Trump delays tariffs, is there hope for a deal?

Just now:

So, is there hope of a detente? Sure, but China “concessions” are nothing of the sort, via Xinhua:

China on Wednesday unveiled the first set of lists of U.S. goods to be excluded from the first round of additional tariffs on U.S. products.

The exemption will be effective from Sept. 17, 2019 to Sept. 16, 2020, the Customs Tariff Commission of the State Council said in a statement.

Two lists of goods will be excluded from China’s first round of tariff countermeasures against the U.S. Section 301 measures.

The first list includes 12 items and allows affected import enterprises to apply for refunds of collected duties within six months from Wednesday.

The second list includes four items that will enjoy the exemption but are not eligible for tariff refunds.

Next, the commission will continue to work on the exemption process and release subsequent lists in due course, according to the statement.

And US businesses are pulling out, via CNBC:

Some American companies in China are speeding up their move away from the mainland as increasing tariffs continue to hurt their businesses. That’s according to a survey released by the American Chamber of Commerce in Shanghai on Wednesday.

More than a quarter of the respondents – or 26.5% – said that in the past year, they have redirected investments originally planned for China to other regions. That’s an increase of 6.9 percentage points from last year, the AmCham report said, noting that technology, hardware, software and services industries had the highest level of changes in investment destination.

The research, conducted in partnership with PwC, surveyed 333 members of the American Chamber of Commerce in Shanghai. It was conducted from June 27 to July 25 — during the period when U.S. President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks, and before the latest escalation in retaliatory tariffs.

Whatever the short term trade war negotiations outcome, expect this decoupling to continue, via Reuters:

The China-U.S. trade war is souring the profit and investment outlook for U.S. companies operating in the world’s second-biggest economy, a survey by a prominent American business association showed.

The annual poll by the American Chamber of Commerce in Shanghai found that while most of its member companies remained profitable in 2018, the number reporting revenue growth fell. Projections for future revenue also dropped, highlighting the corrosive impact of the escalating tit-for-tat tariffs.

Five-year optimism sunk for the first time since 2015, when China’s stock markets nosedived and the authorities fumbled their response.

“Revenue growth projections have lowered, optimism about the future has waned, and many companies are redirecting investment originally planned for China,” AmCham said in a report on the survey published on Wednesday.

Then genie is out of the bottle long term.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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