Goodwill hunting. The Chinese government, for the first time since the U.S.-China trade war began, granted tariff waivers on some U.S. goods on Wednesday, saying it would exempt for one year 16 types of U.S. goods from 25 percent extra tariffs. Then, as a gesture of goodwill, U.S. President Donald Trump announced a two-week delay of a 5 percent tariff hike on $250 billion worth of imports from China. Originally, the hike to 30 percent from 25 percent was due to occur on Oct. 1, which happens to be the 70th anniversary of the founding of the People’s Republic of China. New negotiations are expected to take place at some point before those new U.S. tariffs hit on Oct. 15. According to Bloomberg, Beijing is also preparing to increase purchases of some U.S. agricultural goods, ostensibly to further boost the prospects of talks but also to deal with a rapid rise in pork prices in China. An editorial in the Chinese Communist Party-controlled Global Times, meanwhile, said it was time to put an end to the trade war, and earlier this week, an ABC News/Washington Post opinion poll found that 56 percent of Americans oppose the administration’s handling of the trade dispute with China. We’re a broken record at this point, but there’s little reason to expect any sort of imminent resolution even if the talks proceed as planned.
On second thought. Four unnamed sources said U.S. President Donald Trump appeared to be considering a French proposal to extend a $15 billion credit line to Iran if the Iranian government returns to compliance with the nuclear deal. Last week, a senior U.S. official said the administration was skeptical of the proposal, which would mark a reversal from the current “maximum pressure” strategy. Trump also could meet with Iranian President Hassan Rouhani on the sidelines of the U.N. General Assembly later this month.
How low can you go? The European Central Bank announced a deposit rate cut to minus 0.5 percent from minus 0.4 percent, a tiered interest-rate system to exclude some bank deposits and, most important, the resumption of its quantitative easing program with no end date. The rate cut is bad news for eurozone banks, whose profit margins have been slowly eroded over time, but the introduction of tiered rates will help offset some of the damage. The quantitative easing program will include monthly bond purchases of 20 billion euros ($22 billion) and raises its own set of challenges. The news further enraged Trump, who just yesterday in a tweet called on the U.S. Federal Reserve to cut interest rates to zero or below. Meanwhile, industrial output in the eurozone contracted by 0.4 percent in July relative to the previous month and by 2 percent relative to July 2018. Germany stole the show with a 5.3 percent annual drop, while France saw only a 0.3 percent decline (and a 0.2 percent increase over the previous month). Germany’s Ifo Institute, an economic think tank, joined the wave of organizations slashing growth projections for Germany, cutting its 2019 prediction to 0.5 percent from 0.6 percent and its 2020 figure to 1.2 percent from 1.7 percent. Another German think tank, IMK, said there was a 59.4 percent chance the economy was in recession, up from 43 percent last month, and a third group, the Kiel Institute for the World Economy, said Wednesday that it expected a 0.3 percent drop in German output in the third quarter.
- More than 1,000 Russian police officers conducted approximately 150 raids on homes and offices linked to opposition activists including prominent government critic Alexei Navalny.
- France will proceed cautiously with its pension system reform so as not to reignite the yellow vest protests that rocked the country for months, Prime Minister Edouard Philippe said. Philippe added that a parliamentary vote on the reform should be held before next summer.
- The High Court in Belfast dismissed a case alleging that a no-deal Brexit would violate the 1998 Good Friday Agreement, which helped bring peace to Northern Ireland.
- China and Malaysia agreed to set up a joint dialogue mechanism for the disputed South China Sea.
- U.S. officials reportedly cautioned the Solomon Islands about Chinese funding promises in exchange for severance of diplomatic ties with Taiwan.
- The British government released a short document detailing potential consequences of a no-deal Brexit, including months of disruptions at ports, public disorder and food shortages.
- Cuba’s president said the country would need to enact emergency measures to cope with a fuel shortage this month caused by U.S. efforts to block oil shipments to the country.
- A U.S. government report concluded that it was probably Israel that planted surveillance devices that were found near the White House and around Washington.