54 MONDAY, JULY 9, <strong>2018</strong> international business US-China trade war elevates risks to global economy The trade war that erupted Friday between the United States and China carries a major risk of escalation that could weaken investment, depress spending, unsettle financial markets and slow the global economy, according to the Associated Press. The opening shots were fired just after midnight, when the Trump administration imposed a 25 per cent tariff on $34bn of imports from China, and Beijing promptly retaliated with duties on an equal amount of American products. It accused the US of igniting “the biggest trade war in economic history.” Because of this first round of hostilities, American businesses and, ultimately, consumers could end up paying more for such Chinese-made products as construction equipment and other machinery. And American suppliers of soybeans, pork and whiskey could lose their competitive edge in China. These initial tariffs are unlikely to inflict serious harm to the world’s two biggest economies. Gregory Daco, head of US economics at Oxford Economics, has calculated that they would pare growth in both countries by no more than 0.2 per cent through 2020. But the conflict could soon escalate. President Donald Trump, who has boasted that winning a trade war is easy , has said he is prepared to impose tariffs on up to $550bn in Chinese imports — a figure that exceeds the $506bn in goods that China shipped to the US last year. Escalating tariffs are likely to slow business investment as companies wait to see whether the administration can reach a truce with Beijing. Some employers will probably put hiring on hold until the picture becomes clearer. The damage could risk undoing some of the economic benefits of last year’s tax cuts. “Trade disruption is the greatest threat to global growth,” said Dec Mullarkey, managing director of investment strategies at Sun Life Investment Management. “The direct effects will be amplified as business confidence drops and investment decisions are delayed. Markets are still hoping that the key players return to the negotiation table.” The root of the conflict is the Trump administration’s assertion that China has long used predatory tactics in a drive to supplant America’s technological supremacy. Those tactics include cyber-theft as well as forcing companies to hand over technology in exchange for access to China’s market. Trump’s tariffs are meant to press Beijing to change its ways The rift with China is the most consequential trade conflict the administration has provoked. But it’s hardly the only one. Trump is also sparring with the European Union over his threat to tax auto imports and with Canada and Mexico over his push to rewrite the North American trade pact. And he has subjected most of America’s trading partners to tariffs on steel and aluminum. Many caught in the initial line of fire — US farmers absorbing tariffs on their exports to China, for instance — are fearful. The price of soybeans has plunged 13 percent over the past month on fears that Chinese tariffs will cut off American farmers from China, which buys about 60 percent of their soybean exports. “For soybean producers like me, this is a direct financial hit,” said Brent Bible, a soy and corn producer in Romney, Indiana. “These tariffs could mean the difference between a profit and a loss for an entire year’s worth of work out in the field, and that’s only in the near term.” Christine LoCascio, an executive at the Distilled said the US Committee on Foreign Investment in the United States had notified it that it does not have any outstanding security issues following an agreement with the US government to divest the Long Beach container terminal business to a third party. COSCO said ownership of the container terminal business will be transferred to a trust while a buyer is sought. There had been concerns the trade fight between Beijing and Washington might end up hampering major deals by US or Chinese firms seeking Spirits Council, said she fears China’s tariffs on US whiskey will “put the brakes on an American success story” of rising exports of US spirits. Even before the first shots, the prospect of a trade war was worrying investors. The Dow Jones industrial average has shed hundreds of points since June 11. But the risks are now priced into the market, and the Dow actually rose nearly 100 points Friday to 24,456.48. China’s currency, the yuan, has dropped 3.5 per cent against the dollar over the past month, giving Chinese companies a price edge over their US competition. The drop might reflect a deliberate devaluation by Beijing to signal its “displeasure over the state of trade negotiations,” according to a report from the Institute of International Finance, a banking trade group. The Trump administration sought to limit the impact of the tariffs on US households by targeting Chinese industrial goods, not consumer products, for the first round of tariffs. But that step raises costs for US companies that rely on Chinese-made machinery or components. And it could force them to pass those higher costs on to their business customers