Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

As Trade Wars Broaden, Europe Is the Key to Future

Politics / Protectionism Jul 10, 2018 - 11:44 PM GMT

By: Dan_Steinbock

Politics As the Trump White House has started the “biggest trade war” in history, diplomatic activity is escalating from the transatlantic axis to China and the EU – America’s next tariff target.

After the meeting of China and Central and East European (CEE) countries in Sofia, Bulgaria, Chinese Premier Li Keqiang rushed to the fifth round of intergovernmental consultations between China and Germany.


These visits have been overshadowed by the specter of the U.S. trade wars that are about to broaden over Europe. In few days, Trump will start his own European visit to attend the NATO summit in Brussels, meet with Queen Elizabeth and Prime Minister May in the UK, and to sit down with Vladimir Putin in Helsinki in mid-July.

The White House will seek to push US NATO allies to finance a greater share of the joint military expenditures, strengthen Anglo-Saxon ties against Brussels and to warm its relationship with Russia amid the new U.S.-led Cold War. Behind the façade, the Trump administration seeks to deflect attention from the impending U.S.-EU trade war.

CEE-China 16+1 cooperation will broaden             

Established in 2012, the talks between China and CEE countries have supported faster development as trade volumes have soared to $68 billion last year, which translates to 16 percent growth on a year-to-year basis.

After the CEE economies were harmed by the global financial crisis and the subsequent European debt crisis, China’s economic contribution has been vital. From Beijing’s perspective, the CEE countries, along with key Mediterranean economies, have served as China’s foothold to Europe and the early development of the One Road One Belt (OBOR) initiatives, particularly in Eastern Europe.

From the standpoint of the CEE countries, the 16+1 Framework has been economically important by boosting Eastern Europe’s role and leverage within the EU.

As Brussels’ focus has been on European sovereign debt, massive bailouts, the UK Brexit and new disintegration pressures, the CEE economies, which used to be EU priorities in the early ‘90s, have been effectively ignored.

China’s strong contribution to global economic prospects, which amounts to 30 percent of global economic growth, has supported the resilience of the CEE economies, even amid Washington’s unilateral trade wars.

Joint interests in peace and stability, trade and investment provide a deepening basis for 16+1 cooperation in the future.

Converging Chinese-German interests        

If CEE is China’s door to Eastern Europe, Germany remains the key to advanced Europe. Following the establishment of strategic partnership in 2014, Chinese-German relations have steadily broadened not just in trade and investment, but in technology and innovation.

While joint interests in the bilateral ties are increasing, the underlying environment is growing more challenging. As Chancellor Merkel seeks to sustain integrated EU, she has been under fire from Bavarian conservatives in her government, due to a challenge by Interior Minister Horst Seehofer about immigration policy.

For 60 years, Merkel’s Christian Democratic Union (CDU) has relied on its junior partner, the conservative Christian Social Union (CSU). The dispute about immigration has eroded the ties, even though Merkel contained the friction by agreeing to more hawkish immigration policy.

As German growth is slowing and German exporters have been harmed by U.S. trade friction, the political support of CDU and CSU has eroded, while the ratings social Democrats (SDP) have sunk to below 20 percent. The beneficiary of these trends is the radical right’s Alternative for Germany (AfD).

For now, Merkel’s cautious diplomacy does prevail in Berlin and Brussels, yet Trump’s trade stance will mean more headwinds in the fall.

China-EU cooperation              

While China is US tariffs’ first target; the next ones will include some of the largest trading economies in Europe, East Asia and Americas. In the process, the joint economic (trade and investment), political (international cooperation), even strategic interests (Iran, climate change) between China and the EU, and Germany, are converging.

Last week, Merkel explicitly warned President Trump not to unleash an all-out trade war after U.S. president threatened to impose steep tariffs against the EU. The White House is mulling import taxes of 20 percent on EU cars. The EU has already slapped tariffs on US products including bourbon, jeans and Harley-Davidson motorcycles, as a symbolic tit-for-tat response to the metals duties.

But that’s just a warning shot. Merkel has targeted Trump over his complaint that the EU, in particular Germany, is running a massive trade surplus against the US. These calculations are flawed because they are only based only on goods, not services in which US has a surplus against the EU. Accordingly, Merkel backs a “digital tax” that would target multinationals like Amazon, Facebook or Google, which have come under fire for shifting earnings around Europe to pay lower taxes.

Both Berlin and Brussels are beginning to face the inconvenient truth. Without a coordinated response, Trump’s “America First” doctrine will foster the risk of an all-out trade war, which would hurt global confidence, economic growth and credit.

Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/

© 2018 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules