Category Archives: Business

economy and business news

Ford to Cut 7,000 Jobs, 10% of Global Staff

Ford plans to cut 7,000 jobs, or 10 percent of its global workforce, as part of a reorganization as it revamps its vehicle offerings, the company said Monday.

The reorganization will involve some layoffs and reassignments and should be complete by the end of August, a Ford spokeswoman said. Ford has been phasing out most sedan models in the United States as more consumers have opted for pickup trucks and sport utility vehicles.

The move, which began last year, will lead to 800 layoffs in North America in total, including about 500 this week, said Ford spokeswoman Marisa Bradley.

The company has yet to determine the specifics in other regions, she said.

“As we have said, Ford is undergoing an organizational redesign process helping us create a more dynamic, agile and empowered workforce, while becoming more fit as a business,” Bradley said.

“We understand this is a challenging time for our team, but these steps are necessary to position Ford for success today and yet preparing to thrive in the future.”

Ford had signaled it expected significant job cuts in April 2018 when it announced a plan to phase out several small models in North America. At the same time, the company is ramping up investment in electric cars and autonomous driving technology.

General Motors has also undertaken job cuts over the last year for similar reasons.

Shares of Ford dipped 0.4 percent to $10.25 in early trading.

 

Ford to Cut 7,000 Jobs, 10% of Global Staff

Ford plans to cut 7,000 jobs, or 10 percent of its global workforce, as part of a reorganization as it revamps its vehicle offerings, the company said Monday.

The reorganization will involve some layoffs and reassignments and should be complete by the end of August, a Ford spokeswoman said. Ford has been phasing out most sedan models in the United States as more consumers have opted for pickup trucks and sport utility vehicles.

The move, which began last year, will lead to 800 layoffs in North America in total, including about 500 this week, said Ford spokeswoman Marisa Bradley.

The company has yet to determine the specifics in other regions, she said.

“As we have said, Ford is undergoing an organizational redesign process helping us create a more dynamic, agile and empowered workforce, while becoming more fit as a business,” Bradley said.

“We understand this is a challenging time for our team, but these steps are necessary to position Ford for success today and yet preparing to thrive in the future.”

Ford had signaled it expected significant job cuts in April 2018 when it announced a plan to phase out several small models in North America. At the same time, the company is ramping up investment in electric cars and autonomous driving technology.

General Motors has also undertaken job cuts over the last year for similar reasons.

Shares of Ford dipped 0.4 percent to $10.25 in early trading.

 

Vietnam, EU Eye Trade Alternative to US

Vietnam and Europe could be swapping more pomelo fruit and Portuguese cheese soon if a new trade deal comes into effect, linking two regions that have been looking for an alternative to the trade tensions brought on by the United States.

The European Parliament is scheduled to discuss the trade deal on May 28, after years of negotiations between Vietnam and the European Union. The deal is significant not only because it facilitates exports, like tropical fruit, but also as it lays out commitments on human rights, labor unions, and protection of the environment. Critics, though, say the EU-Vietnam Free Trade Agreement would not really enforce human rights standards and would continue the offshoring of jobs that has left workers vulnerable.

For the EU, the deal is one more way to access Asia’s fast-growing economies, set a model for trading with developing countries, and hold Vietnam’s one-party state accountable on its promise to level the business playing field. 

For Vietnam, it is a chance to call itself a country open for business, with many trade deals, as well as raise quality standards to those expected by European customers. 

“It includes a lot of commitments to improve the business environment in Vietnam,” Le Thanh Liem, standing vice chair of the Ho Chi Minh City People’s Committee, said at a European Chamber of Commerce in Vietnam event.

Vietnamese officials often say that it helps to have an external factor to get difficult internal reforms over the finish line. For example it might be hard to convince conservatives to allow workers to form their own labor unions. But if there is an outside incentive, such as greater trade with the EU, that could bring conservatives on board. 

Labor unions were one concern for Europeans. Another is the loss of blue-collar jobs to Asia, including to Vietnam. European workers worry that as they take gig jobs, like food delivery, in place of their old stable jobs, there is less of a safety net through long-term employers or through tax-funded government programs. And there is one more concern raised through the trade deal:“We have some concerns about human rights in Vietnam, but that has been discussed,” Eurocham chair Nicolas Audier said at the chamber event. 

​Amnesty International reported this month that the number of Vietnam’s political prisoners jumped to 128 from 97 last year, despite the fact that Hanoi says it does not jail people for political reasons.

Some question if the EU is applying consistent standards as it moves toward the trade deal with Vietnam, even while punishing nearby Myanmar and Cambodia for human rights abuses. Brussels is pulling back its Everything But Arms scheme of preferential trade access for the two other countries, based in part on Cambodia’s crackdown on opposition politicians in the 2018 election and on Buddhist-majority Myanmar’s mass killing of the mostly Muslim Rohingya.

But both Vietnam and the EU want more trade options because a major trading partner, the United States, is turning away from the world economy. Washington pulled out of the Trans-Pacific Partnership trade deal in 2017, removing a key reason that Hanoi signed the deal, which was to get Vietnamese textile and garment companies more access to U.S. customers. Europe was also hit when Washington slapped tariffs on foreign steel and aluminum in 2018, and now it is threatening more import duties on European cars. 

So the EU and Vietnam are still working on their trade deal, and it is reflected in Prime Minister Nguyen Xuan Phuc’s schedule. He paid a visit to EU member states Romania and the Czech Republic in April, then hosted a state visit from Romania in May. Lobbying for the deal continued as he welcomed the Swedish crown princess this month, and he will return the courtesy, with the next trip on his calendar planned for Stockholm. 

Huawei Founder Sees Little Effect From US Sanctions

Huawei Technologies’ founder and chief executive said Saturday that the growth of the Chinese tech giant “may slow, but only slightly,” because of recent U.S. restrictions.  

 

In remarks to the Japanese press and reported by Nikkei Asian Review, Ren Zhengfei reiterated that the Chinese telecom equipment maker had not violated any law. 

“It is expected that Huawei’s growth may slow, but only slightly,” Ren said in his first official comments after the U.S. restrictions, adding that the company’s annual revenue growth might undershoot 20%.  

 

On Thursday, Washington put Huawei, one of China’s biggest and most successful companies, on a trade blacklist that could make it extremely difficult for Huawei to do business with U.S. companies. China slammed the decision, saying it would take steps to protect its companies. 

Trade, security issues

 

The developments surrounding Huawei come at a time of trade tensions between Washington and Beijing and amid concerns from the United States that Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied. 

 

A similar U.S. ban on China’s ZTE Corp. had almost crippled business for the smaller Huawei rival early last year before the curb was lifted. 

 

The U.S. Commerce Department said Friday that it might soon scale back restrictions on Huawei. 

 

Ren said the company was prepared for such a step and that Huawei would be “fine” even if U.S. smartphone chipmaker Qualcomm Inc. and other American suppliers would not sell chips to the company. 

 

Huawei’s chip arm HiSilicon said Friday that it had long been prepared for the possibility of being denied U.S. chips and technology, and that it was able to ensure a steady supply of most products. 

 

The Huawei founder said that the company would not be taking instructions from the U.S. government. 

 

“We will not change our management at the request of the U.S. or accept monitoring, as ZTE has done,” he said.

In January, U.S. prosecutors unsealed an indictment accusing the Chinese company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system. 

