The last week in trade has seen a continued ‘truce’ between China and the US on tariffs, the continuing impact of sanctions on the Russian economy and GDP growth in the UK.
The big picture: In positive news for the global economy, the world’s two largest economies have agreed to extend their trade truce for another 90 days. On Monday (11 August), the US and China set a 10 November deadline for lowered tariff rates of 10% on US exports to China, and 30% on US-bound exports from China, the BBC reported.
According to Washington DC, the extension will provide more time for the countries’ trade representatives to discuss issues such as "unfair trade practices" and how they can “remedy trade imbalances".
A Chinese spokesperson described the agreement as “win-win cooperation” and markets around the world rallied when the news was announced. Dissatisfaction with the current US-China trade balance saw Trump threaten tariffs totalling 145% on China earlier this year, with retaliator rates of 125% prepared by China.
Good week/bad week: It’s been a good week for Russia/Ukraine peace prospects. With US and European sanctions appearing to make a dent in Russia’s economy, hopes have risen that a meeting between Trump and Russian president Vladimir Putin could bring the war on Ukraine closer to an end.
The two leaders are set to meet in Alaska today – the first face-to-face meeting between them since Trump resumed office. The in-person summit follows a call on Wednesday which bolstered European hopes that a ceasefire could be achieved without Ukrainian territorial concessions.
Speaking to Reuters a Kremlin source said:
“Apparently, some terms will be agreed upon tomorrow (Friday) because Trump cannot be refused, and we are not in a position to refuse (due to sanctions pressure)”.
It’s been a bad week for various exporting sectors, as different industries across the globe are losing out amid rising protectionism. From Canadian canola farmers began facing a preliminary 75.8% duty on exports of canola seed to China, Reuters reports.
The move follows a tit-for-tat dumping investigation into the sector by Beijing, which came hot on the heels of Canadian electric vehicle tariffs introduced alongside US measures last year.
There were warnings that US tariffs could undermine the Indian government’s plan to make the country into an alternative manufacturing hub to China. The Asian nation now faces a 50% tariff, partly in response to its ongoing purchase of Russian oil.
Managing director of Gokaldas Exports, Sivaramakrishnan Ganapathi, told the FT the rate was “insane”.
“At 50% tariff there is no business to be done. In the interim, brands are saying they’ll scale down their sourcing from India… they have options to go to Vietnam, Bangladesh, Sri Lanka.”
Reports have also warned that China’s economy is struggling under tariff pressure. Industrial output slowed to 5.7% growth last month, having risen by 6.8% in June.
While exports have held relatively steady, experts expect a dip in the second half of the year, with Capital Economics’ Zichun Huang telling the FT that exports are likely to remain under pressure from tariffs and additional duties the US has imposed on rerouted shipments.
How’s stat? 0.4%. That’s the UK’s GDP growth for June, according to figures released by the Office for National Statistics this week.
The announcement following two consecutive contractions of 0.1%, stoking recession fears, amid Trump tariffs and firms adapting to higher National Insurance rates.
Quote of the week: "There is no private company in the world with the nuclear capability we have. If we are not market leader globally, we did something wrong”.
Strong words from Rolls-Royce chief executive Tufan Erginbilgic. He told the BBC that the company could become the UK’s most valuable, after signing contracts that will see it produce nuclear reactors intended to power AI data centres.
The week in customs: Yesterday, Customs Advisory Practice director, Anna Doherty, answered member questions in a live instalment of our Customs Corner series.
She addressed the latest Customs Declarations Service updates and several changes to UK-EU border controls, including the Obligatory Logistics Envelope, phase 6 of New Computerised Transit System and guidance on safety and security (ENS) declarations.
Members can watch the webinar here.
What else we covered: This week’s Commodity in Focus explored potential areas of focus for the rumoured update to the UK Critical Minerals Strategy.
Sticking with government plans, there was another Trade Explained in our series on Industrial Strategy sector plans. This week, considering the content of the advanced manufacturing plan.
There was also exclusive insight into the government’s small business plan from Chartered Institute UK public affairs lead Grace Thompson.
True facts: China has elevated its historic Silk Road trading route, quite literally, with 40 new air routes into Europe.
However, the development has come under scrutiny as nine routes originate in Xinjiang province, the region in which Beijing has been accused of oppressing the majority Uyghur Muslims population with forced labour internment and other human rights abuses.
Politico reports that routes into the UK, Germany, Hungary, Greece, Switzerland, Belgium, Ireland and Spain have been established according to Uyghur Human Rights Project (UHRP) analysis of freight data.
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