Are trade war sides looking for an opportunity to ally to hit China first and comeback and finish one another? How a harsh decision becomes so soft that remains untouchable in a hot summer where farmers prepare to start cultivation for coming autumn? Here we, the ICDST, explain how the tariff war might go to its hidden phases with much more devastation and incurable long term effects. Read more with us!

The United States and the European Union want to move towards “zero customs tariff” in non-automotive industrial trade, announced US President Donald Trump after a meeting with the President of the European Commission, Jean-Claude Juncker. This withdrawal happened few days after U.S. dollar sinking proving this fact that US is not able to be in a long term trade war.

Donald Trump and European Chief Executive Jean-Claude Juncker strove on Wednesday to defuse the crisis created by tariffs imposed by Washington, announcing a series of decisions in agriculture, industry and energy whose scope exact remains to be confirmed. After a two-hour meeting, the two leaders spoke in front of the press in the gardens of the White House.

“Zero tariffs” in their industrial exchanges, with the exception of the automotive sector
Speaking of a “big day” for free trade and evoking a “new phase” in relations between the United States and the European Union, the US president stressed their common will to move towards “zero tariffs” “in their industrial exchanges. the exception of the automotive sector.

He also assured that the EU would begin “almost immediately” to buy “a lot of soybeans” from US producers, and promised to revisit the issue of US tariffs on steel and aluminum, which had fired with powders.

According to a European source, no new customs tariff will be imposed on imports of European cars into the United States, a particularly sensitive issue for Germany, where this key sector employs some 800,000 people.

Our Analysis

Here at ICDST, we predict that the new confrontation goes to a hidden phase where parties will hit by means of certain import restrictions and by finding alternative partners in their trades. The new hidden trade war is even more dangerous as the decisions made or the steps taken are somehow unknown to other parties and finding the right measures will be more difficult. It seems that in near future there will be many invisible diplomatic connections between EU and China for countering US. However, China will be a main loser if it doesn’t attack first as the best defense is attack now that the future of EU/US China relations is unknown.

Gold prices rise slightly on Monday as the dollar recedes, while trade concerns between the US and China also support bullion. The gold futures for the August delivery on the Comex division of the New York Stock Exchange gained 0.2% to $ 1,273.60 per troy ounce.

By ICDST. The United States is considering declaring that China’s investment in US technology companies is a threat to economic and national security, according to information released on Monday, citing eight people familiar with the issue.

The news also indicated that US Treasury Secretary suggested implementing the law in a report scheduled for release on June 29.

On Friday, US President threatened to impose a 20% tariff on all US imports of cars assembled by the European Union, which would heighten trade tensions with Europe.

In response, a senior European Commission official said the EU would respond to any US initiative to raise tariffs on cars made in the bloc.

Meanwhile, the dollar index , which measures the greenback against a basket of six major currencies, fell this morning and was trading at 94.4960. The USD has strengthened since April, but the looming trade war is starting to create nervousness in the market.

Dollar-denominated assets, such as gold, are sensitive to dollar fluctuations. A falling dollar makes gold cheaper to foreign currency holders and, as a result, increases demand for the precious metal.

In the other precious metals trade, silver fell 0.54% to $ 16.370 per troy ounce, while platinum gained 0.35% to $ 878.10 an ounce.

The 28 Member States of the European Union approved on Thursday the retaliatory measures against some US products in response to the taxes imposed by Washington on steel and aluminum, told AFP several European sources. “The implementation of these measures has been adopted unanimously” by the Member States and the European Commission will take steps for their entry into force, said these sources.

European countermeasures may legally come into force from June 20, but the EU could wait until July 1 to react with Canada, also sanctioned by Washington, who wants to launch the retaliation that day said a diplomatic source. The European list contains dozens of American products, some of which are very emblematic, such as bourbon, Harley Harley-Davidson motorcycles and jeans. Here is the detail:

● Steel

Dozens of products like some rolled steels, stainless steel bars, seamless tubes, steel wires, doors, windows, etc.

● Agriculture and food

Beans, corn and rice (processed or not), lingonberries, orange juice, peanut butter, bourbon, cigars, cigarettes, pipe tobacco, rolling, chewing or snuffing .

● Textile

T-shirts and undershirts in cotton, wool or synthetic material, denims (ie jeans) or cotton pants, shorts, cotton bedlinen and some leather shoes .

● Vehicles

Motorcycles with a cylinder capacity greater than 500 cm3, sailing, pleasure or sport boats, with or without motor, rowing boats and canoes.

● Various

Eye makeup, nail polish, foundation and playing cards.

The list must be returned by the European Commission – a formality – before its execution.

The measure aims to offset up to 2.8 billion euros the damage caused to his industry by US taxes on steel (25%) and aluminum (10%). This figure is considered “measured” by the Commission, which wants the procedure to fully respect the rules of the World Trade Organization (WTO).

The list was communicated by the EU to the WTO on May 18, in anticipation of Washington’s decision. The affected products are manufactured in the US and not sold by US brands – otherwise they would be likely to be manufactured anywhere in the world. The EU targets several US states, often agricultural, which voted for Donald Trump in 2016. Other US products could in the future also be taxed by the EU, up to 3.6 billion euros, if it won the dispute with the United States in the WTO since its complaint on June 1.

Source and analytics by ICDST economy group.

