Aurelia Butler

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldChina is willing to engage in “positive dialogue” on trade with the US under a Donald Trump administration, senior trade officials said, a day after Beijing introduced a swath of measures to fortify its exporters ahead of anticipated higher tariffs imposed from Washington.At a press briefing on Friday, officials said Beijing would remain “steadfast” in resisting protectionist measures. They also pledged to maintain a stable exchange rate despite expectations that Trump’s policies, which include imposing 60 per cent tariffs on Chinese goods, could lead to a stronger dollar.“China and the United States share strong economic complementarities . . . China is willing to engage in positive dialogue with the US,” Wang Shouwen, international trade representative and vice-minister of commerce, said when asked about the expected Trump tariffs. “At the same time, it remains steadfast in safeguarding its sovereignty, security and development.” His comments came as Beijing on Thursday announced policies to support its exporters ahead of the start of the Trump administration in January, whose early cabinet appointments indicate it will be particularly hawkish on trade with China.The commerce ministry pledged to guide Chinese banks in channelling more credit to the export sector and help companies with foreign exchange hedging. In addition, it would “promote the development of cross-border ecommerce” and encourage agricultural exports, helping companies to “actively respond to unreasonable foreign trade restrictions”.As part of the measures, China would also “attract and facilitate cross-border exchanges of business personnel” through measures such as visa-free travel.China relies heavily on manufacturing investment and exports to boost an economy that is suffering from weak domestic demand following a prolonged property downturn. The country’s surging exports, which in dollar terms rose 12.7 per cent year on year in October, have ratcheted up tensions with trading partners from the US and the EU to developing countries. Brussels accuses Beijing of failing to do enough to stimulate domestic demand and of not removing barriers for foreign companies operating in China or exporting to the Chinese market. China’s imports declined 2.3 per cent year on year in October.Wang said China’s economy had “already demonstrated remarkable resilience” and that the previous round of tariffs initiated by the US had mainly been borne by American consumers.Some economists have speculated that China could counter Trump tariffs by allowing a depreciation of the renminbi, which would make Chinese goods more competitive in foreign exchange terms. If Trump’s tariffs and tax cuts prove to be inflationary, driving up the prices of goods in the US, that could increase the interest rate differential with China and also drive a weakening of the renminbi, they say. But Liu Ye, director of the international department of the People’s Bank of China, said at Friday’s briefing that the central bank would ensure “the renminbi exchange rate remains fundamentally stable at a reasonable and balanced level”.China’s President Xi Jinping has called for a stable exchange rate as the world’s largest exporter and manufacturer seeks to portray itself as a reliable trading partner. More

One of the promised advantages of leaving the EU was that it would allow Britain to forge its own path in the world. With the re-election of Donald Trump, charting an independent route forward became more complicated.Brexit has already left the UK adrift between American and EU trade and regulatory regimes — reluctant to tack too far one way or the other. Now the government is bracing itself for stark strategic choices on pivotal issues ranging from carbon pricing and AI regulation to trade tariffs when the president-elect enters the Oval Office in January.Ministers and officials wonder whether Trump’s return could force the UK to make a decision — either to cleave to Washington or to veer towards Brussels — or whether Britain can still attempt to chart a middle path on a range of policy flashpoints.Lord Peter Mandelson, the former Labour cabinet minister and EU trade commissioner — and a leading candidate to become the next UK ambassador to Washington — has said that the UK must look to “have our cake and eat it” when triangulating with Trump. That will mean seeking side deals with Washington in areas like digital trade and defence while continuing Labour’s current “reset” with trade and security ties in Europe. Others are less optimistic. Walking a line between being both pro-European and Atlanticist will be difficult when it comes down to matters of substance, warns Charles Grant, the director of the Centre for European Reform in London.Some content could not load. Check your internet connection or browser settings.