manuel, author of the ODI report. “Now in Ethiopia, they’ve managed, with a lot of support partly from the U.S., to have programs that support farmers when a sudden climate or weather event happens. In Uganda, they didn’t. So when they had a drought, that led to a real increase in poverty. So it’s a matter of having the right systems in place.”

Ethiopia’s program, the largest of any low-income country, pays beneficiaries to work on public works projects such as irrigation, roads, schools and health clinics, which helps to create long-term poverty relief.

Such programs are vital in ending extreme poverty, according to the ODI report. The report says there is an annual funding shortfall of $125 billion in the three core sectors of education, health and what it terms social protection transfers, or welfare.

“You need to do economic growth to do part of things, and you also need investment in the social sectors,” Manuel said. “You need to have both sides of the coin to make this work. Donors are investing both in growth and in social sectors, but they’re not investing it in the right countries to nearly the extent that’s needed. And, in particular, in this report we’ve identified 29 countries which can’t afford the investment needed in the social sectors and donors are not giving enough money to that group of countries.”

The statistics show middle-income countries receive more aid than poorer countries, whose share of global aid has fallen over the past six years from 30 percent to 24 percent.

In addition to better aid allocation, the report says more donor nations need to reach the U.N. goal of allocating at least 0.7 percent of gross domestic product to aid budgets. Without urgent action, the authors warn the goal of eliminating extreme poverty by 2030 will remain out of reach.
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U.S. media reports said Friday that President Donald Trump has instructed aides to proceed with tariffs on $200 billion more in Chinese products.

Citing sources familiar with the matter, Bloomberg and Reuters said the president wanted to move forward with the additional duties even though Treasury Secretary Steven Mnuchin is trying to restart trade talks with Beijing.

The reports sent stocks falling Friday and led to a drop in the Chinese yuan.

The White House did not immediately comment on the reports.

Bloomberg reported that Trump met Thursday with his top trade advisers to discuss the tariffs, including Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer. The meeting was not on Trump’s public schedule.

Before Thursday’s meeting, Trump said on Twitter that he felt “no pressure” to make a deal with Beijing, saying “they are under pressure to make a deal with us.” He also raised questions about whether new talks between the United States and China would happen, saying the U.S. “will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?”

A public comment period for the proposed new tariffs ended last week. The U.S. trade representative’s office received nearly 6,000 comments on the proposal.

Even more tariffs

Last week, Trump threatened even more tariffs on Chinese items — duties on another $267 worth of goods, which when combined with the others would cover virtually all the products that China sends to the United States.

“That changes the equation,” he told reporters.

The Untied States has already imposed tariffs on $50 billion worth of Chinese goods, leading China to retaliate on an equal amount of U.S. goods. 

The Trump administration has argued that tariffs on Chinese goods would force China to trade on more favorable terms with the United States.

It has demanded that China better protect American intellectual property, including ending cybertheft. The Trump administration has also called on China to allow U.S. companies greater access to Chinese markets and to cut its U.S. trade surplus.

China has threatened to retaliate against any potential new tariffs. However, China’s imports from the United States are worth $200 billion a year less than American imports from China, so it would run out of room to match U.S. sanctions.
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The Turkish central bank caught international markets by surprise Thursday as it aggressively hiked interest rates in an effort to strengthen consumer confidence, stem inflation and rein in the currency crisis. 

Interest rates were increased to 24 percent from 17.75 percent, which is more than double the median of investor predictions of a 3 percent hike. The Turkish lira surged above 5 percent in response, although the gains subsequently were pared back.

International investors broadly welcomed the move. “TCMB [Turkish Republic Central Bank] did show resolve in hiking the one-week repo rate substantially and going back to orthodoxy,” chief economist Inan Demir of Nomura International said.

The central bank had drawn sharp criticism for failing to substantially raise interest rates to rein in double-digit inflation and an ailing currency. The lira had fallen by more than 40 percent this year.

The rate hike is an apparent rebuke to Turkish President Recep Tayyip Erdogan, who has been opposed to such a move.

Only hours before the central bank decision, Erdogan again voiced his opposition to increasing interest rates. The Turkish president reiterated his stance of challenging orthodox economic thinking, arguing that inflation is caused by high rates, although that runs contrary to conventional economic theory. Erdogan also issued a presidential decree banning all businesses and leasing and rental agreements from using foreign currency denominations.

The central bank indicated further rate hikes could be in the offing. “Tight stance monetary policy will be maintained decisively until inflation outlook displays a significant improvement,” the central bank statement reads.

The strong commitment to challenge inflation was welcomed by investors. “Most importantly, the CBT seemed to be vocal about price stability risks,” wrote chief economist Muhammet Mercan of Ing bank.

‘Crazy’ spending

Fueled by August’s sharp fall in the lira, which drove up import costs, inflation is on a rapid upward trajectory. Some predictions warn inflation could approach 30 percent in the coming months.

While international markets are broadly welcoming the central bank’s interest rate hike, economist Demir warns more action is needed.

“This rate hike does not undo the damage inflicted on corporate balance sheet, and market concerns about geopolitics will remain in place. So this is not the hike to end all problems,” said Demir.

The World Bank and IMF repeatedly have called on Ankara to rein in spending, which they say is fueling inflation. Perhaps in response, Erdogan has announced a freeze on new state construction projects.

In the past few years, he has embarked on an unprecedented construction boom, including building one of the world’s largest airports and a multibillion-dollar canal project in Istanbul, which the president himself described as “crazy.”

Trade tariffs

Investors also remain concerned about ongoing diplomatic tensions between Ankara and Washington. The two NATO allies remain at loggerheads over the detention on terrorism charges of American pastor Andrew Brunson.

Brunson’s detention saw U.S. President Donald Trump impose trade tariffs on Turkey, which triggered August’s collapse in the lira. Trump has warned of further sanctions.

“If we somehow sort out our problems with the United States and adopt an orthodox austerity program, we may find a way out of this mess,” said political analyst Atilla Yesilada of Global Source Partners.  “Turkey is a country that has a net foreign debt of over $400 billion, and where 40 percent of [Turkish] deposits are in foreign currency, so the game could be over in a day.”

Turkey has a long tradition of carrying out business in foreign currencies to mitigate the threat of inflation and a falling lira. The growing danger of the so-called “dollarization” of the economy and the public abandonment of the lira are significant risks to the currency.

Turkish companies are paying the cost for the depreciation of the lira. Analysts estimate about $100 billion in foreign currency loans have to be repaid by the private sector in the coming year. Companies and individuals borrowing in local currency, however, will be facing higher repayments. And most analysts predict the Turkish economy is heading into a recession.

Economist Demir says, though, that the situation could have been far worse.

“In the absence of an [interest rate] hike, the rollover pressures on banks would get even worse, damage on corporate balance sheets would intensify, and local deposit holders’ confidence would have weakened further. So this hike, although it doesn’t eliminate other risks, eliminates some of the worst outcomes for the Turkish economy,” he said.

Thursday’s rate hike appears to have bought time for the Turkish economy and the nation’s besieged currency. Analysts say investors are watching to see if Turkey’s decision-makers use that time wisely.
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