 

Ren’s daughter, Huawei Chief Financial Officer Meng Wanzhou, was arrested in Canada in December in connection with the indictment. Meng, who was released on bail, remains in Vancouver and is fighting extradition. She has maintained her innocence.  

 

Ren has previously said his daughter’s arrest was politically motivated.

Huawei Founder Sees Little Effect From US Sanctions

Huawei Technologies’ founder and chief executive said Saturday that the growth of the Chinese tech giant “may slow, but only slightly,” because of recent U.S. restrictions.  

 

In remarks to the Japanese press and reported by Nikkei Asian Review, Ren Zhengfei reiterated that the Chinese telecom equipment maker had not violated any law. 

“It is expected that Huawei’s growth may slow, but only slightly,” Ren said in his first official comments after the U.S. restrictions, adding that the company’s annual revenue growth might undershoot 20%.  

 

On Thursday, Washington put Huawei, one of China’s biggest and most successful companies, on a trade blacklist that could make it extremely difficult for Huawei to do business with U.S. companies. China slammed the decision, saying it would take steps to protect its companies. 

Trade, security issues

 

The developments surrounding Huawei come at a time of trade tensions between Washington and Beijing and amid concerns from the United States that Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied. 

 

A similar U.S. ban on China’s ZTE Corp. had almost crippled business for the smaller Huawei rival early last year before the curb was lifted. 

 

The U.S. Commerce Department said Friday that it might soon scale back restrictions on Huawei. 

 

Ren said the company was prepared for such a step and that Huawei would be “fine” even if U.S. smartphone chipmaker Qualcomm Inc. and other American suppliers would not sell chips to the company. 

 

Huawei’s chip arm HiSilicon said Friday that it had long been prepared for the possibility of being denied U.S. chips and technology, and that it was able to ensure a steady supply of most products. 

 

The Huawei founder said that the company would not be taking instructions from the U.S. government. 

 

“We will not change our management at the request of the U.S. or accept monitoring, as ZTE has done,” he said.

In January, U.S. prosecutors unsealed an indictment accusing the Chinese company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system. 

 

Ren’s daughter, Huawei Chief Financial Officer Meng Wanzhou, was arrested in Canada in December in connection with the indictment. Meng, who was released on bail, remains in Vancouver and is fighting extradition. She has maintained her innocence.  

 

Ren has previously said his daughter’s arrest was politically motivated.

China’s Top Diplomat Calls for US Restraint on Trade, Iran 

Senior Chinese diplomat Wang Yi told U.S. Secretary of State Mike Pompeo on Saturday that recent U.S. words and actions had harmed the interests of China and its enterprises, and that Washington should show restraint, China’s Foreign Ministry said. 

 

Speaking to Pompeo by telephone, Wang said the United States should not go “too far” in the current trade dispute between the two sides, adding that China was still willing to resolve differences through negotiations but that the nations should be on an equal footing. 

 

On Iran, Wang said China hoped all parties would exercise restraint and act with caution to avoid escalating tensions. U.S. State Department spokeswoman Morgan Ortagus said in a statement that Pompeo spoke with Wang and discussed bilateral issues and U.S. concerns about Iran, but she gave no other details. 

 

Tensions between Washington and Tehran have increased in recent days, raising concerns about a potential U.S.-Iran conflict. Earlier this week the United States pulled some diplomatic staff from its Baghdad embassy following attacks on oil tankers in the Persian Gulf. 

Harder line

 

China struck a more aggressive tone in its trade war with the United States on Friday, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course. 

 

The tough talk capped a week that saw Beijing unveil fresh retaliatory tariffs, U.S. officials accuse China of backtracking on promises made during months of talks, and the Trump administration level a potentially crippling blow against one of China’s biggest and most successful companies. The United States announced on Thursday it was putting Huawei Technologies Co. Ltd., the world’s largest telecom equipment maker, on a blacklist that could make it extremely hard to do business with U.S. companies.  

 

The U.S. Commerce Department then said on Friday that it might soon scale back restrictions on Huawei. It said it was considering issuing a temporary general license to “prevent the interruption of existing network operations and equipment.” 

 

Potential beneficiaries of this license could, for example, include telecom providers in thinly populated parts of U.S. states such as Wyoming and Oregon that purchased network equipment from Huawei in recent years. 

 

On Friday, Chinese Foreign Ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more trade negotiations, said China always encouraged resolving disputes with the United States through dialogue and consultations.

China’s Top Diplomat Calls for US Restraint on Trade, Iran 

Senior Chinese diplomat Wang Yi told U.S. Secretary of State Mike Pompeo on Saturday that recent U.S. words and actions had harmed the interests of China and its enterprises, and that Washington should show restraint, China’s Foreign Ministry said. 

 

Speaking to Pompeo by telephone, Wang said the United States should not go “too far” in the current trade dispute between the two sides, adding that China was still willing to resolve differences through negotiations but that the nations should be on an equal footing. 

 

On Iran, Wang said China hoped all parties would exercise restraint and act with caution to avoid escalating tensions. U.S. State Department spokeswoman Morgan Ortagus said in a statement that Pompeo spoke with Wang and discussed bilateral issues and U.S. concerns about Iran, but she gave no other details. 

 

Tensions between Washington and Tehran have increased in recent days, raising concerns about a potential U.S.-Iran conflict. Earlier this week the United States pulled some diplomatic staff from its Baghdad embassy following attacks on oil tankers in the Persian Gulf. 

Harder line

 

China struck a more aggressive tone in its trade war with the United States on Friday, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course. 

 

The tough talk capped a week that saw Beijing unveil fresh retaliatory tariffs, U.S. officials accuse China of backtracking on promises made during months of talks, and the Trump administration level a potentially crippling blow against one of China’s biggest and most successful companies. The United States announced on Thursday it was putting Huawei Technologies Co. Ltd., the world’s largest telecom equipment maker, on a blacklist that could make it extremely hard to do business with U.S. companies.  

 

The U.S. Commerce Department then said on Friday that it might soon scale back restrictions on Huawei. It said it was considering issuing a temporary general license to “prevent the interruption of existing network operations and equipment.” 

 

Potential beneficiaries of this license could, for example, include telecom providers in thinly populated parts of U.S. states such as Wyoming and Oregon that purchased network equipment from Huawei in recent years. 

 

On Friday, Chinese Foreign Ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more trade negotiations, said China always encouraged resolving disputes with the United States through dialogue and consultations.

US Warns Airliners Flying in Persian Gulf Amid Iran Tensions

U.S. diplomats warned Saturday that commercial airliners flying over the wider Persian Gulf faced a risk of being “misidentified” amid heightened tensions between the U.S. and Iran.

The warning relayed by U.S. diplomatic posts from the Federal Aviation Administration underlined the risks the current tensions pose to a region crucial to global air travel. It also came as Lloyd’s of London warned of increasing risks to maritime shipping in the region.

 

Concerns about a possible conflict have flared since the White House ordered warships and bombers to the region to counter an alleged, unexplained threat from Iran that has seen America order nonessential diplomatic staff out of Iraq. President Donald Trump since has sought to soften his tone.

 

Meanwhile, authorities allege that a sabotage operation targeted four oil tankers off the coast of the United Arab Emirates, and Iran-aligned rebels in Yemen claimed responsibility for a drone attack on a crucial Saudi oil pipeline. Saudi Arabia directly blamed Iran for the drone assault, and a local newspaper linked to the al-Saud royal family called on Thursday for America to launch “surgical strikes” on Tehran.

