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China Hits Back at Trump With Weaker Yuan

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After trying to placate Donald Trump for more than a year only to face tariffs on virtually all its shipments to the U.S., China is signalling it’s ready to play hardball.

In a stark escalation of the trade war that has roiled financial markets and weighed on economic growth worldwide, Beijing allowed the yuan to tumble to its weakest level in a decade against the dollar and asked state-owned companies to suspend imports of U.S. agricultural products.

The moves emerged within days of Trump’s threat to impose additional tariffs on China and struck at the heart of two of the U.S. president’s fiercest criticisms — that Beijing manages its currency unfairly to help exporters and has failed to keep promises to boost purchases of U.S. crops after a trade truce in June. Investors responded by dumping Asian stocks and currencies in favor of haven assets including the Japanese yen, U.S. Treasuries and gold.

“It’s among the worst-case scenarios,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. “First markets sell off, then Trump wakes up and this all gets far, far worse.”

Trump last week proposed adding 10% tariffs on another $300 billion in Chinese imports from Sept. 1, ramping up the trade war between the world’s largest economies shortly after the two sides restarted talks. Bureaucrats in Beijing were stunned by Trump’s announcement, according to Chinese officials who’ve been involved in the trade talks, and Beijing has pledged to respond if the U.S. insists on adding the extra tariffs.

Market Turmoil

The MSCI Asia Pacific Index headed for its biggest decline since March on Monday, with shares slumping more than 2% in markets from Tokyo to Hong Kong and Seoul. Equities in Shanghai saw a more modest drop amid speculation that state-linked funds may act to prop up the market.

The yuan tumbled 1.2% to 7.0275 a dollar at 12:16 p.m. after the People’s Bank of China set its daily reference rate at a weaker level than 6.9 for the first time since December. The sank as much as 1.9% to a record low.

“Breaking seven is due to a mix of factors: an escalation of trade war, the softening of China’s economy and a willingness for the PBOC to tolerate higher volatility for the yuan,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “The PBOC has entered uncharted waters, so it has to manage expectation carefully.”

The central bank attributed the yuan move to protectionism while saying it can still maintain a steady currency. The yuan continues to be stable and strong against a basket of currencies, the central bank said in a statement, adding it’ll continue to create new tools for any necessary measures in response to the “positive feedback” loop in the yuan market.

Corn and soybean futures fell after Bloomberg News reported that China’s state-run agricultural firms have stopped buying American farm goods, and are waiting to see how trade talks progress.

Trump has repeatedly complained that China hasn’t made the “large quantities” of agricultural purchases that he claims President Xi Jinping promised when they met in Osaka at the G-20 summit. China’s commerce ministry didn’t respond to a fax seeking comment.

“China is giving up on its softer diplomatic strategy and is no longer willing to be Trump’s punching bag,” said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte. “Trump’s tariffs threats are backfiring and triggering a full-scale trade war.”

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Next phase of transit job action to be announced Wednesday

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The union representing striking Metro Vancouver transit workers is set to announce Wednesday the next phase of job action as dozens of Unifor members from the Coast Mountain Bus company prepare to receive strike training.

The union said in a statement the escalation was caused by “a failure by the employer to make new offers at the bargaining table.”

Meanwhile, transit users in Metro Vancouver had a slightly smoother commute Tuesday with no SeaBus cancellations, as the labour dispute entered its 19th day.

TransLink was reporting delays on some bus routes early Tuesday, however, and advised transit users to look up their route at alerts.translink.ca.

“Ultimately, this job action is difficult to anticipate,” TransLink spokesperson Ben Murphy told CBC News Monday.

“That’s sort of how the union has designed this — that’s why they’ve gone with this overtime ban.”

On Monday the network experienced as much as a 10 per cent drop in service due to bus drivers refusing to work extra hours.

Unifor, which represents bus drivers, mechanics and SeaBus operators, says bus drivers will refuse overtime hours again on Wednesday and Friday.

Seeking wage increase

The union said CMBC remains unwilling to discuss wages, a key issue in the dispute, while the company insists its proposal is well above increases offered to other public-sector workers in the province.

Unifor has said they are seeking a wage increase that would bring their workers closer to those in other major regions, like Toronto.

“Currently, the difference is about $2.85 an hour, but Toronto is set to receive another two per cent each in the next two years. So it’s about three dollars an hour,” said Unifor western regional director Gavin McGarrigle.

TransLink spokesperson Jill Drews said it comes down to what the company can afford.

“Money doesn’t come from nowhere, it doesn’t grow on trees and we’ve presented an offer that the region can afford,” she said.

“If we go beyond that, it could mean things like raising fares or raising taxes or cutting service that we’d hoped to roll out through expansion plans.”

Unifor’s overtime ban has so far forced the cancellations of dozens of SeaBus sailings and delayed or cancelled numerous bus routes over the past several week.

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Toronto Star shutting down StarMetro newspapers

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The Toronto Star is shutting down its StarMetro newspapers across Canada.

A Torstar spokesperson tells News media the final print editions in Vancouver, Edmonton, Calgary, Toronto and Halifax will be published Dec. 20, but that digital content will still be available.

“We are going digital-only outside of Ontario as more and more of our commuter readers are using their smartphones, laptops and tablets to access their news on their way to and from work,” Bob Hepburn told CBC News in an email.

“This trend, coupled with a corresponding decline in print advertising volumes, has decreased the need for a free daily commuter newspaper in these cities.”

An internal email sent to staff by Torstar president and CEO John Boynton stated “print advertising volumes have decreased significantly in recent months to levels below those required to make them commercially viable.”

Boynton’s memo, provided to CBC News, suggested 73 employees would be affected by the closures of the papers.

The memo also said there are plans to open new Star bureaus in the coming weeks in Vanouver, Edmonton, Calgary and Halifax that will be staffed by Star journalists. The jobs were going to be posted internally on Tuesday and externally on Wednesday.

CBC News has learned the new digital bureaus will be staffed by five reporters in Vancouver, five reporters in Alberta and one in Halifax.

It was only a year ago the company rebranded its free Metro daily newspapers across Canada. The rebrand included an investment that more than doubled the number of Metro journalists, The Star reported at the time.

By Tuesday afternoon, reporters for the paper were tweeting about the shutdown.

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Thousands of CN Rail employees on strike amid contract talks

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The federal government has urged Canadian National Railway Co. and the Teamsters Canada Rail Conference to continue negotiating as the roughly 3,200 conductors, trainpersons and yard workers went on strike.

Labour Minister Patty Hajdu said Tuesday the government is concerned about the impact of a work stoppage on Canadians, but remains hopeful the two sides will reach an agreement.

The rail workers walked off the job after failing to reach a deal by a midnight deadline.

Union spokesperson Christopher Monette said they were still in talks with CN in hopes of reaching a negotiated settlement and ending the dispute as soon as possible.

The union has said passenger rail services in the country’s three biggest cities would not be affected by the strike.

CN workers walk a picket line in Brampton, Ontario, after going on strike shortly after midnight. (Meagan Fitzpatrick/CBC)

It represents workers at commuter rail services including Go Transit in Toronto, Exo in Montreal and the West Coast Express in Vancouver, where passengers would remain unaffected.

The workers, who have been without a contract since July 23, say they’re concerned about long hours, fatigue and what they consider dangerous working conditions.

“We have members out there who are operating trains when they should in fact be resting,” Monette told CBC News after the strike began.

The dispute comes as CN confirmed Friday that it was cutting jobs across the railway as it deals with a weakening North American economy that has eroded demand.

“We are disappointed that the TCRC has initiated strike action which will result in a significant disruption to service,” Janet Drysdale, CN’s vice president of financial planning, said at the Scotiabank Transportation and Industrials Conference on Tuesday.

“We apologize to our customers, but we do appreciate their understanding that safety is always our first priority. Negotiations are expected to continue later today, under the watchful eye of federal mediators.”

Industries react

CN currently handles more than half of all Canadian chemicals production. It is the only railway to service the three major petrochemical centres in North America, which includes the Alberta’s Heartland, the U.S. Gulf Coast and southwestern Ontario.

The Canadian Association of Petroleum producers said in a statement that they are concerned about the strike and “any developments that can negatively impact on the availability of rail capacity, particularly in light of the current shortage of available pipeline capacity relative to oil production in western Canada.”

The association said they will be monitoring the potential impact the strike will have on the industry’s competitiveness.

Chemistry Industry Association of Canada (CIAC) urged the Canadian government, CN, and Teamsters to work together to prevent serious damage the strike will have on the Canadian economy.

“Fully $38 million worth of industrial chemical products rely on CN’s network to get to their destinations every single day, and … the economic impact of the work stoppage is $1 million per day per facility that is shutdown,” Bob Masterson, chief executive officer of CIAC, said in a statement.

Mining said to be 52.3% of revenue

The Mining Association of Canada (MAC) also expressed “serious concern” regarding the strike and how it will affect the mining sector.

According to the association, the mining industry accounted for 52.3 per cent of rail freight revenue in 2018.

“In the minerals and metals sector, experience has demonstrated that a rail stoppage significantly impacts the ability of companies to bring essential inputs to their mines, and the ability to move mineral products and by-products to downstream customers,” said Pierre Gratton, chief executive of MAC.

“MAC members have advised that this strike will result in a severe reduction or elimination of railway capacity and will trigger the closure of mines with concurrent lay-offs of thousands of employees beginning in a matter of days.”

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