Tariff Battle: Where the U.S. and Chinese Moves May Lead

The tariffs on imported aluminum and steel enacted on Friday, a day after announcing levies up to $60 billion in Chinese goods and China made its response. China decided to add tariffs on $3 billion in more than 100 American products, including pork, wine, fruits and so on to balance the loss.

Compared to these two numbers, the American industry seems would not be affected too much, but I believe that this is a warning from China. If the tariff policy is not canceled or modified, China would find more way to against it.

The article mentioned that if Chinese could not export their steel, they have to consume domestically. And because there are so many different kinds of steel for different uses, American steel industries could not satisfy all the demand. In the short term, the price would go much higher but in the long term, the American might have the chance to develop their own steel industry.

The tariff battle, however, is harmful to all the countries because of the economic globalization. The economy of one country would affect others and for protecting its own benefit, the countries would publish some policy to react but it might hurt other countries' benefits as well. This is very complicated and I'd like to see how things go in the end.

https://www.nytimes.com/2018/03/23/business/economy/china-tariffs-explain.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy&region=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=sectionfront

Fed’s Mission Improbable: Lift Unemployment—but Avoid Recession

We mentioned tradeoffs between economic outcomes earlier in the semester, and this article mentions possible tradeoffs between the goals of the Fed. Per the author, the Fed should aim to increase unemployment from 4.1% to the natural rate of 4.5% in order to combat inflation. However, doing so would most likely lead to a recession. It was interesting to note that the article mentioned that unemployment is on pace to reach 3.6% by the fourth quarter of 2019. In reality, the Fed's plan is to gradually raise interest rates so that unemployment and growth rates return to their long-run sustainable levels. In general, I felt that the author was very biased and critical of the current administration's handling of the economy. It is also evident that he fears a recession soon, as we are nearing the end of a business cycle.



https://www.wsj.com/articles/feds-mission-improbable-lift-unemploymentbut-avoid-recession-1521711004

Why Africa’s poor pay high prices

This article explains the problems faced by less developed countries regarding prices. Many people assume that richer countries have higher costs of living. However, this article shows that that is not the case. The dollar simply doesn't go as far in poorer countries because of the high prices of food. The article states that "cheaper food may boost manufacturing by making wages more competitive." This would help bring developing countries up to par in their standard of living compared to prices.

https://www.economist.com/news/middle-east-and-africa/21738911-africas-economic-paradox-why-africas-poor-pay-high-prices

Crisis in Congo

The ongoing humanitarian crisis in Congo that begin in August 2016 is predicted to be Africa's mega-crisis in 2018 with only more people uprooted and forced to leave everything behind. Not only does this displacement put a strain on Uganda's economy, with more than 34,000 refugees only in 2018- but also it has lead an increase in slum living conditions. On top of that there is also a food crisis where due to the political instability no crops can be planted nor harvested so that most people barely eat one meal a day. The shortage has only made the price of food and other basic necessities go up, with Congo's currency losing 55% of it's value in 2017. This is yet another example of how political unrest in a certain country affects the economy of the entire region.

https://www.nrc.no/opinions-all/congo-will-be-africas-mega-crisis-in-2018/

French President’s Next Target: The Railroads. Strikes Loom.

In France, the railroad system is very important for public transportation and for the people who work on the railroad. For now, the railroad system is controlled by the government, which provide great benefits to railroad workers. Emmanuel Macron, France's president, is proposing to reduce the worker's benefits in order to contain costs and improving service, which shifts the industry to treat its workers more like private-sector employees. France's prime minister said that the government has no intention of privatizing the rail system, but the state-owned rail company must be updated if it is to hold its own with the coming competition from private companies. 

https://www.nytimes.com/2018/03/21/world/europe/france-railways-strike.html?rref=collection%2Fsectioncollection%2Fworld&action=click&contentCollection=world&region=rank&module=package&version=highlights&contentPlacement=1&pgtype=sectionfront

China's powerful central bank has a new leader

China's parliament confirmed Monday that deputy governor Yi Gang has been promoted to the top job at the People's Bank of China. He replaces veteran governor Zhou Xiaochuan, who is retiring after leading China's central bank for more than 15 years. Yi, a US-educated economist who speaks English fluently -- had been deputy governor of the central bank for the last decade. He begins his first five-year term at the central bank immediately. Analysts viewed Yi's promotion as a sign of continuity for the world's second-biggest economy. Zhou's governorship saw the size of China's economy increase exponentially as well as several big moves to open up the country to more foreign investment. China's central bank -- like the US Federal Reserve -- plays a key role in the smooth running of the country's economy. Its responsibilities include setting interest rates and regulating China's huge financial sector. One of Yi's big priorities will be getting China's enormous levels of debt under control as economic growth continues to cool. Growth is expected to come in at 6.5% this year, a few notches below the 6.9% rate seen in 2017. The Chinese economy faces other immediate threats. President Donald Trump's decision to impose tariffs on imports of steel and aluminum and the impending results of a probe into alleged Chinese theft of intellectual property have prompted fears of a trade war between the world's top two economies.

http://money.cnn.com/2018/03/19/news/economy/china-new-pboc-governor/index.html

A stronger yen is bad news for Japan's inflation target

A recent article published by CNBC discussed the difficulties that Japan is facing in it's economic policy. The country's central bank aims to increase the inflation rate to 2% by fiscal year 2019, but this goal is not very likely due to current trends, according to Hiro Shirawaka, Credit Suisse's chief economist for Japan. Shirawaka stated that this inflation goal is not likely if the yen continues to strengthen. The appreciation of the yen is counter-intuitive to this desired higher inflation rate. Japan's current inflation rate is 0.9% as of January. This is relevant to the course because it shows some of the difficulties that governments face in trying to achieve certain economic goals.

Source: https://www.cnbc.com/2018/03/20/japans-inflation-rate-may-not-be-2-percent-if-yen-strengthens-credit-suisse.html

Backlash to Facebook revelations

This article deals with the ways politicians are reacting to the revelation that Cambridge Analytica stole personal date from over 50 million Facebook accounts to try to predict how people would vote and what could change how they vote. It is largely unlikely that the actions of one data firm or another were the sole factor that tipped a US Presidential election, but this news raises questions about how or if Facebook is preventing data breaches and what the ethical way to use personal data is. In the era of big data, when we're all posting our every move on Facebook, it's important to question how we think about how our information is used.

https://www.politico.com/story/2018/03/19/angry-democrats-facebook-424456

Trump keeps focusing on goods instead of services in the economy

President Trump has long been focused on the US' ability to produce goods when compared to foreign countries since his campaign began.  He has continually emphasized that the US is operating at deficits that are a bit off because he fails to focus on the service-side of the economy.  For example, just last week he said we are at a trade deficit with Canada, which is true if you look strictly at goods production, but we are actually running at a surplus when services are included.  Additionally, he states we are running at a $800 billion/year deficit, which is true if you exclude services, but that number is actually $556 billion/year.

One thing has been consistently true for President Trump, however, and that is that he wants to see manufacturing in this country, specifically cars and coal mining, to increase.  If the President had not made this concept a big idea throughout his campaign, his approach to these numbers would be a tad different.

http://www.businessinsider.com/trump-keeps-focusing-on-goods-instead-of-services-in-the-economy-2018-3