Aurelia Butler

DETROIT (Reuters) -The United States is taking an analytical approach to its review of whether to keep tariffs on Chinese goods in place and will not base outcomes on any “breakthrough” in U.S.-China trade relations, Deputy U.S. Trade Representative Sarah Bianchi told Reuters.The Biden administration is not assuming any such breakthrough will happen, but will continue dialogue with China at various levels, Bianchi said in an interview on Saturday as a ministerial meeting of the U.S.-led Indo Pacific Economic Framework talks wrapped up.”We are conducting the review from an analytical perspective. We’re not base-casing any breakthrough in the trade relationship” with China as part of the review, Bianchi said. “We’re not assuming that that will happen.”Instead, USTR is continuing to study industry and stakeholder comments on the duties consulting with the U.S. Commerce Department, the Treasury and other agencies to determine which categories make strategic sense, she said.”We’re taking a look at what’s economically sound,” added Bianchi, who oversees USTR’s engagement in Asia.Former U.S. President Donald Trump imposed the tariffs in 2018 and 2019 on thousands of imports from China valued at some $370 billion at the time, after a “Section 301” investigation found that China was misappropriating U.S. intellectual property and coercing U.S. companies to transfer sensitive technology to do business.The duties currently range from 7.5% on many consumer goods to 25% on vehicles, industrial components, semiconductors and other electronics. Among the major categories that escaped tariffs were cellphones, laptop computers and videogame consoles.The review was required by Section 301 of the Trade Act of 1974 four years after the tariffs were first imposed and it started with initial notification steps in May 2022. Bianchi declined to say when the review would be completed, but added that this was “reasonable” by the end of 2023.Tariff exclusions on 352 import categories from China were extended by USTR at the end of 2022 for another nine months and are now set to expire on Sept. 30. Some trade experts in Washington view that date as a possible decision point in the tariff review.INFLATION ARGUMENTSAs the review got underway last May, some Biden administration officials argued in favor of lifting some of the tariffs as the Biden administration struggled to contain high inflation.U.S. Treasury Secretary Janet Yellen that eliminating “non-strategic” tariffs would reduce costs for specific goods, while Trade Representative Katherine Tai argued that the duties represent “significant leverage” over China.Bianchi noted that inflation-related discussions over the tariffs have died down as inflation has eased.Chinese Commerce Minister Wang Wentao raised objections the Section 301 tariffs as an issue of concern during a meeting with Tai in Detroit on the sidelines of an Asia Pacific Economic Cooperation trade meeting.Wang’s meeting with Tai and Commerce Secretary Gina Raimondo the day before were the first cabinet-level exchanges between Washington and Beijing in months amid a series of trade and national security setbacks, including the U.S. downing of a Chinese spy balloon that transited the continental U.S.Bianchi said it was important to the global economy for the U.S. and China to maintain a healthy dialogue, even if they disagree.”These are the two largest economies in the world and we need to be talking at different levels, even if they’re difficult conversations,” she said.”On trade right now, there aren’t many similar perspectives,” she said of the U.S. and China. “I’m not sure where it will lead, but I think the conversations will continue to be a difficult, but I think it’s important that we have them.” More

Will the pace of US hiring slow?Hiring in the US is forecast to slow in May, following months of gains that have helped make the case for the Federal Reserve to keep interest rates high.The labour department is expected to report on Friday that the US added 193,000 jobs in May, according to economists polled by Reuters, down from the 253,000 jobs added in April, but above the level added in March. The unemployment rate is expected to be up slightly at 3.5 per cent, although still hovering around 50-year lows. Average hourly earnings are expected to rise 0.3 per cent month over month, lower than the 0.5 per cent recorded in April.The data will be a crucial part of the Fed’s deliberations when it next meets in June. Although the central bank has indicated it may be ready to pause its historic cycle of rate increases, odds in the futures market are split on whether or not the it will raise interest rates one more time. Persistent inflation has kept pressure on the Fed, and a strong jobs market — which typically suggests higher wages — is one source of that inflation. Kate DuguidCan China’s manufacturing sector return to growth?With the consensus on China’s growth outlook now decidedly dim, markets will be on lookout for any signs of an economic uptick — in particular, any outperformance by the official manufacturing purchasing managers’ index on Wednesday.Despite strong spending by consumers during the long Labor Day holiday, economists polled by Bloomberg expect the gauge of factory activity to come in at 49.6 for May, up slightly from last month’s reading of 49.2 but still below the 50-point threshold that separates growth from contraction. Meanwhile, the non-manufacturing PMI, which includes the services and construction sectors, is tipped to tick down a full point to 55.3.However, analysts at Goldman Sachs say the weak readings from April may only be a blip, despite advance signs of sluggish underlying growth. They predict a rebound to 49.8 for manufacturing, just shy of ending contraction, and expect non-manufacturing activity to rise to 57 on the back of a strong rebound in travel during the holiday.Surprise strength — or weakness — could move the offshore exchange rate of the renminbi, which trades primarily in Hong Kong and is subject to fewer restrictions than the onshore rate. Last week strategists at UBS repeated their recommendation to short the offshore exchange rate against the dollar, euro and yen, noting that with “China’s May activity tracking weak, the [offshore rate] looks vulnerable to further weakness”. Hudson LockettIs eurozone core inflation still rising?A sharp fall in eurozone inflation figures for May is unlikely to provide much relief for European Central Bank policymakers, who will be more focused on the stickiness of core price pressures beyond energy and food.The headline rate of eurozone inflation is set to fall to 6.1 per cent, down from 7 per cent in the previous month, when the figures are released on Thursday, according to Goldman Sachs. However, core inflation would only dip from 5.6 per cent in April to 5.5 per cent in May, Goldman forecast.The introduction of a subsidised €49 monthly public transport ticket in Germany will only partly offset increases in holidays, air fares and other travel prices, Goldman added.Several members of the ECB governing council, including the heads of the German, French and Dutch central banks, last week said they expected to raise interest rates at least a couple more times to keep downward pressure on core price inflation.“We do not expect the drop in core inflation, if it materialises, to meet the threshold required by the ECB to pause rate hikes,” economists at BNP Paribas said in a note to clients, adding that rate-setters have said “a sustained decline in core inflation is needed to pause hiking”.Services prices — which make up almost two-thirds of core inflation — are set to continue rising close to the eurozone record rate of 5.2 per cent reached in April, BNP Paribas predicted, because of “tight labour markets and wage growth that doesn’t show any signs of abating”. Martin Arnold More

The agency, which is due to give an update on France on June 2, said a downgrade from its current “AA” rating could be triggered by a lack of reforms that it said France needed to implement to reduce the burden on spending.”There are very close discussions between Standard and Poor’s and Bruno Le Maire,” Borne told Radio J.”I think there were detailed explanations from Bruno Le Maire to Standard and Poor’s on everything we’re doing to control our public finances and I think that we act in this direction,” she said.Le Maire explained France’s reforms and its objective of cutting the country’s budget deficit to 2.7% of gross domestic product by 2027, she said.Fellow credit ratings agency Fitch cut France’s sovereign credit rating by one notch to “AA-” in April, saying a potential political deadlock and social unrest posed risks to President Emmanuel Macron’s reform agenda. More