 

This all takes root in Trump’s decision last year to withdraw the U.S. from the 2015 nuclear accord between Iran and world powers and impose wide-reaching sanctions. Iran just announced it would begin backing away from terms of the deal, setting a 60-day deadline for Europe to come up with new terms or it would begin enriching uranium closer to weapons-grade levels. Tehran long has insisted it does not seek nuclear weapons, though the West fears its program could allow it to build atomic bombs.

 

The order relayed Saturday by U.S. diplomats in Kuwait and the UAE came from an FAA Notice to Airmen published late Thursday in the U.S. It said that all commercial aircraft flying over the waters of Persian Gulf and the Gulf of Oman needed to be aware of “heightened military activities and increased political tension.”

 

This presents “an increasing inadvertent risk to U.S. civil aviation operations due to the potential for miscalculation or misidentification,” the warning said. It also said aircraft could experience interference with its navigation instruments and communications jamming “with little to no warning.”

 

The Persian Gulf has become a major gateway for East-West travel in the aviation industry. Dubai International Airport in the United Arab Emirates, home to Emirates, is the world’s busiest for international travel, while long-haul carriers Etihad and Qatar Airways also operate here.

 

In a statement, Emirates said it was aware of the notice and in touch with authorities worldwide, but “at this time there are no changes to our flight operations.”

 

Qatar Airways similarly said it was aware of the notice and its operations were unaffected.

 

Etihad, as well as Oman Air, did not respond to a request for comment Saturday about the warning.

 

The warning appeared rooted in what happened 30 years ago after Operation Praying Mantis, a daylong naval battle in the Persian Gulf between American forces and Iran during the country’s long 1980s war with Iraq. On July 3, 1988, the USS Vincennes chased Iranian speedboats that allegedly opened fire on a helicopter into Iranian territorial waters, then mistook an Iran Air heading to Dubai for an Iranian F-14. The Vincennes fired two missiles at the airplane, killing all aboard the flight.

 

Meanwhile, Lloyd’s Market Association Joint War Committee added the Persian Gulf, the Gulf of Oman and the United Arab Emirates on Friday to its list of areas posing higher risk to insurers. It also expanded its list to include the Saudi coast as a risk area.

 

The USS Abraham Lincoln and its carrier strike group have yet to reach the Strait of Hormuz, the narrow mouth of the Persian Gulf through which a third of all oil traded at sea passes. A Revolutionary Guard deputy has warned that any armed conflict would affect the global energy market. Iran long has threatened to be able to shut off the strait.

 

Benchmark Brent crude now stands around $72 a barrel.

 

US Warns Airliners Flying in Persian Gulf Amid Iran Tensions

U.S. diplomats warned Saturday that commercial airliners flying over the wider Persian Gulf faced a risk of being “misidentified” amid heightened tensions between the U.S. and Iran.

The warning relayed by U.S. diplomatic posts from the Federal Aviation Administration underlined the risks the current tensions pose to a region crucial to global air travel. It also came as Lloyd’s of London warned of increasing risks to maritime shipping in the region.

 

Concerns about a possible conflict have flared since the White House ordered warships and bombers to the region to counter an alleged, unexplained threat from Iran that has seen America order nonessential diplomatic staff out of Iraq. President Donald Trump since has sought to soften his tone.

 

Meanwhile, authorities allege that a sabotage operation targeted four oil tankers off the coast of the United Arab Emirates, and Iran-aligned rebels in Yemen claimed responsibility for a drone attack on a crucial Saudi oil pipeline. Saudi Arabia directly blamed Iran for the drone assault, and a local newspaper linked to the al-Saud royal family called on Thursday for America to launch “surgical strikes” on Tehran.

 

This all takes root in Trump’s decision last year to withdraw the U.S. from the 2015 nuclear accord between Iran and world powers and impose wide-reaching sanctions. Iran just announced it would begin backing away from terms of the deal, setting a 60-day deadline for Europe to come up with new terms or it would begin enriching uranium closer to weapons-grade levels. Tehran long has insisted it does not seek nuclear weapons, though the West fears its program could allow it to build atomic bombs.

 

The order relayed Saturday by U.S. diplomats in Kuwait and the UAE came from an FAA Notice to Airmen published late Thursday in the U.S. It said that all commercial aircraft flying over the waters of Persian Gulf and the Gulf of Oman needed to be aware of “heightened military activities and increased political tension.”

 

This presents “an increasing inadvertent risk to U.S. civil aviation operations due to the potential for miscalculation or misidentification,” the warning said. It also said aircraft could experience interference with its navigation instruments and communications jamming “with little to no warning.”

 

The Persian Gulf has become a major gateway for East-West travel in the aviation industry. Dubai International Airport in the United Arab Emirates, home to Emirates, is the world’s busiest for international travel, while long-haul carriers Etihad and Qatar Airways also operate here.

 

In a statement, Emirates said it was aware of the notice and in touch with authorities worldwide, but “at this time there are no changes to our flight operations.”

 

Qatar Airways similarly said it was aware of the notice and its operations were unaffected.

 

Etihad, as well as Oman Air, did not respond to a request for comment Saturday about the warning.

 

The warning appeared rooted in what happened 30 years ago after Operation Praying Mantis, a daylong naval battle in the Persian Gulf between American forces and Iran during the country’s long 1980s war with Iraq. On July 3, 1988, the USS Vincennes chased Iranian speedboats that allegedly opened fire on a helicopter into Iranian territorial waters, then mistook an Iran Air heading to Dubai for an Iranian F-14. The Vincennes fired two missiles at the airplane, killing all aboard the flight.

 

Meanwhile, Lloyd’s Market Association Joint War Committee added the Persian Gulf, the Gulf of Oman and the United Arab Emirates on Friday to its list of areas posing higher risk to insurers. It also expanded its list to include the Saudi coast as a risk area.

 

The USS Abraham Lincoln and its carrier strike group have yet to reach the Strait of Hormuz, the narrow mouth of the Persian Gulf through which a third of all oil traded at sea passes. A Revolutionary Guard deputy has warned that any armed conflict would affect the global energy market. Iran long has threatened to be able to shut off the strait.

 

Benchmark Brent crude now stands around $72 a barrel.

 

US Says It May Scale Back Some Huawei Trade Restrictions

The U.S. Commerce Department said Friday it may soon scale back restrictions on Huawei Technologies after this week’s blacklisting would have made it nearly impossible for the Chinese company to service its existing customers.

The Commerce Department, which had effectively halted Huawei’s ability to buy American-made parts and components, is considering issuing a temporary general license to “prevent the interruption of existing network operations and equipment,” a spokeswoman said.

Potential beneficiaries of the license could, for example, include internet access and mobile phone service providers in thinly populated places such as Wyoming and eastern Oregon that purchased network equipment from Huawei in recent years.

Temporary license

In effect, the Commerce Department would allow Huawei to purchase U.S. goods so it can help existing customers maintain the reliability of networks and equipment, but the Chinese firm still would not be allowed to buy American parts and components to manufacture new products.

The potential rule roll back suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences.

The blacklisting, officially known as placing Huawei on the Commerce Department’s entity list, was one or two efforts by the Trump administration this week allegedly made in an attempt to thwart national security risks. In an executive order, President Donald Trump also effectively barred the use of its equipment in U.S. telecom networks.

The United States believes Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.

Aggressive trade talks tone

The latest Commerce move comes as China has struck a more aggressive tone in its trade war with the United States, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course.

A spokesman for Huawei, the world’s largest telecommunications equipment maker, did not immediately respond to a request for comment.

