Trade

Donald Trump said he plans to announce tariffs on imported semiconductors over the next week, adding there would be flexibility with some companies in the sector.

So the components will pay tariffs. The phnones and computers will not. This will bring manufacturing back.

Ho Hum.

Of course the whole thing is nuts anyway. By far the largest part of an iPhone’s value is the IP. Which is owned in California. After that, the processing chip, mebbe the screen. Both in Taiwan?

China gets the assembly work. Bit out of date now but a decade back that was about $8 of value per phone.

By value an iPhone is manufactured in CA more than anywhere else. But tariffs must be imposed upon China?

Elon Musk has branded Donald Trump’s trade tsar “dumber than a sack of bricks” and exposed a growing White House split over tariffs.

The Tesla founder said Peter Navarro, the US President’s senior counsellor for trade, was “truly a moron”….

And so say all economists about his views on trade.

Note that he’s not playing 4D chess – if anyone is. He really does believe all this nonsense about a trade defict is others stealing from us. That tariffs are good in and of themselves.

after claiming the world’s richest man was merely a “car assembler” rather than a manufacturer.

There’s that too….

Chinese AI experts are circumventing Joe Biden’s export bans to obtain advanced microchips, academic papers have shown.

High-end AI chips made by the US tech giant Nvidia have been used by an employee at a blacklisted Beijing company as well as academics at China’s national science institute, according to studies published online.

The Biden administration has barred Nvidia from selling its most advanced chips in China amid a global race to develop powerful AI systems and concerns about possible military uses.

However, four academic papers published on the open access science website ArXiv in recent weeks demonstrate experiments done in China using Nvidia’s H100, the company’s most powerful AI chip.

The studies include using AI systems to solve logic problems and carrying out tests of their mathematical ability.

While the researchers are using the H100 chips in small numbers – eight chips or fewer, compared to the thousands that have been acquired by US tech giants – the studies show that they are having some success circumventing US controls.

The people who run the varied US export control programs – for nuclear, military, dual use and so on and on – are not entirely insane. Yes, yes, I know, bit of a revelation that.

If you can buy it retail then it’s not controlled. On the obvious grounds that if you can buy it, from the shelf, at Walmart (or, OK, Frys) then there really is no damn point in trying to control who can get on a ‘plane with it. Sure, we might even want to control still, but as it’s obviously lunatic to think that we can let’s not bother.

Can you buy these chips retail? Well then…..

Joe Biden has warned Chinese electric cars are a threat to US national security, as he ordered a sweeping investigation into whether the vehicles can be exploited for spying.

The President accused China on Thursday of using unfair trade tactics to flood the US market with technology-packed vehicles that can hoover up sensitive data about people and infrastructure.

He said the US Department of Commerce would investigate vehicles that used technology from “countries of concern” and prepare to hit them with new restrictions.

Gotta try summat because they need that help, right?

One cardinal fact governs the world economy today. China produces 31pc of global manufactured goods: it accounts for 13pc of total consumption.

The rest of us must absorb China’s increasing excess capacity. If the country is to meet the Communist Party’s growth target of 5pc over the next decade with the current hyper-investment model, it can do so only by eating further into the industrial core of Europe, America, and India.

“Other major economies must be willing to reduce investment and manufacturing shares to accommodate China. Needless to say, this is very unlikely,” said Professor Michael Pettis from Peking University.

Heathen Chinee are making stuff that we can consume for cheap. Someone make them stop!

West braces for Shanghai shock as zero-Covid nightmare ends
Sudden flood of ships from world’s largest port risks unleashing a crippling wave of inflation

An increase in supply from Shanghai is going to increase inflation in consuming nations?

It could be just weeks before Shanghai – a manufacturing superpower, and home to the world’s biggest cargo port – returns to life.

Thrown back into lockdown by Beijing’s disastrous zero-Covid strategy, the city’s reopening will have far-flung consequences for the global economy.

Experts say Shanghai’s reopening may unleash a massive wave of pent-up demand, sending a sudden flood of ships and containers to ports in Europe and the US’s West Coast, which still haven’t recovered from the last round of disruption.

