US to make 16 billion dollars aid to farmers- WSJ

The US Government has rolled out a 16 billion dollars aid package for the US agriculture sector to offset the losses from the trade conflict with China. According to Wall Street Journal the commodity prices have sank to the lowest level in more than 10 years while the expectation is that the trade conflict will hinder the agritrade between the countries.

According to WSJ this program is similar to the aid initiative in 2018 which was about 12 billion dollars founding for farmers. This initiative is about direct aid to farmers.

The S&P GSCI Agricultural Commodities index was trading today up 0,06 % to 274,30 points. During one year time the index has dropped by 18,59 % and 5-years time by 13,40 %.

Soybeans are the biggest product crop to be exported to China. Before the conflict the US shipped 10 billion – 12 billion dollars of soybeans to China a year, writes the WSJ.

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EU to start new trade talks with the US

The European Union countries have agreed to start new trade talks with the US. The EU Commission have now the formal authorisation to proceed with the matter.

But this situation is still facing resistance from France and Belgium. The France President Emmannuel Macron has said that he objects the talks because of the US withdrawl from the Paris Agreement in 2017.

And the issue is also about agricultural goods. The US wants them be part of the trade deal and the EU is not interested including them. It is also believed that the EU elections in May will increase the rethorik of protectionism in the agricultural products in France and in Belgium.

According to New York Times, the US Congress has made clear that it will not ratify any trade agreement with the EU that does not include agriculture. The Trump’s administration have been insisted to include them in the trade deal.

Last week the US Goverment announced that they are planning to propose new tariffs regarding civilian aircraft and agrigoods like French cheese and Italian olive oils. The reason for this was the WTO research, which found that the EU subsidies to Airbus (AIR) have had negative impact on the US trade. On the other hand, the WTO has shown that this is vice versa with the US subsidies in Boeing.

On the agenda there is also the tariffs proposed to the EU car import to the US.

Germany, the biggest automanufacturing country in the EU, increased its car production to 451 400 units in March 2019. The GDP from manufacturing in general was 171 billion euros during the fourth quarter of 2018.

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Brexit: Temporary tariffs for agri and cars in no-deal

The UK Goverment has today published its guidelines for temporary import tariffs in the case of no-deal Brexit. According to the Cabinet, the goverment wants to protect vulnerable industries like agriculture in this kind of situation. On the other hand, the goverment reminds that 87 % of total imports by value would be tariff free.

This would mean that for example vehicle import from the EU would get 13 % tariffs in the case of no-deal Brexit. This would not apply for the car parts supply from the EU.

According to the Goverment press release tariffs would apply to 13% of goods imported into the UK. This includes:

  • A mixture of tariffs and quotas on beef, lamb, pork, poultry and some dairy to support farmers and producers who have historically been protected through high EU tariffs.
  • Retaining a number of tariffs on finished vehicles in order to support the automotive sector and in light of broader challenging market conditions’. However, car makers relying on EU supply chains would not face additional tariffs on car parts imported from the EU to prevent disruption to supply chains.
  • In addition, there are a number of sectors where tariffs help provide support for UK producers against unfair global trading practices, such as dumping and state subsidies. Tariffs would be retained for these products, including certain ceramics, fertiliser and fuel.
  • To meet our long-standing commitment to reduce poverty through trade, the government currently offers preferential access to the UK market for developing countries. To ensure that access for developing countries is maintained, we would retain tariffs on a set of goods, including bananas, raw cane sugar, and certain kinds of fish.

-Our priority is securing a deal with the European Union as this will avoid disruption to our global trading relationships. However, we must prepare for all eventualities. If we leave without a deal, we will set the majority of our import tariffs to zero, whilst maintaining tariffs for the most sensitive industries.  This balanced approach will help to support British jobs and avoid potential price spikes that would hit the poorest households the hardest, said Trade Policy Minister George Hollingberg in the release.

 

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Stocks gained – no new news

Financial markets gained on the Wednesday trading in Wall Street. Dow Jones was trading 0,67 % to 23947, the tech- index Nasdaq was up 1,16 % to 6976 points. The composite index S&P 500- index was up 0,5 % to 2588 points.

The US-China trade talks gained also attention, when China committed to buy more US agricultural goods, energy goods and manufactured goods. Also president Donald Trump said that he is committed to make a deal.

In the UK the stocks ended up 0, 76 % to 3787 points. Prime Minister Theresa May was defending the Brexit plan. The Parliament is to vote about the deal on Tuesday next week. There were rumors in the EU side that the UK have to ask for an extention for the negotiating period.

In Germany the Dax- index ended up 0,83 % to 10893 points and in France the Cac- index ended 0,84 % to 4813 points.

In Asia the Nikkei-index ended up 1, 10 % to 20427 points. In Hong Kong the Hang Seng index ended up 2,27 % to 26462 points.

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G20: US and China to halt tradewar

During the G20 meeting in Argentina the US and China leaders, President Mr Donald Trump and China President Mr Xi Jinping agreed to halt the escalating trade war.

According to the White House spokesperson,  President Trump would not follow through his threat to raise tariffs on Chinese goods from 10% to 25% in the new year.  This has been the major issue in the discussions and also one of the biggest threats to global economy.

The countries also agreed that China will buy more agricultural, energy and industrial products from the United States. The aim is to reduce the trade imbalance between the countries.

According to White House, this new statement gives both countries 90 days time to agree upon new trade terms. If such agreement is not ready, the former tariffs increase from 10% to 25 % will become into force.

The financial markets ended up in Wall Street on Friday evening. Dow Jones ended +0,79 % to 25538, S&P 500 + 0,82 % to 2760 and Nasdaq 0,79 % to 7330 points. In Europe the markets were down with the FTSE 100 -index -0,83 % to 6980 and German Dax-index -0,36 % to 11 257 and CAC 40-index in Paris -0,05% to 5003.

Euro declined 0,67 % to 1,13 US-dollars and UK sterling ended down 0,33 % to  1,27 US-dollars.

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