- I’m Malcolm Scott, international economics enterprise editor in Sydney. Today we’re looking at the latest state of play in the US-China trade war. Send us feedback and tips to ecodaily@bloomberg.net. And if you aren’t yet signed up to receive this newsletter, you can do so here.
- Federal Reserve official Neel Kashkari signaled confidence markets will remain orderly, while economists wonder about the inflation fallout.
- In China, a hobbled jobs market is impairing the resilience Beijing needs to battle it out against the US.
- House prices in London will suffer more than any other part of the UK from Trump’s trade war, real estate agents warned.
Trump’s tariff exemption on consumer electronics and semiconductors suggests US-China trade tensions may have peaked. “This is a small step by the US toward correcting its wrongful action of unilateral ‘reciprocal tariffs,’” the Chinese Ministry of Commerce said in a statement posted on its official WeChat account on Sunday. The ministry urged the US to “take a big stride in completely abolishing the wrongful action.” While Trump on Sunday downplayed the reprieve, saying “NOBODY is getting ‘off the hook,’” the move was welcomed by economists after weeks in which his tariff threats against China seemed to be ratcheting ever higher — to a whopping 145%. The reprieve announced Friday covered $100 billion of goods — more than a fifth of total US imports from China last year — according to Citigroup economists including Xiangrong Yu. Analysts noted it was a reprieve for Apple too. The exemptions suggest Beijing’s tit-for-tat strategy is “beginning to yield results,” according to Tommy Xie, head of Asia macro research at Oversea-Chinese Banking Corp, who noted China’s initial measured and restrained approach was met with “little acknowledgment” from the US. Ahead of the tariff onslaught, China’s export engines have been running hot. Exports in dollar terms far exceeded forecasts and soared 12.4% in March from a year earlier, the customs authority said Monday, reversing a decline of 3% in February. Imports shrank 4.3%, leaving a trade surplus of $103 billion last month. The latest figures suggest companies are diverting shipments to countries across Southeast Asia, with China’s exports to the region reaching the second-highest ever. Exports to Vietnam and Thailand soared to records, while sales to the US grew more than 44% from February to exceed $40 billion last month. China’s President Xi Jinping is heading to Vietnam, Malaysia and Cambodia from Monday, seeking to present China as a more stable partner than the US under Trump. His visit highlights the tricky position Southeast Asian nations face — they’ve become key routes for Chinese exports to reach the US since Trump’s tariffs in his first term. So while tariff rates may have peaked, tariff diplomacy is still in full swing. The first Group of Seven monetary policy decisions since Trump’s trade war unleashed global market turmoil may prompt diverging responses from either side of the Atlantic. While Bank of Canada officials on Wednesday could keep borrowing costs on hold to guard against the potential inflationary impact of an ongoing tariff battle with the US, the European Central Bank is now widely anticipated to reduce interest rates the following day. See here for the rest of the week’s economic events. The Best of Bloomberg Economics | - When the job market looks bleak, head to grad school. That happened after the global financial crisis, and may be happening again.
- Six years after Argentina’s bailout collapsed, the International Monetary Fund is investing billions of dollars in a similar rescue strategy.
- Despite the franc’s strength, the Swiss National Bank will probably avoid cutting its rate below zero this year.
- Australia’s two major parties revealed campaign plans, while Canada’s fiscal position is set to worsen after election promises.
- Singapore eased monetary policy settings for a second straight review, warning of “significant ramifications” from weaker global trade.
- Key rating decisions at the end of last week included upgrades for Italy and Nigeria, and Hungary pushed to the edge of junk.
Goldman Sachs economists led by Jan Hatzius have taken a look through history and academic studies to examine whether Trump’s tariffs will succeed in reviving domestic manufacturing employment. While the range of estimates is wide, studies find a 10 percentage point increase in tariff rates raises employment in protected industries by 0.2-0.4%, but that each 1 percentage point increase in tariff-driven costs lowers employment by 0.3-0.6%. “Scaling these estimates to the US economy imply a boost of just under 100k to manufacturing employment from tariff protection but a roughly 500k drag on downstream employment from input cost pressures,” the Goldman economists | 