Out of $70 billion Huawei spent buying components in 2018, about $11 billion went to U.S. firms including Qualcomm, Intel Corp and Micron Technology Inc.

If the Commerce Department issues the license, U.S. suppliers would still need separate licenses to conduct new business with Huawei, which would be extremely difficult to obtain, the spokeswoman said.

The temporary general license would last for 90 days, she said, and would be posted in the Federal Register, just as the rule adding Huawei to the entity list will be published in the government publication Tuesday.

“The goal is to prevent collateral harm on non-Huawei entities that use their equipment,” said Washington lawyer Kevin Wolf, a former Commerce Department official.

The listing

The entity listing bans Huawei and 68 affiliates in 26 countries from buying American-made goods and technology without licenses that would likely be denied.

The entities list identifies companies believed to be involved in activities contrary to the national security or foreign policy interests of the United States.

In a final rule posted Thursday, the government tied Huawei’s entity listing to a criminal case pending against the company in Brooklyn, New York.

US indictment 

U.S. prosecutors unsealed the indictment in January accusing the company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system.

Huawei Chief Executive Officer Meng Wanzhou, daughter of the company’s founder, was arrested in Canada in December in connection with the indictment, a move that has led to a three-way diplomatic crisis involving the U.S., China and Canada.

Meng, who was released on bail, remains in Vancouver, and is fighting extradition. She has maintained her innocence, and Huawei has entered a plea of not guilty in New York.

Trump injected other considerations into the criminal case after Meng’s arrest when he told Reuters he would intervene if it helped close a trade deal.

US Says It May Scale Back Some Huawei Trade Restrictions

The U.S. Commerce Department said Friday it may soon scale back restrictions on Huawei Technologies after this week’s blacklisting would have made it nearly impossible for the Chinese company to service its existing customers.

The Commerce Department, which had effectively halted Huawei’s ability to buy American-made parts and components, is considering issuing a temporary general license to “prevent the interruption of existing network operations and equipment,” a spokeswoman said.

Potential beneficiaries of the license could, for example, include internet access and mobile phone service providers in thinly populated places such as Wyoming and eastern Oregon that purchased network equipment from Huawei in recent years.

Temporary license

In effect, the Commerce Department would allow Huawei to purchase U.S. goods so it can help existing customers maintain the reliability of networks and equipment, but the Chinese firm still would not be allowed to buy American parts and components to manufacture new products.

The potential rule roll back suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences.

The blacklisting, officially known as placing Huawei on the Commerce Department’s entity list, was one or two efforts by the Trump administration this week allegedly made in an attempt to thwart national security risks. In an executive order, President Donald Trump also effectively barred the use of its equipment in U.S. telecom networks.

The United States believes Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.

Aggressive trade talks tone

The latest Commerce move comes as China has struck a more aggressive tone in its trade war with the United States, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course.

A spokesman for Huawei, the world’s largest telecommunications equipment maker, did not immediately respond to a request for comment.

Out of $70 billion Huawei spent buying components in 2018, about $11 billion went to U.S. firms including Qualcomm, Intel Corp and Micron Technology Inc.

If the Commerce Department issues the license, U.S. suppliers would still need separate licenses to conduct new business with Huawei, which would be extremely difficult to obtain, the spokeswoman said.

The temporary general license would last for 90 days, she said, and would be posted in the Federal Register, just as the rule adding Huawei to the entity list will be published in the government publication Tuesday.

“The goal is to prevent collateral harm on non-Huawei entities that use their equipment,” said Washington lawyer Kevin Wolf, a former Commerce Department official.

The listing

The entity listing bans Huawei and 68 affiliates in 26 countries from buying American-made goods and technology without licenses that would likely be denied.

The entities list identifies companies believed to be involved in activities contrary to the national security or foreign policy interests of the United States.

In a final rule posted Thursday, the government tied Huawei’s entity listing to a criminal case pending against the company in Brooklyn, New York.

US indictment 

U.S. prosecutors unsealed the indictment in January accusing the company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system.

Huawei Chief Executive Officer Meng Wanzhou, daughter of the company’s founder, was arrested in Canada in December in connection with the indictment, a move that has led to a three-way diplomatic crisis involving the U.S., China and Canada.

Meng, who was released on bail, remains in Vancouver, and is fighting extradition. She has maintained her innocence, and Huawei has entered a plea of not guilty in New York.

Trump injected other considerations into the criminal case after Meng’s arrest when he told Reuters he would intervene if it helped close a trade deal.

After Huawei Blow, China Says US Must Show Sincerity for Talks

The United States must show sincerity if it is to hold meaningful trade talks, China said on Friday, after U.S. President Donald Trump dramatically raised

the stakes with a potentially devastating blow to Chinese tech giant Huawei.

China has yet to say whether or how it will retaliate against the latest escalation in trade tension, although state media has taken an increasingly strident tone, with the ruling Communist Party’s People’s Daily publishing a front-page commentary that evoked the patriotic spirit of past wars.

China’s currency slid to its weakest in almost five months, although losses were capped after sources told Reuters that the central bank would ensure the yuan did not weaken past the key 7-per-dollar level in the immediate term.

The world’s two largest economies are locked in an increasingly acrimonious trade dispute that has seen them level escalating tariffs on each other’s imports in the midst of negotiations, adding to fears about risks to global growth and knocking financial markets.

Foreign ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more U.S.-China trade talks, said China always encouraged resolving disputes between the two countries with dialog and consultations.

“But because of certain things the U.S. side has done during the previous China-U.S. trade consultations, we believe if there is meaning for these talks, there must be a show of sincerity,” he told a daily news briefing.

The United States should observe the principles of mutual respect, equality and mutual benefit, and they must also keep their word, Lu said, without elaborating.

On Thursday, Washington put telecoms equipment maker Huawei Technologies Co Ltd, one of China’s biggest and most successful companies, on a blacklist that could make it extremely difficult for the telecom giant to do business with U.S. companies.

That followed Trump’s decision on May 5 to increase tariffs on $200 billion worth of Chinese imports, a major escalation after the two sides appeared to have been close to reaching a deal in negotiations to end their trade battle.

‘Wheel of destiny’

China can be expected to make preparations for a longer-term trade war with the United States, said a Chinese government official with knowledge of the situation.

“Indeed, this is an important moment, but not an existential, live-or-die moment,” the official said.

“In the short term, the trade situation between China and the United States will be severe, and there will be challenges. Neither will it be smooth in the long run. This will spur China to make adequate preparations in the long term.”

The impact of trade friction on China’s economy is “controllable,” the state planner said on Friday, pledging to take countermeasures as needed, Meng Wei, a spokeswoman for the National Development and Reform Committee (NDRC), told a media briefing.

The South China Morning Post, citing an unidentified source, reported that a senior member of China’s ruling Communist Party said the trade war with the United States could reduce China’s 2019 growth by 1 percentage point in the worst-case scenario.

Wang Yang, the fourth-most senior member of the Communist Party’s seven-member Standing Committee, the top decision-making body, told a delegation of Taiwan businessmen on Thursday that the trade war would have an impact but would not lead to any structural changes, the paper said, citing an unidentified source who was at the meeting.

One company that says it has been making preparations is Huawei’s Hisilicon unit, which purchases U.S. semiconductors for its parent.

Its president told staff in a letter on Friday that the company had been secretly developing back-up products for years in case Huawei was one day unable to obtain the advanced chips and technology it buys from the United States.