“It seems clear that the UK government will look to walk a tightrope with the Americans; collaborating with the US on defence and lining up with the EU on trade and climate issues,” he says.But, he adds, “the danger is we don’t keep anyone happy: we do just enough with the US to create doubts in European minds that we’re not trustworthy.”Other trade experts and longtime Brussels watchers agree that the result of the US election has the potential to significantly complicate the UK prime minister’s efforts to reset relations with Brussels on a number of commerce and trade issues.Trump will be returning to the White House in the new year just as the British government is seeking to finalise its pitch to the EU on how to deepen ties on trade, energy co-operation and security matters ahead of a planned EU-UK summit in the early spring.“The big question is whether any kind of tariff exemptions or deal with the Trump administration requires a radically different approach to either regulation or trade — if the inconsistencies with the EU became too big, then it would make it difficult to get closer to the EU,” says Olivia O’Sullivan, director of the UK in the World programme at think-tank Chatham House.It is not just about trade or defence: the UK could also find itself caught between Europe and the US over how to deal with China. The government will also have to navigate complex domestic political arguments about its approach that will probably revive many of the issues around the Brexit referendum.Experts caution that there are downsides to pivoting in either direction — but also in failing to make a choice at all. As Kim Darroch, former UK ambassador to the US, warns: “If you choose to leave the world’s biggest trading bloc and drift gently around in the Atlantic — and are not sure whether you want to join an American regulatory regime for trade or the EU one — it’s going to leave you looking very isolated.”The success or failure of London’s attempts to thread the needle with Washington will depend in large part on how hard Trump’s new administration pushes for Starmer’s government to choose between dual trade regimes, according to trade experts.John Alty, the former director-general of trade policy at the UK Department for International Trade during the last Trump presidency, says that Britain’s current trade agreement with the EU in theory left the country free to do side-deals with the US without affecting UK-EU trade.The UK government would be looking to put together a package of “common interests” based around digital trade and supply-chain resilience in critical minerals. At the same time, London will be arguing to Washington that imposing economically damaging tariffs is self-defeating when it is also demanding Europe finds more money to pay for its own for defence. US demands could include some carve-out for US exporters from a UK carbon border tax on imported goods which is due to be introduced in 2027, or politically more contentious “asks”, such as requesting that the UK admit US food products such as chlorine-washed chicken or hormone-raised beef as part of an offer for a full US-UK free trade agreement.A container ship in the UK port of Felixstowe. Some UK industries could be badly affected by heavy tariffs, in particular pharmaceuticals and automotive, which are leading exporters to the US More

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The growth was higher than a median forecast of 4.6% in a Reuters poll of economists, and annual growth of 3.0% in the second quarter.On a quarter-on-quarter, seasonally adjusted basis, GDP expanded 3.2% in the July to September period, higher than both the advance estimate of 2.1% and the June quarter growth of 0.5%.The trade ministry upgraded its GDP growth forecast for 2024 to “around 3.5%” from a previous range of 2.0% to 3.0%. The ministry said it expects growth of 1.0% to 3.0% in 2025. The MAS left monetary policy settings unchanged last month in its last review of the year as inflation pressures continued to moderate and growth prospects improved.The MAS has said core inflation should ease to around 2% by the end of this year. Annual inflation was 2.8% in September. More

NEW YORK (Reuters) – U.S. stocks are extending their lead over global peers and some investors believe that dominance could grow if President-elect Donald Trump can implement his economic platform without becoming mired in a full-blown trade war or ballooning the federal deficit.The S&P 500 has gained over 24% in 2024, putting it well ahead of benchmarks in Europe, Asia and emerging markets. At 22 times expected future earnings, its premium to an MSCI index of stocks of more than 40 other countries stands at its highest in more than two decades, according to LSEG Datastream. Though U.S. stocks have outperformed their counterparts for more than a decade, the valuation gap has widened this year thanks to resilient economic growth and strong corporate earnings – particularly for the technology sector, where excitement over developments in artificial intelligence have boosted the shares of companies such as chipmaker Nvidia (NASDAQ:NVDA). Some market participants believe Trump’s agenda of tax cuts, deregulation and even tariffs can further fuel U.S. exceptionalism, outweighing worries over their potentially disruptive nature and