Evelyn Reynolds

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    Chinese Exports Are Threatening Biden’s Industrial Agenda

    The president is increasingly hitting back with tariffs and other measures meant to restrict imports, raising tensions with Beijing.President Biden’s trillion-dollar effort to invigorate American manufacturing and speed a transition to cleaner energy sources is colliding with a surge of cheap exports from China, threatening to wipe out the investment and jobs that are central to Mr. Biden’s economic agenda.Mr. Biden is weighing new measures to protect nascent industries like electric-vehicle production and solar-panel manufacturing from Chinese competition. On Wednesday in Pittsburgh, the president called for higher tariffs on Chinese steel and aluminum products and announced a new trade investigation into China’s heavily subsidized shipbuilding industry.“I’m not looking for a fight with China,” Mr. Biden said. “I’m looking for competition — and fair competition.”Unions, manufacturing groups and some economists say the administration may need to do much more to restrict Chinese imports if it hopes to ensure that Mr. Biden’s vast industrial initiatives are not swamped by lower-cost Chinese versions of the same emerging technologies.“It is a very clear and present danger, because the industrial policy of the Biden administration is largely focused on not the traditional low-skill, low-wage manufacturing, but new, high-tech manufacturing,” said Eswar Prasad, a Cornell University economist who specializes in trade policies.“Those are precisely the areas where China has upped its own investments,” he said.Both America and China are using large government subsidies to stoke economic growth and try to dominate what they believe will be the most important global markets of this century: the technologies meant to speed a global transition away from fossil fuels in order to avert catastrophic climate change.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    A Japanese Village Wants Tourists to Come for Heat, Soot and Steel

    This past October, I found myself in Yoshida Village standing before a tatara, a giant open-top furnace that was filled with charcoal and raging with such controlled ferocity that it could have been a set piece in Lucifer’s bedroom.Deep within the belly of those orange flames sat a growing and mangled ingot that contained some exceptionally high-quality steel called tamahagane, or jewel steel, from which Japanese swords have been made for much of the country’s history. The presence of a usable ingot seemed unlikely, and if true, downright alchemic. All we had been doing for the last 20 hours was gently shaking iron sand and fresh charcoal onto the flames at timed intervals.Yoshida is nestled back in the mountains of Shimane Prefecture in central Japan, abutting the ever-turbulent Sea of Japan. For nearly 700 years, workers around Yoshida made jewel steel in places called tatara-ba (literally “furnace spots”) on a grueling schedule — one that reshaped mountains and rivers, that seared the brows of generations of sooty men shoveling charcoal in loincloths. Then, at the start of the 20th century, production all but ceased. Other methods were cheaper and more efficient.Shimane Prefecture is perhaps best known for its Izumo Shrine, about an hour’s drive from Yoshida.At the height of its steel prowess, Yoshida swelled to nearly 15,000 people. Today, the population hovers around 1,500. As with many towns in the Japanese countryside, a mix of aging population, low birthrates and loss of industry has emptied its streets.Recently, though, in a Colonial Williamsburg sort of way, 24-hour re-enactments of the old iron-smelting traditions began to be performed in Yoshida. The firings are managed by a man named Yuji Inoue, who works for Tanabe Corp., which owns the furnace. “We consider the tatara a symbol and a pillar of town development,” he told me, standing next to the flickering furnace. Mr. Inoue and Tanabe Corp. were trying to remake Yoshida into a kind of tatara village, which he hoped would create self-sufficiency, expand the population and revitalize the town.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Biden Calls for Tariffs on Chinese Steel in Pittsburgh Pitch, Vying With Trump for Votes