“Today, the wheel of destiny has turned and we have arrived at this extreme and dark moment, as a super-nation ruthlessly disrupts the world’s technology and industry system,” the company president said in the letter.

The letter was widely shared on Chinese social media, gaining 180 million impressions in the few hours after it was published on the Weibo microblogging site.

“Go Huawei! Our country’s people will always support you,” wrote one Weibo user after reading the letter.

Trade Tensions Seen Tightening Job Market for Chinese Graduates

A record number of 8.34 million university graduates are set to enter the Chinese job market this summer amid escalating trade tensions between Washington and Beijing.

Observers say that as China’s export-dependent economy braces for more hits from tariff hikes, which U.S. President Donald Trump recently imposed, the country’s job markets will be tighter for everyone including fresh graduates.

And the impact of a job mismatch among college graduates has long weighed on their actual employment rate at only 52% this year, according to a recent survey.

That means more than 4 million graduates will soon join the ranks of those unemployed, although many of them may opt to pursue higher education, the survey found.

Tightening job market

“Graduate employment has always been problematic in China. Given the current situation with the trade war, I think we should expect it to be even more so this year,” said Geoffrey Crothall, spokesperson at China Labor Bulletin.

“And there’s always been a mismatch between the expectations of graduates, the reality of the job markets and particularly the expectations of employers,” he added.

Graduates will either take longer to find a job or settle with one that has lower pay or poor career prospects, Crothall said.

Making matters worse, the number of job opportunities in China is on the wane as China tries to move away from labor-intensive industries, said Wang Zhangcheng, head of the Labor Economics Institute at the Zhongnan University of Economics and Law.

“The transformation of industrial structure and the U.S.-China trade war [is making the situation worse]. Also, China’s economy no longer grows at a fast pace. Instead, it has matured with mid- to low-paced growths. Under such circumstances, the demand for labor has declined,” Wang said.

“Plus, many jobs have been replaced by robots as a result of the development of artificial intelligence in the past two years. That surely adds pressure on job seekers,” he added.

Fewer jobs, more seekers

A recent report by Renmin University of China (RUC) and career platform Zhaopin.com found that the number of job seekers in China grew 31% year-on-year in the first quarter – the highest growth in workers since 2011 — while the number of job vacancies shrank by 11% at the same time.

China’s job market prosperity index has dropped to a record low since 2014, it concluded.

However, the latest available state statistics paint a slightly different picture.

Official data showed that China’s surveyed unemployment rate in urban areas stood at 5.2% in March, down 0.1 percentage points from February.

Analysts described the country’s job markets as “stable overall” although the surveyed unemployment rate in 31 major cities went up 0.1 percentage points month-on-month, to 5.1% in March – the highest since late 2016.

Still, China’s State Council has made “saving jobs” one of its top policy priorities since late last year, offering incentives for firms with no or few layoffs and subsidies for internships or on-the-job training.

And college graduates remain a focal point of the council’s employment stabilization plan, along with migrants and laid-off workers.

Distorted graduate employment

China used to boast a graduate employment rate of more than 90% as universities rushed graduates to sign so-called “tripartite employment agreements” with potential employers.

Any refusal may risk their chances of thesis defense or diplomas.

Such agreements are nonbinding on the employers to offer jobs, but distort the overall graduate employment rate, which has allowed universities to attract new students – a fraud that the Ministry of Education now forbids.

In a recent notice, the ministry has disallowed universities from withholding graduates’ degree certificates if they refuse to sign such agreements.

In spite of the ban, graduates still complain about “being forcefully employed.”

On Weibo, China’s Twitter-like microblogging platform, one user wrote, “Our school still forces you to sign the agreements. The career adviser calls every day, pulling a long face.”

Another student from Rizhao Polytechnic in Shandong province noted, “Those who have signed the agreements have completed their thesis defense while many of us who haven’t signed the agreements can do nothing but wait.”

One user urged that unless the government writes the ban into law and imposes penalties, no universities would comply.

Job mismatch

Another cause of concern for graduate employment is the long-standing mismatch between the knowledge and skills students have acquired from years of studies in universities, and the private sector’s actual job requirements, professor Wang said.

Given the shifts of production paradigms and “widening structural gaps in labor forces allocations, many of our universities have set up professional courses which may not keep up with the changing [requirements] of the labor markets. That leads to the scenario that many graduates may not find the right career fit for their skills,” the professor said.

As a solution, the education ministry has encouraged universities to focus on fundamentals by providing multifaceted cultivation of talents, so graduates leaving school will meet what different jobs require.

South Korea Waits Out US-China Trade War

Juhyun Lee contributed to this report.

SEOUL — As U.S. President Donald Trump intensifies his trade battle with China, one of the hardest-hit countries could be South Korea.

Asia’s fourth-largest economy, South Korea is especially vulnerable to the tariff war because of its reliance on foreign trade — in particular, exports to its two biggest trading partners: China and the United States.

After U.S.-China trade talks broke down, Trump last week raised tariffs on $200 billion worth of Chinese imports, and threatened to do so with $300 billion more. China retaliated with tariffs on $60 billion of U.S. goods.

The trade war escalation, which rattled markets and threatened to hold back global growth, comes at an especially bad time for South Korea, whose economy unexpectedly contracted in the first quarter.

“South Korea is particularly vulnerable,” says Xu Xiao Chun, an economist who monitors South Korea for Moody’s Analytics. “It’s not inconceivable that you could see a second consecutive quarter of contraction of GDP, which would make it a technical recession.”

Trade war exacerbates tech woes

As the world’s leading producer of memory chips that go into consumer electronics, such as cellphones and computers, South Korea benefited from years of rapid and consistent growth in the global smartphone market.

But global demand for smartphones has plateaued. That, combined with a slowdown in China and sluggish global growth, has hurt South Korea’s export-driven economy.

In April, South Korea’s exports declined for the fifth consecutive month, falling 2% compared to the same period a year earlier.

“South Korea’s economy was already going down the wrong path… but the latest escalation in the trade war really puts a spanner (obstacle) in the works,” Xu said.

South Korea was always likely to be hurt by the U.S.-China trade war just by virtue of its proximity to China, its biggest trading partner and top export destination.

South Korea’s exports to China could be cut by about $1.3 billion a year, said An Sung-bae with the state-run Korea Institute for International Economic Policy.

But the U.S.-China tariffs also pose a more specific threat to South Korea’s crucial semiconductor industry.

Here’s how it works:

South Korea sends semiconductors to China, where they are placed into smartphones and other electronics. China then ships many of those assembled products to the United States.

Trump’s tariffs could drastically raise the price of those electronics. For example, the cost of an iPhone XS could go up by around $160 if Trump follows through on all his tariff threats, one analyst at Morgan Stanley estimated.

Those higher prices would result in fewer shipments of electronics from China to the United States. Which means South Korea would be selling a lot fewer semiconductors to China.

That could put a major dent in South Korea’s economy, since semiconductors make up nearly half of its total shipments to China.

“Companies that mainly target the Chinese market will suffer… and the South Korean export business relies heavily on the Chinese market,” said Mun Byung-Ki, a senior researcher at the Korea International Trade Association.

A bright spot?

But some analysts say the situation may not be that dire. One reason: even if South Korean exports to China decline, it may make up the gap by shipping more products to the United States — a situation that could potentially provide a major boom for South Korea’s tech industry.

Alex Holmes, a Singapore-based analyst at Capital Economics, says that already may be happening. Though South Korea’s overall export numbers are suffering, its shipments to the United States are growing, he says.