inflationary potential. “Given the pro-growth tendencies of this new administration, I think it’s tough to fight the battle against U.S. equities, at least in 2025,” said Venu Krishna, head of U.S. equity strategy at Barclays (LON:BARC).Signs of a growing U.S. bias were evident immediately after the Nov. 5 election, when U.S. equity funds received more than $80 billion in the week following the vote while European and emerging market funds saw outflows, according to Deutsche Bank (ETR:DBKGn).Strategists at Morgan Stanley (NYSE:MS), UBS Global Wealth Management and the Wells Fargo (NYSE:WFC) Investment Institute are among those who recommend overweighting U.S. equities in portfolios or expect them to outperform next year.EARNINGS ENGINEA critical driver of U.S. strength is corporate America’s profit edge: S&P 500 company earnings are expected to rise 9.9% this year and 14.2% in 2025, according to LSEG Datastream. Companies in Europe’s Stoxx 600, by contrast, are expected to increase earnings by 1.8% this year and 8.1% in 2025.”The U.S. continues to be the geographic region of the world that generates the highest earnings growth and the most profitability,” said Michael Arone, chief investment strategist at State Street (NYSE:STT) Global Advisors. The dominant role of massive technology companies in the U.S. economy and their heavy weightings in indexes such as the S&P 500 are helping drive that growth. The five largest U.S. companies – Nvidia, Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) – have a combined market value of more than $14 trillion, compared with roughly $11 trillion for the entire STOXX 600, according to LSEG data.More broadly, the U.S. economy is expected to grow by 2.8% in 2024 and 2.2% in 2025, compared with 0.8% this year and 1.2% next year for a group of about 20 countries using the euro, according to forecasts from the International Monetary Fund.Trump’s plans to raise tariffs on imports could help the U.S. extend that advantage, despite the risk of some blowback, said Mike Mullaney, director of global markets research at Boston Partners, who favors U.S. stocks.”If Trump throws on a 10% to a 20% tariff on European goods, they’re going to get hurt more on a relative basis than we are,” Mullaney said.Republicans’ lock on power in Washington – which could make it easier for Trump to enforce his agenda – prompted Deutsche Bank’s economists to raise their 2025 U.S. growth forecasts to 2.5% from 2.2%.While tax cuts and deregulation are expected to boost growth, relatively tight margins in U.S. Congress and the administration’s sensitivity to market reactions could limit the scope of the most “extreme” policies, such as tariffs, the bank wrote on Thursday.Analysts at UBS Global Wealth Management, meanwhile, expect the S&P 500 to hit 6,600 next year, driven by advances in artificial intelligence, lower interest rates, tax cuts and deregulation. The index closed at 5,948.71 on Thursday.Still, an all-out trade war with China and other partners could hit U.S. growth and stoke inflation. A scenario in which countries retaliate against far-reaching U.S tariffs could send the S&P 500 to as low 5,100 – though global stocks would also decline, UBS said.Certain corners of the market could be particularly vulnerable to Trump’s policies: worries over plans for cutting bureaucratic excess bruised shares of government contractors last week, for example, while drugmakers fell when Trump picked vaccine skeptic Robert F. Kennedy Jr. to lead the Department of Health and Human Services.Broad tax cuts could also spark concerns about adding to U.S. debt. Deficit worries have helped drive a recent selloff in U.S. government bonds, taking the 10-year Treasury yield to a five-month high last week.At the same time, the valuation gap between the U.S. and the rest of the world could become so wide that U.S. stocks start looking expensive, or international equities become too cheap to ignore. For now, however, the long-term trend is in favor of the U.S., with the S&P 500 gaining more than 180% against a rise of nearly 50% for Europe’s STOXX over the past decade. “Momentum is a great thing,” said Colin Graham, head of multi-asset strategies at Robeco. “If you’ve got something that keeps outperforming, then investors will follow the money.” More

(Reuters) – Northvolt, the Swedish maker of battery cells for electric vehicles, said on Thursday it has filed for Chapter 11 bankruptcy protection in the U.S., dealing a blow to Europe’s hopes that its most developed battery player would reduce Western car makers’ reliance on Chinese rivals.Northvolt said it has only enough cash to support operations for about a week and said it has secured $100 million in new financing for the bankruptcy process. It said operations will continue as normal during the bankruptcy.”Northvolt’s liquidity picture has become dire,” the company said in its Chapter 11 petition, filed in U.S. Bankruptcy Court in Houston. The company, which has operations in California, has about $30 million of cash, which can support its operations for only about a week. It has $5.8 billion