Issue 103 | Jan. 18, 2019

The British Parliament's rejection of a deal to split from the European Union adds significant pressure on continental companies as they plan for the now greater possibility of an abrupt and disorderly exit. A no-deal Brexit threatens time-consuming customs checks and potentially expensive tariffs on goods that now move across the English Channel seamlessly and tax-free. Many big companies have already spent millions of dollars locking in extra parts and storage space ahead of time, and planning out alternative supply lines in case all the confusion overwhelms British and European ports. Read more
France and Germany plan to sign a new treaty in Aachen

By choosing Aachen as the place where they will sign their renewed treaty of friendship and cooperation on Jan. 22, Emmanuel Macron and Angela Merkel aim to send a strong signal: France and Germany are still at the heart of the European project, guiding and dominating it, even as the British prepare to depart. The Aachen treaty is intended to reinvigorate the Franco-German partnership at the core of the EU and strengthen the Elysée treaty of 1963 which institutionalized it. This may do more harm than good. Even without Brexit, the EU needs new energy and leadership to confront its many problems. Franco-German understanding is a necessary but increasingly insufficient condition for progress. Read more 
Fed says economy growing in most of U.S. as weak spots emerge
The Fed cut its benchmark interest rate by three-quarters of a percentage point after two days of tumult in international markets due to fear of a recession in the United States. The Beige Book economic report shows "outlooks generally remained positive," but a Federal Reserve survey shows optimism is declining on concerns over trade. In addition to disrupting payments from the federal government's Market Facilitation Program, the shutdown also "slowed the release of government reports on agricultural market conditions, leading to greater uncertainty for market participants." Read more
Trump's tariffs are producing billions, but China isn't paying
According to data from U.S. Customs and Border Protection, more than $13 billion in duties imposed by the Trump administration were assessed on imported goods as of Dec. 18. Actual collections could lag and be lower because of refunds and other factors, but Treasury Department reports show receipts from all customs duties have risen sharply since the tariffs took effect. Trade economists say companies and consumers ultimately pay. Johns Hopkins University applied economics professor Steve Hanke states, "Tariffs on Chinese imports are paid by Americans, not by the Chinese or their government. The President's tariffs are simply a tax on American consumers.'' Read more
Before start of new oil pact, OPEC made progress averting glut

OPEC cut oil output sharply in December before a new accord to limit supply took effect, it said on Thursday, suggesting that producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand. The supply cut was a policy U-turn after the producer alliance known as OPEC+ agreed in June 2018 to boost supply amid pressure from U.S. President Donald Trump to lower prices and cover an expected shortfall in Iranian exports. Worried by a drop in oil prices and rising supplies, OPEC and allies including Russia agreed in December to return to production cuts in 2019. OPEC Secretary General Mohammad Barkindo told Reuters that producers were seeking to avoid a build-up in the industrialized world's oil inventories above the five-year average. Read more
Huawei targeted in U.S. criminal probe for alleged theft of trade secrets
A U.S. criminal probe targeted at Huawei involves allegations that Huawei stole robot phone-testing technology from T-Mobile. The world's largest telecommunications equipment manufacturer is accused of having spied on its U.S. business partners. Federal prosecutors are investigating Huawei Technologies for allegedly stealing trade secrets from U.S. businesses and could soon issue an indictment. The action is the latest in a long list taken to fight what some in the Trump administration call China's cheating through intellectual property theft, illegal corporate subsidies and rules hampering U.S. corporations that want to sell their goods in China. Read more
Forecast for U.S. Trade Policy in 2019: Tariffs, Negotiations and Trump
Feb. 13, 2019
Join the Global Initiatives Council to hear from John G. Murphy, senior vice president for international policy, U.S. Chamber of Commerce, for an in-depth forecast of U.S. trade policy under the Trump administration in 2019. RSVP here.
Compiled by Center for Global Trade & Foreign Investment intern Changyue Ma.

For more information, contact Jasmin Sakai-Gonzalez, 213.580.7569.