That’s particularly the case for Korean electronics that fall under U.S. tariffs. Those tariffed goods have well out-performed non-tariffed items, Holmes says, “which suggests that U.S. companies have already switched suppliers as a result of tariffs.”

The increased shipments to the United States almost cover the equivalent hit South Korea has taken as a result of the tariffs, Holmes adds.

Manufacturing shift?

The tariffs could also have a long-term impact on manufacturing in Asia, as companies shift their production bases away from China as a way to shield themselves from the trade war.

A growing number of Asian companies, including some South Korean memory chipmakers, have already begun shifting their manufacturing centers to fast-growing and cheaper countries in Southeast Asia.

“If South Korea wants to find cheaper factories in say Vietnam or one of the ASEAN countries, it could make its money back or potentially even grow more than it would have if it relied on Chinese manufacturing,” Xu said. “But those sort of actions take a lot of time, a lot of capital, and there is a lot of risk involved.”

With no end in sight to the U.S.-China trade tensions, it’s a pattern that could be repeated, threatening China’s reputation as a low-cost production base.

“The knock-on effect of this trade war will be to locate a lot more production capabilities in other countries in Asia,” Xu said.

Retail Chiefs Dismiss AI Job Threat, Promise More Training

Executives from major global retailers played down the threat to employment in stores from artificial intelligence and automation on Thursday and pledged more training to help staff adopt more high-value tasks as machines take over their work.

Retail is one of the largest employers in many developed economies and experts have predicted automation puts millions of low-skilled jobs in the sector at risk, particularly as the introduction of self-checkouts makes cashiers redundant.

“Technology can liberate people from repetitive tasks,” Barbara Martin Coppola, chief digital officer at Swedish furniture giant IKEA, told Reuters on the sidelines of the World Retail Congress, an annual industry gathering.

“These jobs are not gone. We are believers in the talent we have in our house and we look to repurpose it into more fulfilling tasks.”

Martin Coppola said IKEA needs far fewer people to select the goods displayed on the firm’s website, known as online merchandising, as algorithms get more sophisticated. But these people can be trained in digital marketing instead.

“It is important to see technology as an enabler and not to let it be at the expense of human beings and the planet,” she said.

Walmart, the world’s biggest private employer with 2.2 million staff, has been adding self check-outs and announced last month that it would be rolling out automated shelf scanners, to check product availability, and cleaning robots.

“Cleaning the floor is not a thing that brings a person fulfillment,” said Tom Faitak, Walmart’s senior manager for AI, robotics and automation, adding that automating repetitive tasks gives staff more time to help customers.

“Robots are not fantastic at interacting with people,” he said. “Robots are good at doing the same task over and over, not finding an item on the shelf.”

Walmart staff who are freed up from some repetitive tasks are increasingly being redeployed to pick orders placed online and prepare them for curbside pickup.

Consultants McKinsey estimate that 53 percent of activities in retailing are automatable, particularly in stock management and logistics. It predicts that next generation automated grocery stores could see the number of labor hours for inventory and stocking cut by two thirds.

Walmart and Kroger – the biggest U.S. supermarket chain — say they are committed to developing their store workers so they are not left behind.

Walmart offers training to tens of thousands of associates through an “Academy” program, while Kroger launched a new scheme last year to promote continued education, from high school certificates to doctorates.

Kroger Chairman and Chief Executive Rodney McMullen, who started out as a store clerk at the chain and had his college education supported by the company, noted that U.S. unemployment was at its lowest for decades, pushing automation.

“Part of it is because you just can’t find people,” he said, noting that the company was creating higher-paid jobs in software engineering as it seeks to modernize the business. The Cincinnati-based company has built robot-aided warehouses and is trying out self-driving vehicles to improve delivery.

Retail Chiefs Dismiss AI Job Threat, Promise More Training

Executives from major global retailers played down the threat to employment in stores from artificial intelligence and automation on Thursday and pledged more training to help staff adopt more high-value tasks as machines take over their work.

Retail is one of the largest employers in many developed economies and experts have predicted automation puts millions of low-skilled jobs in the sector at risk, particularly as the introduction of self-checkouts makes cashiers redundant.

“Technology can liberate people from repetitive tasks,” Barbara Martin Coppola, chief digital officer at Swedish furniture giant IKEA, told Reuters on the sidelines of the World Retail Congress, an annual industry gathering.

“These jobs are not gone. We are believers in the talent we have in our house and we look to repurpose it into more fulfilling tasks.”

Martin Coppola said IKEA needs far fewer people to select the goods displayed on the firm’s website, known as online merchandising, as algorithms get more sophisticated. But these people can be trained in digital marketing instead.

“It is important to see technology as an enabler and not to let it be at the expense of human beings and the planet,” she said.

Walmart, the world’s biggest private employer with 2.2 million staff, has been adding self check-outs and announced last month that it would be rolling out automated shelf scanners, to check product availability, and cleaning robots.

“Cleaning the floor is not a thing that brings a person fulfillment,” said Tom Faitak, Walmart’s senior manager for AI, robotics and automation, adding that automating repetitive tasks gives staff more time to help customers.

“Robots are not fantastic at interacting with people,” he said. “Robots are good at doing the same task over and over, not finding an item on the shelf.”

Walmart staff who are freed up from some repetitive tasks are increasingly being redeployed to pick orders placed online and prepare them for curbside pickup.

Consultants McKinsey estimate that 53 percent of activities in retailing are automatable, particularly in stock management and logistics. It predicts that next generation automated grocery stores could see the number of labor hours for inventory and stocking cut by two thirds.

Walmart and Kroger – the biggest U.S. supermarket chain — say they are committed to developing their store workers so they are not left behind.

Walmart offers training to tens of thousands of associates through an “Academy” program, while Kroger launched a new scheme last year to promote continued education, from high school certificates to doctorates.

Kroger Chairman and Chief Executive Rodney McMullen, who started out as a store clerk at the chain and had his college education supported by the company, noted that U.S. unemployment was at its lowest for decades, pushing automation.

“Part of it is because you just can’t find people,” he said, noting that the company was creating higher-paid jobs in software engineering as it seeks to modernize the business. The Cincinnati-based company has built robot-aided warehouses and is trying out self-driving vehicles to improve delivery.

US Housing Starts Rise in April; Supply Challenges Remain

U.S. homebuilding increased more than expected in April and activity in the prior month was stronger than initially thought, suggesting declining mortgage rates were starting to provide some support to the struggling housing market.

Land and labor shortages, however, continue to constrain builders’ ability to construct more lower priced houses. This segment has experienced an acute shortage of inventory, holding back home sales. Investment homebuilding has contracted for five straight quarters.

Housing starts rose 5.7% to a seasonally adjusted annual rate of 1.235 million units last month, driven by gains in the construction of both single- and multi-family housing units, the Commerce Department said on Thursday. Groundbreaking was also likely boosted by drier weather in the Midwest.

Data for March was revised up to show homebuilding rising to a pace of 1.168 million units, instead of falling to a rate of 1.139 million units as previously reported.

The government revised the seasonally adjusted data back to January 2014. The unadjusted series will be revised in July.

Building permits rose 0.6% to a rate of 1.296 million units in April. Building permits had declined for three straight months. Permits for single-family housing, however, fell for a fifth straight month, likely reflecting the supply challenges.

Economists polled by Reuters had forecast housing starts would increase to a pace of 1.205 million units in April.