“There is a risk of a tsunami of cargo coming out of Shanghai that could make a bad situation worse,” says Simon Heaney, a supply chain researcher at Drewry, the maritime consultancy.

What?

On that gravity model of trade. It really isn’t geographic distance that matters, it’s economic distance.

For a decade “black gold” drew roughnecks and executives by the thousand to “Fort Mac” in northeastern Alberta. Some were paid a fortune to move dirt. Then the oil price crashed, a fire ripped through the town, Canada’s grubby oil was shunned by investors and assailed by environmentalists and wages fell.

OK, oil price falls, so oil town goes bust. So what?

Except it still pays to ship oil from Venezuela to Houston. From Saudi to Japan. Why doesn’t it pay to ship from Alberta to Toronto?

With too few pipelines, Alberta could not get its product to market.

It’s economic distance that matters – here, transport links – not geographic distance. At with point everyone’s got to redo their models about trade with the EU. Sure, we’re close geographically. But that’s not the determinant of the gravity model of trade, is it?

However, farmers’ leaders warned that if China restricted imports this could lead to the UK being inundated with meat produced at a lower cost than was possible in Britain because of enhanced animal welfare standards.

British folk made better off. If we allow this to catch on then where would we be?

But critics of the proposed agreement fear the zero tariffs and zero quotas deal that the government in Canberra is demanding would see British farmers and businesses undercut by Australian rivals, with concerns that cheap imports of beef and lamb could see demand for home-grown produce dwindle.

Ian Blackford MP, the SNP’s Westminster leader, has warned Scotland’s farmers and crofters would be disproportionately affected, with the country’s beef, dairy, sheep and grain sectors particularly at risk.

How ghastly that would be, that the British be made better off at the cost to a few porridge wogs.

Boris Johnson backs tariff-free trade with Australia
Agreement would be first deal since Brexit but farmers fear competition from cheap imports

Competition, yes.

Boris Johnson is prepared to offer Australia tariff-free access to British food markets despite warnings that it could put farmers out of business.

That’s how efficiency rises, those less so go bust.

Trade between the UK and France bounced back towards normal in March as firms adjusted to life after Brexit, according to analysis by French customs officials.

Imports from Britain climbed to 107pc of typical levels after taking Covid effects into account, the research found – with exports back at 96pc.

He said, however, that the investigation was continuing to ensure that the problems, described as a shortage of raw materials, were not a result of AstraZeneca allegedly favouring the UK’s order for 100m doses.

De Croo said: “AstraZeneca pointed to production issues at Seneffe. The federal medicines and health products agency has together with its European partners carried out checks at the site.

“It appears that there is a shortage of the raw materials needed to make the vaccines. The analysis of the situation there is still ongoing.

Love to know which raw materials. And what’s the hold up on them? Because allow it go go a level or two deeper and we end up back where home production just isn’t possible. Because at some level of detail the supply chain for anything and everything is the entire global economy.

What’s in a name? Plenty, when it comes to asafoetida or “devil’s dung”. The evil-smelling spice is a stink bomb that unquestionably lives up to its moniker. Inhalation at five paces can make someone with a blocked nose stagger back. It has to be stored away from other spices to prevent it overwhelming them. Just a smidgen can cure indigestion. Yet it is a staple in Indian cuisine, adding a certain subtle aroma, pungency and flavour. For the Jain community, whose religion forbids the use of onion and garlic, “hing”, as it is called in India, is a lifesaver for the flavour it adds. Hing is India’s answer to Japan’s umami.

Yet, until now, no one in India has grown the spice.

So, now some has been planted and Huzzah.

Although spice nationalism does sound like a pretty silly thing to be worrying about. Rather ignores the whole benefit of that trade thing….

Previously Indian cooks benefited from the labour of Afghans. Now they won’t. This is an advance how?

Brexit: No 10 startled by EU insistence that UK accept trade terms

Horrors!

Downing Street reacted in dismay as Emmanuel Macron led EU leaders in warning Boris Johnson that he must swallow the bloc’s conditions, in what appeared to be taken as a direct challenge to the British prime minister’s threat to walk out on the talks.

