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Reduced tariff and Brexit uncertainties boosts global equities

Global Economics and Markets Newsletter December 2019

Family Consulting provides an overview of the months most important financial market and global macroeconomic events that may affect private business and family office decisions.

At the start of the December 2019, President Trump tweeted he will re-impose tariffs on Brazilian and Argentine steel and aluminum for what the president says is in retaliation for substantial currency depreciation in these countries which has hurt US farmers.Brazil and Argentina are major agricultural producers and have lately increased their trade with China, in part due to Chinese retaliatory tariffs on US farm products. The US had previously imposed tariffs on Brazil and Argentina on national security grounds, only to later provide these countries with exemptions. Those exemptions are now being rescinded. There will be a 25% tariff on steel and a 10% tariff on aluminum.

As retaliation for France’s digital services tax, Trump said that he will impose a 100% tariff on USD 2.4 billion in goods imported from France including champagne, cheese, yogurt, and handbags. Tariffs on traded services were also threatened. He also said that the US might impose new duties on products from other European countries as retaliation for EU subsidies for Airbus.

Although these tariff announcements initially hurt US equities as there was a concern the US was becoming more protectionist, potentially increasing the costs to US consumers and manufacturers, but following the announcement that a ‘phase 1’ deal has been completed, but yet to be signed (but both China and the US expect this to take place in January 2020), US and global equities rallied.

In brief the deal will reduce some U.S. tariffs on Chinese goods in exchange for increased Chinese purchases of U.S. agricultural, manufactured and energy products by approximately USD 200 billion over the next two years whilst China pledged to better protect U.S. intellectual property, limit coerced transfer of American technology to Chinese firms, open its financial services market to U.S. firms and to avoid manipulation of its currency. The announcement was made by US Trade Representative Robert Lighthizer but he said no date has yet been set for second phase of talks.

 

This newsletter explains the following topics;

・This Month’s Big Themes

▶ Tariffs
▶ Global Automotive Sales

・Country/Regional Update 

▶ Japan
▶ United States
▶ China
▶ United Kingdom
▶ Latin America
▶ India
▶Turkey

・Capital Markets

▶ Equities
▶ Interest Rates
▶ Foreign Exchange
▶Commodities

 

(569KB, PDF)

* This Article is based on the relevant Japanese or specific country’s tax law and other authorities in effect on the date of this Article. This Article would not be guaranteed updating if there are any changes in Japanese tax law, any other law, or interpretations by the courts or tax authorities thereof after the date of this Article.

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