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Trump raises idea of decoupling U.S. economy from China – The Globe and Mail

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U.S. President Donald Trump takes questions after delivering remarks during a news conference at the North Portico at the White House on Sept. 7, 2020 in Washington, DC.

Tasos Katopodis/Getty Images

With the U.S. election approaching, President Donald Trump on Monday again raised the idea of separating the U.S. and Chinese economies, also known as decoupling, suggesting the United States would not lose money if the world’s two biggest economies no longer did business.

“So when you mention the word decouple, it’s an interesting word,” Mr. Trump told a Labour Day news conference at the White House in which he vowed to bring jobs back to the United States from China.

“We lose billions of dollars and if we didn’t do business with them we wouldn’t lose billions of dollars. It’s called decoupling, so you’ll start thinking about it,” Mr. Trump said.

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Mr. Trump, who long touted friendly ties with Chinese President Xi Jinping as he sought to make good on promises to rebalance a massive trade deficit, has made getting tough on China a key part of his campaign for re-election on Nov. 3. He has accused his Democratic opponent, Joe Biden, who leads in most opinion polls, of being soft toward Beijing.

“If Biden wins, China wins, because China will own this country,” he said.

Mr. Biden for his part has criticized Mr. Trump’s Phase 1 trade deal with China, saying it is “unenforceable,” and “full of vague, weak, and recycled commitments from Beijing.”

Mr. Trump vowed that in future his administration would prohibit federal contracts with companies that outsource to China and hold Beijing accountable for allowing the coronavirus, which began in China, to spread around the world.

“We will make America into the manufacturing superpower of the world and will end our reliance on China once and for all. Whether it’s decoupling, or putting in massive tariffs like I’ve been doing already, we will end our reliance in China, because we can’t rely on China,” Mr. Trump said.

“We will bring jobs back from China to the United States and we will impose tariffs on companies that desert America to create jobs in China and other countries,” he added.

U.S. Treasury Secretary Steven Mnuchin said in June that a decoupling of the U.S. and Chinese economies would result if U.S. companies were not allowed to compete on a fair and level basis in China’s economy.

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Other officials and analysts have said that the two countries’ economies are so intertwined as to make such a move impractical, but Washington would continue to pressure Beijing to level the playing field.

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Euro zone firms continue to load up on credit as economy reopens: ECB data – TheChronicleHerald.ca

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FRANKFURT (Reuters) – Euro zone companies continued to load up on bank credit in August, European Central Bank data showed on Friday, two months after most economies had eased restrictions on economic activity aimed at controlling the coronavirus pandemic.

Bank loans to firms rose by 7.1% year on year, extending a borrowing boom that started in March when large parts of the euro zone’s economy came to a standstill and entrepreneurs were forced to draw from their credit lines to pay their bills.

(Reporting By Francesco Canepa; Editing by Toby Chopra)

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Pandemic's impact to influence economy, social order for long time, forum told – Assiniboia Times

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BANFF, Alta. — The COVID-19 pandemic is fundamentally changing the way the world’s economic and social orders function and some of those effects will be permanent, speakers at the Global Business Forum in Banff said on Thursday.

In a series of online sessions broadcast to a ballroom at the Banff Springs Hotel with just three people per table to prevent spread of the disease, subject experts from around the world said the virus has accelerated and amplified trends they were already seeing, as well as taking a few surprising turns.

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The pandemic has drawn attention to food security and that stands to boost a technological revolution in agriculture in Canada, said Murad Al-Katib, CEO of Saskatchewan food processing giant AGT Food and Ingredients Inc.

The expansion of plant protein crops such as peas, lentils, and other legumes in Prairie fields has boosted productivity of the industry, and processing those crops into value-added products will continue to grow, he said, while calling on government to help that process.

“Governments are paying attention now. COVID has everyone spooked,” he said.

“COVID wasn’t a slap in the face, it was a punch in the nose for governments to recognize that they can’t just leave food and food systems entirely to fragmented private sector imports and distribution.”

South of the border, meanwhile, recent civil unrest and violence has been escalated by a pandemic that has disproportionately hurt poorer families and Black people, while adding greatly to the fortunes of the richest Americans, said Trevor Noren, executive director of New York analytics firm 13D.

He said COVID-19 is “gasoline for a fire that had already been lit” that could accelerate generational change in ways that historically have been caused by wars.

“We believe COVID could prove to be that catalyst today, the event that forces a reckoning with the inefficiencies and vulnerabilities of excessively concentrated wealth and power,” he said.

“It will mean a backlash against the three primary forces that have driven consolidation: globalization, digitization and financialization.”

World oil demand has recovered to about 90 million barrels per day and that’s less than the 100 million bpd that existed before the COVID-19 slump, but it doesn’t mean the world has reached “peak oil,” said Michael Tran, managing director and energy strategist for RBC in New York.

“With COVID comes the idea of slower mobility, the demise of travel, we’re all working from home, this has really altered how we think about oil demand, but in my experience, acute events that impact oil demand have a shorter term impact than (government) policy shifts do,” he said.

He said events like the 9-11 attacks sharply affected oil demand, but it was short-term, while former president Barack Obama’s fuel efficiency standards had a more lasting affect.

Demand in the developed world peaked long ago, he added, but oil demand in the developing world is expected to continue to grow.

Cross-border trade between Canada and the United States has remained strong despite restrictions on in-person travel, said Kirsten Hillman, Canada’s ambassador to the U.S., adding she expects the partners’ traditional ties to recover fully when those restrictions are lifted.