    President Biden on Wednesday called for major increases to some tariffs on steel and aluminum products from China, speaking to members of a national steelworkers union in Pittsburgh as he vies with former President Donald J. Trump for votes in Northern industrial states.“These are strategic and targeted actions that are going to protect American workers and ensure fair competition,” Mr. Biden told a crowd of about 100 union members at the United Steelworkers, which endorsed him last month. “Meanwhile, my predecessor and the MAGA Republicans want across-the-board tariffs on all imports, from all countries, that could badly hurt American consumers.”The Biden administration has argued that a flood of low-cost exports from China is undermining American-made products — jeopardizing Mr. Biden’s push to expand U.S. manufacturing, a central focus of his economic agenda.In his speech, Mr. Biden said he would ask the U.S. trade representative, Katherine Tai, to increase tariffs to what White House officials said would be 25 percent on certain Chinese products that now face tariffs of 7.5 percent, or none at all, pending the outcome of an administration review of the China tariffs initially imposed under Mr. Trump.“I want fair competition with China, not conflict,” Mr. Biden said, flanked by supporters and signs that read, “President Joe Biden: Standing With Workers.” “And we’re in a stronger competition to win the economic competition of the 21st century with China or anyone else because we’re investing in America, and American workers, again.”The move is another effort by Mr. Biden to put up new barriers to trade with China in some industries. It could help him compete with Mr. Trump in a “tough on China” context with swing voters, though administration officials said elections did not motivate the move. We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Risk of a global recession is minimal, IMF economist says — would take ‘a lot to derail’

    The risk of a global recession is “fairly minimal,” Pierre-Olivier Gourinchas, the International Monetary Fund’s economic counsellor, told CNBC.
    Good news include strong economic performance by the U.S. and several emerging market economies, along with inflation falling faster than expected until recently, despite weaker growth in Europe.
    However, threats to economic growth remain from escalating tensions in the Middle East.

    One of the International Monetary Fund’s top economists signals little risk of a global recession, despite the ongoing rumblings of geopolitical uncertainty.
    The Washington DC-based institute this week nudged its global growth outlook slightly higher to 3.2% in 2024 and projects the same rate in 2025.

    “When we do the risk assessment around that baseline, the chances that we would have something like a global recession is fairly minimal. At this point, it will take a lot to derail this economy. So there has been tremendous resilience in terms of growth prospects,” Pierre-Olivier Gourinchas, economic counsellor and director of the research department at the IMF, told CNBC’s Karen Tso on Tuesday at the group’s meeting in New York.
    The “set of good news” includes strong economic performance by the U.S. and several emerging market economies, along with inflation falling faster than expected until recently despite weaker growth in Europe, Gourinchas said.

    There is divergence within Europe, he added, with the IMF downgrading its growth forecasts for Germany, France and Italy, but taking them higher for Spain, Portugal, Belgium and the U.K.
    Growth forecasts since fall last year have had to factor in increased geopolitical instability, with tensions in the Middle East looming over the oil market, while Israel’s war with Palestinian militant group Hamas in the Gaza Strip led to disruptions in shipping routes in the Red Sea, by way of maritime attacks from Yemeni Houthis. That has all combined with the ongoing Russia-Ukraine war, which had its biggest wider impact on energy prices in Europe in 2022.
    Oil prices increasing significantly and persistently throughout 2024 and further disruption to shipments between Asia and Europe would fuel inflation in 2024, Gourinchas noted, which would then cause central banks to hold rates higher for longer and weigh on global growth.

    By the IMF’s estimate, a consistent rise in oil prices of around 15% in 2024 would push up global inflation by around 0.7%, though the value of the commodity has so far proved relatively stable even through the recent spike in Israel-Iran tensions.
    Despite the positivity of the latest forecast, Gita Gopinath, the IMF’s deputy managing director, told CNBC on Tuesday she assessed geopolitical risks as a “big concern.”
    “We have somehow managed the situation so far, and we’re not seeing big spillovers from the Middle East. But that is not a given. And that’s one of the big risks that we do see, the implications that could have for oil prices could be substantial. If the conflict were to escalate, become much bigger conflict,” she said. More

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    High company valuations a ‘worry,’ IMF’s capital markets chief says

    High corporate valuations could pose a significant risk to financial stability, the IMF’s director of monetary and capital markets said Tuesday.
    Market “optimism” has stretched company valuations to a point where that could become vulnerable to an economic shock, Tobias Adrian told CNBC.
    “There’s always this question, if a negative shock were to hit to what extent do we see a readjustment of pricing,” he said.

    Financial Counsellor and Director of the Monetary and Capital Markets Department Tobias Adrian hold the press briefing of the Global Financial Stability Report at the International Monetary Fund during the 2024 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group in Washington DC, United States on April 16, 2024.
    Anadolu | Anadolu | Getty Images

    High corporate valuations could pose a significant risk to financial stability as market optimism becomes untethered from fundamentals, the IMF’s director of the Monetary and Capital Markets Department said Tuesday.
    Financial markets have been on a tear for much of this year, buoyed by falling inflation and hopes of forthcoming interest rate cuts. But that “optimism” has stretched company valuations to a point where that could become vulnerable to an economic shock, Tobias Adrian said.

