World Economic Leaders Warn of Fallout From Trade War Between U.S. and China

FUKUOKA, Japan — Global finance leaders meeting in Japan this weekend said they were increasingly worried that the trade dispute between the United States and China, which shows no signs of abating, could propel the world economy into a crisis.

The sense of gloom at the gathering of the Group of 20 major economies came amid increasing evidence that global economic growth is slowing amid President Trump’s renewed trade war with Beijing. In a closing statement, or communiqué, officials at the G-20 warned that trade tensions have “intensified” and agreed to address the risks.

But the Trump administration, intent on rewriting the rules of international commerce in America’s favor, gave no sign that it was ready to back down. Treasury Secretary Steven Mnuchin continued to blame China for prolonging the fight and insisted that the trade dispute was not hurting America’s economy or hampering global growth.

“I don’t think in any way that the slowdowns you’re seeing in parts of the world are a result of trade tensions at the moment,” Mr. Mnuchin told reporters on the sidelines of the G-20.

Mr. Trump is expected to meet with President Xi Jinping of China in late June, a critical encounter that could determine whether the world’s two largest economies can resolve their dispute. Talks between the two countries fell apart last month, with Mr. Trump accusing China of reneging on a trade deal and China insisting that the United States was not negotiating in good faith.

Tensions have since increased as Mr. Trump raised tariffs on $250 billion worth of Chinese goods and threatened to tax nearly all Chinese imports. Beijing has responded with higher tariffs on American goods, and in a white paper released last Sunday, Chinese officials vowed to “never give in” on issues of principle.

Mr. Trump will make a decision about the next round of tariffs after his meeting with Mr. Xi.

“We are not far from a real and open trade war between China and the U.S.,” Bruno Le Maire, France’s finance minister, said in an interview on the sidelines of the gathering on Sunday. “I think all the G-20 people are aware that kind of situation would lead to an economic crisis, to a lack of growth and to a slowdown everywhere in the world.”

Mr. Mnuchin met on Sunday with Yi Gang, the governor of the People’s Bank of China. It was the first face-to-face contact between officials from the two countries since the talks broke down last month. Mr. Mnuchin, in a tweet, described their discussion of trade as “candid.”

But he said he had no plans to return to Beijing before Mr. Trump and Mr. Xi meet and that Chinese officials would not be traveling to Washington. The Treasury secretary, who has shuttled back and forth to China several times in the past year, said he had had no contact with Liu He, the Chinese vice premier and top trade negotiator, since early May.

Policymakers from around the world voiced their concerns about Mr. Trump’s protectionist approach to Mr. Mnuchin in hopes that the former Goldman Sachs banker, who has been a more moderate voice on trade, might persuade the president to back away from tariff threats and find a way to make peace with China.

Mr. Le Maire said he made this case directly to Mr. Mnuchin and urged the Treasury secretary to consider a multilateral approach, such as working through the World Trade Organization, to confront China. He also noted that the steel and aluminum tariffs that Mr. Trump imposed on imports last year have had a ripple effect, compounding the protectionism emanating from the United States.

This year the European Union was forced to impose quotas to slow a flood of cheap Chinese steel, which otherwise would have gone to the United States, to its shores.

In Germany, which has been bracing for Mr. Trump to make a decision about imposing tariffs on auto imports, anxiety about trade has led to a decline in business sentiment and spending.

“We all hope there will be a way out of these trade tensions,” Olaf Scholz, the German finance minister, said in an interview. “Because every one of us knows that our fundamental economic data are influenced by the insecurity of this situation.”

He added, “As an indirect effect of these insecurities, companies postpone their decisions to invest.”

Canada is also feeling pain as a result of strained relations between the United States and China. Last year, Canadian authorities arrested Meng Wanzhou, the chief financial officer of the Chinese tech giant Huawei, who faces extradition to the United States. Since then, China has detained two Canadians, rebuffing Canada’s calls for their release. It has also begun blocking imports of Canadian canola.

“We’re seeing actions in China to restrict the trade of canola,” said Bill Morneau, Canada’s finance minister. “We don’t see that as something related to the quality of the canola, but rather as a trade response to our legal system.”

All the friction is taking a toll on many of the world’s largest economies as businesses race to reorient their supply chains and anxiously await new trade barriers. Mr. Trump has added to the uncertainty in recent weeks, threatening tariffs on allies like Mexico to solve problems, such as immigration, that have nothing to do with trade.

This month, the World Bank and the International Monetary Fund warned about the prospects of slowing economic growth, and both pointed to widening trade disputes as a culprit. The bank noted that global trade growth has slowed to its lowest level in a decade while the I.M.F. said that the tariffs that the United States and China placed on each other’s imports could reduce global gross domestic product by 0.5 percent, or $455 billion, next year.

The Trump administration views America’s relative economic strength as a source of leverage, but there are also signs that the tariffs are taking a toll in the United States.

In a survey of businesses conducted by the Federal Reserve in May, contacts across the central bank’s 12 districts mentioned tariffs 37 times, up from 19 in the April report and 18 in March.

Businesses reported a range of experiences: Some said they were passing along cost increases, while others said they could not. Pecan farmers in the Dallas district were considering shifting into hemp and away from their tariff-impaired crop, while clothing stores in Richmond, Va., reported that they had stocked up on inventory to avoid import taxes and could not place new “seasonally appropriate” orders.

In Fukuoka, a coastal city known as a trade gateway to the rest of Asia, finance ministers debated how to assess the effects of trade tensions on the global economy. The United States, expressing skepticism its protectionist measures are dampening growth, was an outlier. In drafting the communiqué, it resisted language that would call for trade tensions to be resolved.

To the relief of many at the meeting, the Trump administration did resolve its immigration fight with Mexico and back off from a threat to impose more tariffs. Mr. Mnuchin rescheduled a Saturday morning meeting here to confer with White House officials about the decision. He said that he was pleased that the additional tariffs did not need to be imposed and that the United States could focus its attention on China.

The Treasury secretary said he believed that the tariffs on China would encourage businesses to move manufacturing to other countries, creating new winners and losers but not dampening overall output. He acknowledged that other finance ministers expressed concern about the United States continuing on its current path.

For months, Mr. Mnuchin has been viewed as a moderate voice and optimist on Mr. Trump’s trade team, but before his meeting with Mr. Yi he struck a more strident tone, laying blame for the faltering negotiations directly on China and accusing it of backing out of commitments. Echoing Mr. Trump’s threat, he warned that if China does not return to the negotiating table then more tariffs are coming.

“It’s important to continue to communicate if they’re going to eventually get a deal,” said Clete Willems, a former top White House trade official who recently joined the firm Akin Gump. “There have been periods like this before: A few weeks ahead of last year’s G-20, expectations were exceedingly low and presidential engagement provided a jump-start for what was a period of very productive engagement.”

In an interview, Mr. Mnuchin expressed confidence that the United States could weather the trade dispute with China despite economic weakness around the world. He dismissed recent warning signs, such as weak employment and retail sales figures, as aberrations and said he saw no indication that the economy was slowing.

“Like a lot of negotiations, sometimes you go backwards before you go forwards,” Mr. Mnuchin said. “We’re either going to have an agreement or we’re not going to have an agreement. We’re prepared for both outcomes.” June 9, 2019

Jeanna Smialek contributed reporting from Washington.

By Alan Rappeport* –  The New York Times  via Other-news.info

*Alan Rappeport is an economic policy reporter at The New York Times, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters in the era of President Trump.

Commenti

Novembre 2019

Lun Mar Mer Gio Ven Sab Dom
        1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30