The 30-year fixed mortgage rate has dropped to 4.10% from a peak of about 4.94% in November, according to data from mortgage finance agency Freddie Mac. Decreasing mortgage rates reflect a recent decision by the Federal Reserve to suspend its three-year monetary policy tightening campaign.

Strong labor market

Relatively cheaper home loans and a strengthening labor market, characterized by the lowest unemployment rate in nearly 50 years, are underpinning demand for housing. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 212,000 for the week ended May 11.

The robust job market should underpin the economy as the boost from the White House’s $1.5 trillion tax cut package fades and President Donald Trump’s escalating trade war with China disrupts supply chains at factories, which are already struggling with an inventory bloat that has cut production.

A survey on Wednesday showed confidence among homebuilders rose to a seven-month high in May. While lower borrowing costs are boosting demand, builders said they “continue to deal with ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability.”

The housing market has been mired in a soft patch since last year. Investment in homebuilding contracted at a 2.8% annualized rate in the first quarter.

Prices of U.S. Treasuries fell after the release of the data while the dollar rose to a session high against a basket of currencies. U.S. stock index futures were trading higher. Last month, single-family homebuilding, which accounts for the largest share of the housing market, increased 6.2% to a rate of 854,000 units. Single-family homebuilding surged in the Midwest, which had suffered flooding in prior months. Single-family starts also rose in the Northeast and West, but fell in the South, where the bulk of homebuilding occurs.

Permits to build single-family homes dropped 4.2% to a rate of 782,000 units in April.

Starts for the volatile multi-family housing segment advanced 4.7% to a rate of 381,000 units last month. Permits for the construction of multi-family homes rebounded 8.9% to a pace of 514,000 units last month.

US Housing Starts Rise in April; Supply Challenges Remain

U.S. homebuilding increased more than expected in April and activity in the prior month was stronger than initially thought, suggesting declining mortgage rates were starting to provide some support to the struggling housing market.

Land and labor shortages, however, continue to constrain builders’ ability to construct more lower priced houses. This segment has experienced an acute shortage of inventory, holding back home sales. Investment homebuilding has contracted for five straight quarters.

Housing starts rose 5.7% to a seasonally adjusted annual rate of 1.235 million units last month, driven by gains in the construction of both single- and multi-family housing units, the Commerce Department said on Thursday. Groundbreaking was also likely boosted by drier weather in the Midwest.

Data for March was revised up to show homebuilding rising to a pace of 1.168 million units, instead of falling to a rate of 1.139 million units as previously reported.

The government revised the seasonally adjusted data back to January 2014. The unadjusted series will be revised in July.

Building permits rose 0.6% to a rate of 1.296 million units in April. Building permits had declined for three straight months. Permits for single-family housing, however, fell for a fifth straight month, likely reflecting the supply challenges.

Economists polled by Reuters had forecast housing starts would increase to a pace of 1.205 million units in April.

The 30-year fixed mortgage rate has dropped to 4.10% from a peak of about 4.94% in November, according to data from mortgage finance agency Freddie Mac. Decreasing mortgage rates reflect a recent decision by the Federal Reserve to suspend its three-year monetary policy tightening campaign.

Strong labor market

Relatively cheaper home loans and a strengthening labor market, characterized by the lowest unemployment rate in nearly 50 years, are underpinning demand for housing. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 212,000 for the week ended May 11.

The robust job market should underpin the economy as the boost from the White House’s $1.5 trillion tax cut package fades and President Donald Trump’s escalating trade war with China disrupts supply chains at factories, which are already struggling with an inventory bloat that has cut production.

A survey on Wednesday showed confidence among homebuilders rose to a seven-month high in May. While lower borrowing costs are boosting demand, builders said they “continue to deal with ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability.”

The housing market has been mired in a soft patch since last year. Investment in homebuilding contracted at a 2.8% annualized rate in the first quarter.

Prices of U.S. Treasuries fell after the release of the data while the dollar rose to a session high against a basket of currencies. U.S. stock index futures were trading higher. Last month, single-family homebuilding, which accounts for the largest share of the housing market, increased 6.2% to a rate of 854,000 units. Single-family homebuilding surged in the Midwest, which had suffered flooding in prior months. Single-family starts also rose in the Northeast and West, but fell in the South, where the bulk of homebuilding occurs.

Permits to build single-family homes dropped 4.2% to a rate of 782,000 units in April.

Starts for the volatile multi-family housing segment advanced 4.7% to a rate of 381,000 units last month. Permits for the construction of multi-family homes rebounded 8.9% to a pace of 514,000 units last month.

Moody’s: Turkey Needs Credible Economic Plan to Avoid Downgrade

Turkey needs to put a comprehensive and credible economic plan in place if it is to avoid another cut to sovereign credit rating, a senior Moody’s sovereign analyst said on Thursday.

New analysis from the rating agency shows Turkey’s recession, the slump in the lira, upcoming refinancing pressures and dwindling reserves have pushed it to right near the top of its worldwide external vulnerability index.

“Failure to put forward a credible broad-based plan to address the structural issues, and in the near-term dampen the market volatility pressure on the lira…that would be a pressure point from a rating perspective,” Moody’s Managing Director of Sovereign Risk, Yves Lemay, told Reuters.

Moody’s downgraded Turkey to Ba3 – three rungs into junk territory – last August, but it also kept it on a ‘negative’ outlook which is a warning that another cut could happen in 12-18 months.

It gives it some time and one of Turkey’s main plusses is that it has a low debt-to-GDP level of about 30 percent, but the likelihood is that an economic plan would be laid out after Istanbul’s mayoral elections have been re-run on June 23.

“For us, the critical issue is whether this administration has the capacity to move aside the political issues and focus on the economic needs of the country,” Lemay said, adding that the repeat of the Istanbul vote had underscored concerns.

“It is another manifestation of the domestic political risk in this instance, and the weakening of the institutions of the country.”

With regards to the drop in currency reserves, he added: “When we look at the size of what [sovereign and bank debt] is coming due in the next year against the size of the reserves, it is a signal of significant vulnerability.”

“The amount of reserves is very much insufficient to refinance the external obligations.”

Moody’s calculates the Turkish government’s interest payments rose 30.4% in nominal terms last year and almost 50% in the first three months of 2019 due to the weak lira and a rise in payments.

As a result it expects interest payments to increase to around 8.2% of the government’s revenue in 2019 from only 5.9% in 2017, “eroding” the government’s fiscal strength.

Moody’s: Turkey Needs Credible Economic Plan to Avoid Downgrade

Turkey needs to put a comprehensive and credible economic plan in place if it is to avoid another cut to sovereign credit rating, a senior Moody’s sovereign analyst said on Thursday.

New analysis from the rating agency shows Turkey’s recession, the slump in the lira, upcoming refinancing pressures and dwindling reserves have pushed it to right near the top of its worldwide external vulnerability index.

“Failure to put forward a credible broad-based plan to address the structural issues, and in the near-term dampen the market volatility pressure on the lira…that would be a pressure point from a rating perspective,” Moody’s Managing Director of Sovereign Risk, Yves Lemay, told Reuters.

Moody’s downgraded Turkey to Ba3 – three rungs into junk territory – last August, but it also kept it on a ‘negative’ outlook which is a warning that another cut could happen in 12-18 months.

It gives it some time and one of Turkey’s main plusses is that it has a low debt-to-GDP level of about 30 percent, but the likelihood is that an economic plan would be laid out after Istanbul’s mayoral elections have been re-run on June 23.