in debts.Northvolt, which employs around 6,600 staff across seven countries, said it expects to complete the restructuring by the first quarter of 2025.Northvolt transformed in a matter of months from Europe’s best shot at a homegrown electric-vehicle battery champion to a company struggling to stay afloat by slimming down, hobbled by production problems, the loss of a major customer and a lack of funding.Europe has been hoping that Northvolt would reduce Western car makers’ reliance on Chinese rivals such as battery maker CATL and EV and battery maker BYD (SZ:002594).Northvolt said the $100 million in a new loan is part of $245 million in financing support for the bankruptcy. Swedish truck maker Scania, a shareholder and its biggest customer, said on Thursday that it was loaning $100 million to Northvolt to support the manufacturing of electric vehicle battery cells in Skellefteå, northern Sweden.”This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” Tom Johnstone, interim chairman of Northvolt’s board, said in a statement, noting the support Northvolt has received from existing lenders and customers.As part of the restructuring, Northvolt will evaluate proposals for new money investment from strategic and financial investors, as well as existing lenders, shareholders and customers, he said.Volkswagen (ETR:VOWG_p), Northvolt’s top shareholder with a 21% stake, said it had taken note of the filing and was in close contact with the Swedish firm. It declined to comment on potential repercussions on its own business.STIFF COMPETITIONInvestment group Vargas, a co-founder of Northvolt and one of its largest shareholders, said the bankruptcy would allow the company to address financial challenges and maintain its competitive edge in producing high-performance battery cells. Handelsbanken analyst Hampus Engellau said the bankruptcy filing would give the company some short-term breathing space. Even so, he said, “This tells us that they haven’t found investors and raised the capital needed to restructure their business.”Northvolt had been discussing the possibility of filing for Chapter 11 bankruptcy protection in the United States as one of several options for survival, two sources familiar with the matter told Reuters last week.Northvolt has led a wave of European startups investing tens of billions of dollars in battery production to serve the continent’s automakers as they switch from internal-combustion engines to EVs. But EV demand is growing at a slower pace than some in the industry had projected, and competition remains stiff from China, which controls 85% of global battery-cell production, according to International Energy Agency data.At a court hearing late Thursday, U.S. Bankruptcy Judge Alfredo Perez approved some routine initial steps in Northvolt’s bankruptcy, including allowing the company to pay wages owed to employees and draw the first $51 million of the Scania loan.On Monday, Reuters reported that Northvolt had missed some in-house targets and curtailed production at its battery-cell plant in Skellefteå, underscoring the challenge of ramping up output.The company’s court filing on Thursday said it had capacity to produce 300,000 batteries a year.In October, Northvolt struck a deal that gave access to a small amount of money while talks on a bigger financing package continued, business daily DI reported.Those talks had become more difficult in recent weeks, one of the sources familiar with the Chapter 11 plan said.In recent years several Swedish companies have opted for Chapter 11 bankruptcy protection filings, such as Scandinavian airline SAS and debt collector Intrum, a process that allows management to retain control over the company and run operations.Swedish Deputy Prime Minister Ebba Busch said on social media platform X that the government continues to support the EV battery industry and hopes that the restructuring will help turn around Northvolt’s fortunes. Busch told Reuters on Tuesday that the Swedish government had no plans to take a stake in Northvolt. More

Speaking with journalists in Brasilia, minister Fernando Haddad said this year revenues have been performing as expected, but government will need to block or freeze some 5 billion reais ($859.9 million) in spending.Brazilian government has until Friday to release a bi-monthly revenue and expenditure report with updates on its budget outlook for this year.Haddad said the government will not change its primary deficit target for this year, which mandates zero deficit excluding interest payments, with a tolerance margin of 0.25 percentage points of GDP in either direction.The minister also said that government would be ready to announce a fiscal package with broad spending cut measures for the next years as of Monday, when he will attend an internal meeting to finalize the plan. Expectations for more details on the fiscal package impact have been driving Brazil’s assets in recent weeks, as investors await to see if the measures would be enough to end their worries on government’s ability to comply with its fiscal framework. ($1 = 5.8144 reais) More