He had promised it during his presidential campaign. He did it. To the chagrin of the rest of the world – and even some of its Republican allies – Donald Trump validated Thursday the introduction of tariffs on imports of steel (25%) and aluminum (10%) . And if at the moment Canada and Mexico are the only ones to be exempt from taxes, this trade barrier has immediately triggered the anger and concern of many countries. China, Brazil, Japan, Europe: allies and rivals of the United States denounce this attack against free trade. What trigger a trade war?

“Dialogue is always the first option for the European Union,” says Cecilia Malmström, European Commissioner for Trade.

Officially, EU countries – which exported 5.3 billion euros of steel and 1.1 billion euros of aluminum to the United States in 2017 – still hope that Donald Trump will give up these measures protectionists supposed to enter into force in fifteen days. “The EU is a close ally of the United States and we continue to believe that the EU should be exempt from these measures,” she said.

Behind the scenes, this is actually months that the 28 member countries are preparing to respond. “We are ready and will be ready to use re-balancing measures if necessary,” Jyrki Katainen, the Vice President of the European Commission, explicitly threatened on Friday. How? Brussels has conscientiously compiled the list of products imported from the United States that could, in turn, be taxed up to 2.8 billion euros.

The aluminum summit, which took place in Montreal on June 3 and 4, was suddenly backfired because of the trade dispute triggered by the introduction, since June 1, of tariffs on steel. and aluminum exported to the United States by the European Union, Canada and Mexico.

The summit, attended by nearly a hundred industry and government representatives from Canada, the United States, Europe and Japan, aimed to mobilize forces to fight global overcapacity, just before the meeting. G7 in Quebec City on June 8th and 9th.

US decision to impose new tariffs of 10% on aluminum and 25% on steel, followed by threats of retaliation from EU, Canada and Mexico, creates crisis according to Jean Simard, president of the Aluminum Association of Canada. But paradoxically, the industry intends to take advantage of this trade conflict to tackle the problem of Chinese overproduction. “We have a little more listening than we would otherwise have,” says Simard.

Participants agreed to call on the G7 countries to support the creation of a global forum on global aluminum overcapacity. The idea is inspired by the one that has existed for two years on the overproduction of steel. This would bring together the G20 countries, representing 80% of the primary aluminum market, and would receive assistance from experts from the Organization for Economic Co-operation and Development (OECD). Ambition: to paint a complete picture of the industry and its problems, and then start negotiations to resolve them.

“A climate of uncertainty”
It is not excluded that China wants to participate, as for steel, to show its goodwill. If the country knows a strong demand of aluminum related to its economic growth, Beijing also exports a lot and increases …

U.S. economy is improving as the government has decided to increase tariff/tax over importation where then the internal businesses will grow as their competitors are not present in the market. This can improve exportation and bourse market (stock exchange) as investors only see higher chances for the artificial growth . But, are things as easy as that? The answer is No.

This type of policy is an old one leading to temporary benefits and will have unfavorable consequences such as:

1- Fall of national currency against major world products (if we consider other currencies as products too)-most wanted ones such as oil and gas

2- Number one will lead to higher inflation rate, but a little inflation rate is necessary for the banks to absorb funds and pay higher interest rates to the clients and loans to the businesses. This is a wise circulation of money in a healthy economy.

2- Other partner countries such as China might do the same thing to U.S. as economy is bilateral: If you sell you must buy too other wise they will set high tax for importation from U.S. too in order to nullify the policy of the same kind.

3- The internal businesses improve but they lose competitiveness and in near future will fail to regulate their income/outcome numbers.

4- The other exporters will find a new destination market for their products and will replace U.S. with a new market where then getting back those sellers will cost U.S. higher in the future.

We don’t support liberal policies such as globalization in this article-which is against current U.S. policy, but the danger of closing the doors to the international markets has only short term benefits. We at ICDST have analyzed the last 12 months of U.S. trades and found outstanding numbers. Recently, we detected that the current fall of U.S. dollar is the result of the policies mentioned already. The EU virtually will have to change its trade deals with U.S. too. Let’s now rethink why  U.S. left Paris agreement: This would happen sooner or later as U.S. decided to run its factories faster with a closed door to the global market. This is an old method of shifting the weight of the economical loss on the shoulders of other partner countries.  The only problems with such policy are two with their solutions brought to you here:

1- The loss of currency becomes an evident factor of the economy growth; Interesting hah? This means as long as U.S. dollar currency falls, its internal economy will improve  if the inflation rate is fixed nearly low. To hide this from international observers, the U.S. can absorb its own currency to balance product currency equation. To do so, they can sell large volumes of gold reserves a little cheaper than international price but of course must remove the resulting numbers from the yearly economy balance to protect the value of national currency against the internal products.

2- The international market might not tolerate such policies and would react to it as they will soon know how to block U.S. destination markets. The solution to the second problem of this interesting but old policy is to change the direction of world top investors into a channel which reduces the chances of non-central investments. The U.S. can trick the world if top world investors are interested in more focused/central investment in a single country (U.S.) with an almost middle term (5 to 10 years) prospect else the whole scenario will fail. One method of centralization of investments is to destabilize rest of the potential rivals economies by various means.

The future of the world economies are convolved in a way that escaping from the dominoes like consequences is impossible for all partners. But what makes a country a safe heaven for investors and what makes it a hell to its citizens? The answer is the prospect that a country might have a better economy. This is sometimes done by generating fake numbers. Whenever economies publish some numbers, we must hesitate to see if they’re real or not. The independent factors announced by world bank are still good parameters in studying the world economies including GDP/GDPPC, currency value, import export balance,… .