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Donald Trump once boasted of being a ‘Tariff Man’, and sometimes it feels like the US president enjoys talking about little else.
Just days after lifting the threat of a trade war with Mexico, Trump has floated the prospect of a deeper conflict with China.
In a piece of tub-thumping drama, the president declared overnight that he’d impose new tariffs on Chinese exports “immediately” if its leader, Xi Jinping, doesn’t meet him at the G20 summit later this month.
He told reporters that America could impose tariffs of 25%, or even higher, on the $300bn of Chinese goods that haven’t yet been caught up in the trade war. Such a move would be a major escalation in a conflict that has already dented trade and weighed on global growth.
But Trump isn’t backing down, telling CNBC that his trade war policy is getting results.
“The China deal is going to work out. You know why? Because of tariffs.
Right now, China is getting absolutely decimated by companies that are leaving China, going to other countries, including our own, because they don’t want to pay the tariffs.”
[Fact check: American importers, not Chinese exporters, pay these tariffs…..]
Trump’s comments put Beijing in rather a fix.
President Xi Jinping can hardly be seen kowtowing to the White House, so may resist committing to a meeting at the G20. But without formal talks at the G20, how will the trade war be resolved? This may take some diplomatic skills.
Also coming up today
New UK unemployment data is due this morning, which may show that the long run of rising employment levels has faded.
Economists also predict that earnings growth slowed – basic pay, excluding bonuses, may have risen by 3.1% in the year to April, down from 3.3% a month ago.
This would be another sign that the British economy is stumbling in the face of economic uncertainty at home and abroad; just yesterday, we learned that the UK economy shrank by an alarming 0.4% in April.
Michael Hewson of CMC Markets sets the scene:
Having seen manufacturing activity fall sharply in April there is a concern that wage growth could start to go the same way as the economy slows.
Having come in at 3.3% for the last three months there is a sense we could start to slip back, with expectations of a softening to 3.1%, for the three months to April. The unemployment rate is expected to remain unchanged at 3.8%.
Two of the Bank of England’s top policymakers – deputy governor Ben Broadbent and MPC member Michael Saunders – may give their view on the UK economy today. They’re appearing at parliament for re-appointment hearings to the BoE.
- 9.30am BST: UK unemployment and earnings report
- 10am BST: Eurozone sentix investor confidence survey
- 10am BST: BoE policymakers Michael Saunders and Ben Broadbent at the Treasury Committee in parliament