and, eventually, to consumers. If you like Chick-fil-A sandwiches, for instance, you may feel the effects. Charlie Souhrada of the North American Food Equipment Manufacturers said the tariffs could raise the cost of a kind of pressure cooker Chick-fil-A uses. The administration has placed “these import taxes squarely on the shoulders of manufacturers and, by extension, consumers,” Souhrada said. One way the tariffs will squeeze farmers, landscapers and construction firms is by raising the price of excavators and loaders made by Bobcat, which uses attachments imported from China. US suppliers rarely make these attachments, so the company must import them. Jason Mayberry, Bobcat’s assistant general counsel, said in a filing submitted to the US Trade Representative’s office that the company would have to raise prices to offset the tariff. Bobcat’s raw material costs have also risen because of the administration’s steel and aluminum tariffs. • L–R: Norway’s Prime Minister Erna Solberg; and French President Emmanuel Macron, at a press conference on the Sovereign Health Funds programme to fight climate change, in Paris ... on Friday. Photo: AFP Twitter suspends over 70 million accounts in Inc suspended more than one million two months Twitter accounts a day in recent months to reduce the flow of misinformation on the platform, the Washington Post reported. Reuters sources quoted Washington Post as reporting that Twitter and other social media platforms such as Facebook Inc have been under scrutiny by US lawmakers and COSCO Shipping wins US security clearance for OOIL China’s COSCO Shipping Holdings said on Sunday a key United States review body has cleared its planned $6.3bn acquisition of shipping firm Orient Overseas International Ltd on security issues, Reuters has reported. COSCO said on June 30 that all pre-conditions for the OOIL offer made last year had been met after receiving approval by the Chinese anti-monopoly regulator. It already has approvals from European and United States antimonopoly regulators. In a regulatory filing on Sunday the company regulatory approval. US and China on Friday implemented tariffs against each other’s goods, with no signs of a near-term resolution. COSCO’s acquisition of OOIL will see the Chinese shipping giant become the world’s third-largest container shipping line. The deal is the latest in a wave of mergers and acquisitions in global container shipping that has left the top six shipping lines controlling 63 per cent of the market and comes at a time when the industry is experiencing a recovery after a lengthy downturn. international regulators for doing too little to prevent the spread of false content. The companies have been taking steps such as deleting user accounts, introducing updates and actively monitoring content to help users avoid being a victim to fake content. Twitter suspended more than 70 million accounts in May and June, and the pace has continued in <strong>July</strong>, the Post reported on Friday, citing data it obtained. “It’s hard to believe that 70 million accounts were affected when Twitter has only 336 million monthly active users (MAU),” Wedbush analyst Michael Pachter said. Twitter’s MAU is expected to grow nearly three per cent to 337.06 in the second quarter, according to Thomson Reuters. “My guess is that a large number of these suspended accounts were dormant ... it should have little impact on the company,” Pachter told Reuters. If the 70 million were mostly active accounts, the affected accounts would have been “screaming bloody murder”, added the analyst. According to a Washington Post source, however, the aggressive removal of unwanted accounts may result in a rare decline in the number of monthly users in the second quarter. “Due to technology and process improvements during the past year, we are now removing 214 percent more accounts for violating our spam policies on a yearon-year basis,” the company said in a blog post last month. In May, it identified and challenged more than 9.9 million “potentially spammy” or automated accounts per week, compared with 6.4 million in December 2017. Shares of Twitter fell marginally to $46.50 after the bell on Friday. Deal for Weinstein Co. covers back pay for De Niro, Streep An agreement reached in the sale of Harvey Weinstein’s movie studio won’t leave Hollywood stars like Robert De Niro and Meryl Streep holding the bag. The Associated Press reported that Lantern Capital Partners said Friday it is agreed to make payments to unsecured creditors, such as actors seeking residuals, as part of a $289m Weinstein Co. acquisition it expects to close Friday. A judge must approve the deal. A Wednesday hearing is scheduled in Delaware. De Niro and Bradley Cooper say they’re each owed $940,706 for “Silver Linings Playbook.” Streep says she’s owed $168,611 for “August: Osage County.” The Weinstein Co. filed for bankruptcy protection in March amid fallout from sexual assault allegations against Weinstein. The movie mogul is due in court <strong>Monday</strong> for arraignment on charges alleging a sex crime against a third woman.
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