She said the recent decision by the U.S. to withdraw threatened tariffs on aluminum shows that the new U.S.-Canada-Mexico trade agreement is working as a defence against protectionism.

The pandemic first erupted in China and that’s where it is expected to begin to meet its end, said Jeongmin Seong, a partner with McKinsey Global Institute in Shanghai, in a presentation.

Dealing with the pandemic forced the country, already an earlier adopter of digitization, to take it in new directions such as using remote communication in health care, real estate and education, and many of those applications will continue, he said.

He added Chinese business leaders have become more focused on its domestic customers and less interested in developing markets with the rest of the world, while Chinese consumers have become more financially prudent and more debt averse.

This report by The Canadian Press was first published Sept. 24, 2020.

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If Donald Trump drags the U.S. economy down, Canada's economy is going along for the ride – Toronto Star

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From economy to psychology, from environment to diplomacy, what happens in the U.S. election will have a profound impact on Canada. Northern Exposure is a series of stories looking at what’s at stake for us as America decides its future.

WASHINGTON—“Over the years I have learned,” a reader in British Columbia wrote to me this week, “that when the U.S. coughs, Canada gets a very bad cold, perhaps the flu,” The saying has a particular resonance during a pandemic, but in few areas is the analogy more apt than when it comes to the economy.

Roughly a fifth of Canada’s gross national product comes from exports to the U.S., which accounts for roughly 75 per cent of Canada’ foreign trade. The U.S. is also Canada’s largest source of foreign investment. As of 2011, U.S. subsidiaries in Canada employed more than 546,000 people.

“Our proximity to the U.S. is a huge source of our prosperity. We live next to such a massive market that is that is willing to do business with us, right?” said Peter Loewen from the University of Toronto’s Munk School of Global Affairs and Public Policy. “People shouldn’t underestimate that. These levels of wealth are all recent, and they come from our capacity to trade.”

And when it comes to trade, the presidency of Donald Trump induced some coughing fits among Canadians — or at least some gagging sounds — when he imposed import tariffs and forced the renegotiation of the North American Free Trade Agreement by threatening to tear it up. It’s been a turbulent time.

Considering the upcoming election, veteran trade lawyer Daniel Ucjzo of Dickinson Wright in Ohio would expect that volatility to change if the administration did. “I mean, it wouldn’t be trade policy by tweet,” he said in a recent phone interview.

“This relationship revolves around the relationship between the leaders, whether we like it or not,” Ujczo said. If Trump is reelected and Trudeau remains prime minister, “I think we’ll see pretty much more of the same — and there will need to be a focus on a more constructive relationship between those two.”

If Trump’s Democratic opponent, Joe Biden, were to be elected, however, Ujczo foresees a stronger relationship, between both the leaders and their cabinet-level officials.

He’s not the only one who thinks so. Kathryn Friedman, an expert on North American relations at the University at Buffalo, points out that when Biden was the U.S. vice-president, his last official visit was to Ottawa, where he praised Canada as an ally and a friend; by contrast, Trump and his administration often portray Canada as a national security threat and a predatory trader. Under a Biden administration, Friedman said, “I do think that Canada would be elevated back to its rightful place as one of our closest allies.”

But that relationship, paradoxically, might not make much difference to actual trade policy. The experts I’ve spoken with more or less agree that despite its adversarial and sometimes tortured negotiation, the new USMCA trade deal is a good update on the old NAFTA. No prominent American politicians — and few Canadians — are itching to change it.

Ujczo says he’d expect a less “disruptive” second term from Trump on continental trade, since he’s already laid the groundwork for a new playing field in his first term. But more than that, the Democrats’ trade policy ideas, especially among the congressional delegation, aren’t substantially different from Trump’s protectionist impulses.

“Canadians always think that Democrats are more favourable because they’re aligned on socio-cultural ideology, but Democrats have really not been great for Canada on trade issues,” he said. “I do think we would see more predictability from the White House, but I anticipate less predictability from Congress.”

A Biden administration, meanwhile, would likely cancel the Keystone XL pipeline, a project to which Canada’s oil industry and governments are deeply committed.

Biden would also bring the United States back into the Trans Pacific Trade Partnership “within the first week or so” of his administration, according to Chris Sands, who leads the Canada Institute at the Wilson Center in Washington. “What does that mean for Canada, which is already a member? Well, good news, bad news,” said Sands. “Suddenly you’ve got another competitor in that family and you lose one of the little advantages you had over the U.S.”

Aside from direct trade issues, the Canadian economy generally feels the strength or weakness of the American economy through investment, jobs at American corporations and tourism, among other things. That means Canada will be watching its neighbour’s recovery from the COVID-19-induced recession very closely.

In managing the virus itself, probably a precondition of a full recovery, Trump has graded his response this year an “A+” while pinning virtually all hope for a quick economic recovery on the quick development of a vaccine.

Biden has announced a more aggressive response to the spread of the virus, in line with what many epidemiologists have recommended, which may include locking down some areas of the country again or implementing national rules on masks. Biden has also staked part of his economic platform on stimulus, sometimes invoking Franklin Roosevelt’s Great Depression-era New Deal as a parallel.

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Polls show many American voters see the economy, and the prospects for dealing with it, as an area of strength for Trump. By contrast, 13 Nobel Prize-winning economists issued a statement this week supporting Biden, saying his economic policies “will result in economic growth that is faster, more robust, and more equitable.”

That said, predicting the trajectory of the American economy under any president is a very difficult job.

What isn’t difficult to see is that whatever direction it goes, it is likely to take Canada’s economy at least some of the way with it.

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