    “We do worry in some segments where valuations have become quite stretched,” Adrian told CNBC’s Karen Tso Tuesday.
    “It was led by tech last year, but at this point, it’s really across the board that we have seen a run up in valuations. There’s always this question, if a negative shock were to hit to what extent do we see a readjustment of pricing,” he said.
    Adrian, who was speaking on the side lines of the IMF’s Spring Meeting in Washington, said that credit markets were a particular area of concern.

    “I would point to credit markets, where spreads are very tight even though borrower fundamentals are deteriorating, at least in some segments,” he said.
    “Even riskier borrowers are able to issue new debt, and that’s at very favourable prices,” he added.

    Real estate risks

    The IMF’s financing concerns also extend to the property market, and chiefly commercial real estate, which Adrian said had grown “somewhat worrisome.”
    Medium and small-sized lenders in particular could be vulnerable to commercial real estate shocks as the sector has come under pressure from a shift to remote work and online shopping, he said.
    “There’s really a nexus between exposure of some banks, particularly middle sized and smaller banks, to commercial real estate that also tend to have [a] fragile funding base. Sort of the combination of having a risk exposure to commercial real estate, and this fragile funding that could in some scenarios, reignite some instability,” Adrian said.

    The IMF on Tuesday released its World Economic Outlook, in which it upgraded its global growth forecast slightly, saying the economy had proven “surprisingly resilient.”
    It now sees global growth at 3.2% in 2024, however it noted that downside risks remain, including regarding inflation and the increasingly uncertain path forward for interest rates.
    Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy has not seen inflation come back to target, adding to the unlikelihood that it will cut rates in the near-term.
    “We do see risks in terms of inflation persistence. Some of that has realized already, but of course we could see further surprises,” Adrian said.
    “We’ve [cited] risks as broadly balanced around the globe. But in some countries, there’s a little bit more upside and others a little bit more downside. So certainly, interest rate risk is a key factor we’re looking at,” he added. More

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    VW Workers in Tennessee Start Vote on U.A.W., Testing Union Ambitions

    The United Automobile Workers hopes contract gains at the Big Three carmakers will provide momentum in a broad effort to organize nonunion plants.Last fall the United Automobile Workers union won big pay increases from the Detroit automakers, and the impact rippled quickly through the nonunion auto plants scattered across the South.Afterward, Toyota, Honda, Volkswagen, Nissan, Hyundai and Tesla raised wages for their own hourly workers in the United States, none of whom are unionized. On production lines in Alabama, Tennessee, Kentucky and elsewhere, those pay increases have been referred to as the “U.A.W. bump.”Now 4,300 workers at Volkswagen’s plant in Chattanooga, Tenn., will test whether the union can achieve an even greater bump. On Wednesday, they begin voting on whether to join the U.A.W., and the prospects of a union victory appear high. About 70 percent of the workers pledged to vote yes before the union asked for a vote, according to the U.A.W.“I think our chances are excellent,” said Kelcey Smith, 48, who has worked in the VW plant’s paint department for a year and is a member of a committee working to build support for the U.A.W. “The energy is high. I think we are going to nail it.”Volkswagen has presented reasons it believes a union is not needed at the plant, including pay that is above average for the Chattanooga region. But it has also said it encourages all workers to vote in the election, which is to conclude on Friday, and decide for themselves. “No one will lose their job for voting for or against the union,” a company spokesman said.The stakes go beyond the Tennessee plant, Volkswagen’s only U.S. factory. A victory there would add fuel to the U.A.W.’s push to extend its presence to the more than two dozen nonunion auto plants in the United States, mostly clustered in Southern states where union resistance has been strong historically, and where right-to-work laws make it hard for unions to organize workers.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    UK inflation eases less than expected to 3.2% in March, sparking concerns of U.S.-style stickiness

    Inflation in the U.K. eased to 3.2% in March, the Office for National Statistics said on Wednesday, slightly higher than the 3.1% forecast from economists polled by Reuters.
    The core figure, excluding energy, food, alcohol and tobacco, came in at 4.2%, compared with a projection of 4.1%.

