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Good column from Greg Ip. China's import slowdown is casting a broad shadow on the global economy. Export dependent Germany has been hit by weakness in global auto demand -- and its own reluctance to stimulate.
wsj.com/articles/for-a…
wsj.com/articles/for-a…
This is an underappreciated chart --
Auto demand in China peaked in early 18. And with enormous excess capacity in the auto sector, there is less investment.
Auto demand in China peaked in early 18. And with enormous excess capacity in the auto sector, there is less investment.
If you set aside trade with the US, there has been a roughly $200b swing in China's trade balance in manufactures over the last 12-16ms, largely from weak demand. Partially from lower prices imported chips, but it still a huge swing, one with important global consequences
This all impact the US (non-petrol exports were down y/y in q2 and q3, and look poised for a sharper fall in q4. Some of that is trade war blowback, but some is the reflection of true weakness in US trading partners
Manufactured exports are only ~ 5% of US GDP, but a 5% fall is still a 25 bp drag on output
and that comes at a time when the 15 pp increase in tariffs on the $200b list (10 to 25) and the new 15 pp tariff on the $112b are taking about 20 bp of GDP out of consumers' pockets
and that comes at a time when the 15 pp increase in tariffs on the $200b list (10 to 25) and the new 15 pp tariff on the $112b are taking about 20 bp of GDP out of consumers' pockets
Apologies for reposting. Sept round of tariffs was set at 15% not the 10% I put in initially