At a summit in Brussels, the EU proposed a further “two to three weeks” of negotiations but Europe’s heads of state and government offered Johnson little succour, demanding that he alone needed to “make the necessary moves to make an agreement possible”.

The intervention was evidently regarded as incendiary in No 10 as Johnson had said he would make a decision on Friday on whether there were grounds to continue the talks. In September, he had said that without agreement by the time of this summit the government would “move on” to focus on no-deal preparations.

This being how negotiations are done.

“Here’s our demands. Obey or no deal!”

“Well, if we could just clarify the details here?”

“Well, OK, we’ll change that little bit. But our demands, Obey!”

Somewhere around the 55th iteration of this the deal is done. Or, not, obviously. But that the “Obey!” bit has been done is about as remarkable as Boris or The Donald chasing totty.

When did Robert Kuttner get his trade policy from Pat Buchanan?

In the COVID crisis, her recent writings and tweets have been far more solicitous of the effect on the WTO than on the U.S. economy. In a recent tweet, Hillman declared, “Everyone needs to keep saying it again and again. Tariffs are taxes on imports paid by American importers and passed on to American consumers.”

Apparently this is something that Kuttner disagrees with.

In fact, tariffs are a policy tool, not good or evil per se. And in the coming negotiations over how to reset the U.S.-China relationship, tariffs can be used well, badly, or not at all.

Well, yes, they’re a tax upon imports, paid by Americans, which mean that Americans will buy fewer imports. What’s the difficulty with understanding this, Bobby?

The UK mandate keeps the NHS out of any deal and upholds British standards on food standards and animal welfare, meaning Britain will reject any attempt to sell chlorinated chicken or hormone-fed beef to the UK….

As with all such deals, it’s a list of where we’re not going to have free trade.

Britain should negotiate trade deals with individual US states as a backstop while Boris Johnson tries to seal a post-Brexit free trade agreement with America, a former trade secretary will say on Monday.

Liam Fox will point out that four US states – California, Texas, Florida and New York – would be members of the G20 if they were independent nations, and that many deals could be struck with states, rather than the US as a whole.

While tariffs on goods can only be negotiated by Washington, deals on services, which account for the majority of Britain’s transatlantic trade, can be sealed on a state level, unlocking billions of pounds of business for the UK economy.

Not really, no. The US Constitution means that the Feds are the people who deal with trade. It’s not so much the over the national borders thing, it’s the interstate trade that they’ve a lock on, the Commerce Clause.

They are serious about this too. Back when FDR was trying to screw things up with the New Deal a farmer decided he’d not like to submit to the Feds telling him how much wheat he could produce or not. So, he said it was only for his own consumption therefore bugger off.

The Feds argued, and the Supreme Court agreed, that if he didn’t grow it then he would buy from some other farmer. Who might be across state lines. That therefore made restrictions upon his growing his own wheat for his own consumption a matter of interstate trade and thus something the Feds got to regulate under the Commerce Clause.

Brits selling insurance in NYC is sufficiently different to get around that, is it?

Liz Truss, the new trade secretary, will promise to create up to 10 new tax-free zones at ports and airports in a move condemned by Labour as setting up tax havens and money-laundering opportunities along Britain’s coasts.
….
Those advising Truss on a new free port panel will include Eamonn Butler, the director of the rightwing, libertarian Adam Smith Institute, and Tom Clougherty, the head of tax at the Thatcherite thinktank the Centre for Policy Studies (CPS).

Tom, of course, used to be at the ASI. Thus does the march through the institutions continue.

As to the actual free ports – they’re really just large bonded warehouses and no one has been complaining about those.

Kim Jong-un, the North Korean leader, has condemned international sanctions on his country as the work of “hostile forces” to impede efforts to improve the living standards of his citizens.

That is pretty much what they are.

Ten years after the crash: have the lessons of Lehman been learned?
Our panel of writers considers what has changed – and what still needs to

OK, reasonable point for discussion.

Yanis Varoufakis:

Second, trade agreements must commit governments of poorer countries to minimum living wages for their workers.

Killing the ability of poor places to get richer makes the financial system safer, does it?