    Workers deliver drinks to a pub in the City of London, UK, on Tuesday, April 16, 2024. 
    Bloomberg | Bloomberg | Getty Images

    Inflation in the U.K. eased to 3.2% from 3.4% in March, the Office for National Statistics said on Wednesday, but a set of higher-than-expected figures spurred investors to push back bets on the timing of the first Bank of England rate cut.
    Economists polled by Reuters had expected a reading of 3.1%.

    Food prices provided the biggest downward drag on the headline rate, the ONS said, while motor fuels pushed it higher.
    The core figure, excluding energy, food, alcohol and tobacco, came in at 4.2%, compared with a projection of 4.1%. Services inflation, a key watcher for U.K. monetary policymakers, declined from 6.1% to 6% — again above the expectations of both economists and the BOE.
    This week, investors have been monitoring signs of a cooling U.K. labor market, with unemployment unexpectedly rising to 4.2% in the period between December and February. Wage growth excluding bonuses meanwhile dipped from 6.1% in January to 6% in February.
    BOE Governor Andrew Bailey on Tuesday said he saw “strong evidence” that higher interest rates were working to tame the rate of price rises, which has cooled from a peak of 11.1% in October 2022. The central bank’s own forecast is for inflation to “briefly drop” to its 2% target in the spring before increasing slightly.

    But a higher-than-expected March core print firmly above 4% is likely to increase speculation that inflation is proving stickier than recent forecasts have suggested, and the timing of the first interest rate cuts may be moving further down the line.

    Market pricing shifted on Wednesday, with a majority of investors now seeing a first cut of 25 basis points in September or November from the current rate of 5.25%, with only around a 25% likelihood of a June trim.
    Uncertainty has also been raised over the path of central banks around the world given signs of continued inflationary pressures in the U.S., with analysts questioning who will move ahead of the Federal Reserve.

    ‘The U.S. direction’

    Camille de Courcel, head of European rates strategy at BNP Paribas, on Wednesday told CNBC’s “Squawk Box Europe” that the latest data showed that the U.K. was “going in the U.S. direction” and provided a risk to her prior call for a June rate cut from the BOE.
    While labor data surprised to the downside, the ONS has cautioned its month-on-month figures may be skewed by methodological issues. That means the BOE’s Monetary Policy Committee will be far more focused on upside surprises on wage growth and services, de Courcel said.
    Some expect a sharp fall in inflation in next month’s reading due to the year-on-year impact of utility prices.
    Ruth Gregory, deputy chief U.K. economist at Capital Economics, expects the print to fall below the 2% target in April and said in a Wednesday note that the BOE may still opt for a June cut, if inflation continues to decline in the coming months. But risks of U.S.-style stickiness or inflation fueled by geopolitical tensions in the Middle East are high, she added.
    The British pound moved higher against both the U.S. dollar and euro following the announcement, trading up 0.3% against the greenback at $1.246 and 0.2% stronger against the euro at 1.172.
    U.K. Finance Minister Jeremy Hunt, who is gearing up for a national election this year, said on social media platform X that the inflation data was “welcome news.” More

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    The Global Turn Away From Free-Market Policies Worries Economists

    More countries are embracing measures meant to encourage their own security and independence, a trend that some say could slow global growth.Meeting outside Paris last week, top officials from France, Germany and Italy pledged to pursue a coordinated economic policy to counter stepped-up efforts by Washington and Beijing to protect their own homegrown businesses.The three European countries have joined the parade of others that are enthusiastically embracing industrial policies — the catchall term for a variety of measures like targeted subsidies, tax incentives, regulations and trade restrictions — meant to steer an economy.More than 2,500 industrial policies were introduced last year, roughly three times the number in 2019, according to a new study. And most were imposed by the richest, most advanced economies — many of which could previously be counted on to criticize such tactics.The measures are generally popular at home, but the trend is worrying some international leaders and economists who warn that such top-down economic interventions could end up slowing worldwide growth.The sharpened debate is sure to be on display at the economic lollapalooza that opens Wednesday in Washington — otherwise known as the annual spring meetings of the International Monetary Fund and the World Bank.From left, Adolfo Urso of Italy, Bruno Le Maire of France and Robert Habeck of Germany vowed to coordinate their economic policies.Yoan Valat/EPA, via ShutterstockWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More