“For us, the critical issue is whether this administration has the capacity to move aside the political issues and focus on the economic needs of the country,” Lemay said, adding that the repeat of the Istanbul vote had underscored concerns.

“It is another manifestation of the domestic political risk in this instance, and the weakening of the institutions of the country.”

With regards to the drop in currency reserves, he added: “When we look at the size of what [sovereign and bank debt] is coming due in the next year against the size of the reserves, it is a signal of significant vulnerability.”

“The amount of reserves is very much insufficient to refinance the external obligations.”

Moody’s calculates the Turkish government’s interest payments rose 30.4% in nominal terms last year and almost 50% in the first three months of 2019 due to the weak lira and a rise in payments.

As a result it expects interest payments to increase to around 8.2% of the government’s revenue in 2019 from only 5.9% in 2017, “eroding” the government’s fiscal strength.

Costs Mounting in US From Trump’s Tariff Fight With China   

The costs seem to be mounting in the U.S. from President Donald Trump’s tit-for-tat trade tariff war with China, both for farmers whose sales of crops to China have been cut and U.S. consumers paying higher prices for imported Chinese products.

The government said Wednesday that to date it has paid out more than $8.5 billion to American farmers to offset their loss of sales to China and other trading partners because of foreign tariffs imposed by Beijing and other governments.

Trump last year pledged up to $12 billion in aid to farmers — chiefly soybean, wheat and corn growers, and those who raise pigs. Trump says he could ask Congress for another $15 billion if U.S. farmers continue to be hurt by China’s tariffs of as much as 25%  on U.S. agricultural imports.

The U.S. had been shipping $12 billion worth of soybeans a year to China, but Beijing’s imposition of the tariff severely cut down on the U.S. exports as China bought the beans from other countries.

Trump said Tuesday on Twitter, “Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now. Hopefully China will do us the honor of continuing to buy our great farm product, the best, but if not your Country will be making up the difference based on a very high China buy. This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us. The Farmers have been ‘forgotten’ for many years. Their time is now!”

White House economic adviser Larry Kudlow acknowledged to a television interviewer last weekend that “to some extent” U.S. consumers will bear the brunt of higher costs on Chinese goods after Trump’s tariffs have been levied on the imported goods.

Trade Partnership Worldwide, a Washington economic consulting firm, estimates in a new study the typical American family of four people would pay $2,300 more annually for goods and services if Trump imposes a 25% tariff on all Chinese imports, as he says he is considering.

Such higher tariffs would hit an array of Chinese-produced consumer goods — clothing, children’s toys, sports equipment, shoes and consumer electronics — that are widely bought by Americans.

If that does not happen, but the existing U.S. tariffs remain in place, the research group says the average U.S. family would pay $770 in higher costs each year.

The U.S. imported almost $540 billion in Chinese goods in 2018, while the U.S. exported $120 billion, a trade imbalance that Trump is seeking to even out with imposition of the tariffs. The U.S. exported almost $59 billion in services to China, while importing only $18 billion, but services are not directly affected by tariffs.

Costs Mounting in US From Trump’s Tariff Fight With China   

The costs seem to be mounting in the U.S. from President Donald Trump’s tit-for-tat trade tariff war with China, both for farmers whose sales of crops to China have been cut and U.S. consumers paying higher prices for imported Chinese products.

The government said Wednesday that to date it has paid out more than $8.5 billion to American farmers to offset their loss of sales to China and other trading partners because of foreign tariffs imposed by Beijing and other governments.

Trump last year pledged up to $12 billion in aid to farmers — chiefly soybean, wheat and corn growers, and those who raise pigs. Trump says he could ask Congress for another $15 billion if U.S. farmers continue to be hurt by China’s tariffs of as much as 25%  on U.S. agricultural imports.

The U.S. had been shipping $12 billion worth of soybeans a year to China, but Beijing’s imposition of the tariff severely cut down on the U.S. exports as China bought the beans from other countries.

Trump said Tuesday on Twitter, “Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now. Hopefully China will do us the honor of continuing to buy our great farm product, the best, but if not your Country will be making up the difference based on a very high China buy. This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us. The Farmers have been ‘forgotten’ for many years. Their time is now!”

White House economic adviser Larry Kudlow acknowledged to a television interviewer last weekend that “to some extent” U.S. consumers will bear the brunt of higher costs on Chinese goods after Trump’s tariffs have been levied on the imported goods.

Trade Partnership Worldwide, a Washington economic consulting firm, estimates in a new study the typical American family of four people would pay $2,300 more annually for goods and services if Trump imposes a 25% tariff on all Chinese imports, as he says he is considering.

Such higher tariffs would hit an array of Chinese-produced consumer goods — clothing, children’s toys, sports equipment, shoes and consumer electronics — that are widely bought by Americans.

If that does not happen, but the existing U.S. tariffs remain in place, the research group says the average U.S. family would pay $770 in higher costs each year.

The U.S. imported almost $540 billion in Chinese goods in 2018, while the U.S. exported $120 billion, a trade imbalance that Trump is seeking to even out with imposition of the tariffs. The U.S. exported almost $59 billion in services to China, while importing only $18 billion, but services are not directly affected by tariffs.

Ford: More Lincolns to Be Built for Chinese Market Locally

Ford Motor Co plans to start production of new luxury Lincoln models in China for that market as they are launched, starting with the new Corsair later this year, to benefit from lower costs and avoid the risk of tariffs, a top executive said Monday.

“It’s a huge, huge opportunity for Lincoln because we see China as ground zero for Lincoln given the size of the market and how well the brand has been received,” Chief Financial Officer Bob Shanks said at a Goldman Sachs conference in New York.

Ford has lower levels of localized production than rivals General Motors Co or Volkswagen AG, who make more vehicles in China for Chinese consumers, benefiting from lower labor and material costs, and avoiding tariffs in the burgeoning trade war between the United States and China.

Shanks said all new Lincoln models, with the exception of the Navigator assembled in Louisville, Kentucky, will also be produced in China.

He declined to say how much Ford will save through localized production.

Ford has been struggling to revive sales in China, the automaker’s second-biggest market. Ford sales slumped 37 percent in 2018, after a 6 percent decline in 2017.

Shanks said that all of the problems the automaker experienced in China last year were related to the Ford brand, not Lincoln, which is popular with Chinese customers.

Ford: More Lincolns to Be Built for Chinese Market Locally

Ford Motor Co plans to start production of new luxury Lincoln models in China for that market as they are launched, starting with the new Corsair later this year, to benefit from lower costs and avoid the risk of tariffs, a top executive said Monday.

“It’s a huge, huge opportunity for Lincoln because we see China as ground zero for Lincoln given the size of the market and how well the brand has been received,” Chief Financial Officer Bob Shanks said at a Goldman Sachs conference in New York.

Ford has lower levels of localized production than rivals General Motors Co or Volkswagen AG, who make more vehicles in China for Chinese consumers, benefiting from lower labor and material costs, and avoiding tariffs in the burgeoning trade war between the United States and China.

Shanks said all new Lincoln models, with the exception of the Navigator assembled in Louisville, Kentucky, will also be produced in China.

He declined to say how much Ford will save through localized production.

Ford has been struggling to revive sales in China, the automaker’s second-biggest market. Ford sales slumped 37 percent in 2018, after a 6 percent decline in 2017.

Shanks said that all of the problems the automaker experienced in China last year were related to the Ford brand, not Lincoln, which is popular with Chinese customers.