US, China seek allies as they dig in for ‘trade tussle’

Bloomberg

The US and China look to be preparing for a protracted confrontation over trade and investment as they each try to line up allies for their cause.
The struggle for support is being waged worldwide, with its locus shifting this week to Washington and the semi-annual meetings of the International Monetary Fund (IMF). Behind the battle: an effort by each country to gain an edge in their standoff over everything from steel to semiconductors. Much of the jockeying is likely to play out at meetings starting on Thursday of finance ministers and central bankers from the Group of
20 and Saturday’s broader gathering of IMF member nations.
“There’s a competition” between the world’s two-largest economies to garner backing for their respective positions, said David Dollar, who was the US. Treasury’s economic emissary to China from 2009 to 2013 and is now a senior fellow at the Brookings Institution in Washington.
The concerted attempts at coalition-building suggest that neither nation believes that a quick resolution of their various disputes is a given.
Such a festering could act as a damper on global stock markets and the world economy by making investors and businesses more cautious about the outlook.
“I’m deeply concerned” about the relationship, said National Committee on US-China Relations President Stephen Orlins, who worked on the normalisation of ties between the two countries while at the US State Department from 1976 to 1979. “Over the next 12, 18, 24 months it may be deeply, deeply disrupted.”
Citing national security concerns, the Trump administration has slapped tariffs on steel and aluminum exports from China and a number of other countries, with Beijing responding with import taxes of its own on US goods. Washington also has threatened to levy additional tariffs on a broad range of Chinese exports in a separate case involving intellectual property.
While there’s a chance that Chinese policy makers in Washington for the IMF meeting could take the opportunity to get together with their US counterparts, Dollar doubted that any talks would lead to a breakthrough, given that Beijing’s delegation is apparently led by its new central bank governor Yi Gang and not by someone steeped in trade.
China has held top-level economic talks in recent days with India and Japan. All three have been hit by tariffs on their steel exports to the US. The meeting between Japan and China was the first in eight years.

‘Economic Embrace’
“China’s rising economic might, coupled with the perception of the US as an unreliable and untrustworthy partner, is driving countries around the world closer into China’s economic embrace,” said Eswar Prasad, a former chief of the IMF’s China division and now a professor at Cornell University.
The US, for its part, won European and Japanese backing for a statement at the World Trade Organization’s December meeting that indirectly criticised China by voicing concern about overcapacity in some industries and complaining about forced technology transfer.
The European Union and Japan also joined the challenge the US filed at the WTO against Chinese technology licensing rules.
“I call it a trade coalition of the willing,” Larry Kudlow, head of the White House’s National Economic Council, told reporters on April 5.
At its March 19-20 meeting in Buenos Aires, the G-20 opted not to take sides in the dispute between its two leading members, blandly declaring that trade and investment were “important engines” of growth.
Former IMF executive director Thomas Bernes said some countries may have been reluctant to criticise the US because they were simultaneously trying to win exemptions from American tariffs on their steel and aluminum exports. Those considerations are still at play, with Japanese PM  Shinzo Abe making his country’s case to President Donald Trump on a visit.

US grain ships change direction mid-voyage after China tariffs
Bloomberg

At least two ships loaded with sorghum have changed course while sailing across the Indian Ocean after China imposed a hefty tariff on US supplies this week.
The N Bonanza and RB Eden were loaded with sorghum at the port of Corpus Christi, Texas. Both departed mid-March, destined for Shanghai, according to Rosie Collin, director of community relations for the port authority.
When China announced the 179 percent tariff on April 17, they both altered course, vessel data tracked by Bloomberg show. The RB Eden completed a U-turn and is now sailing southwest in the Indian Ocean, while the N Bonanza appeared to head away from Asia. It’s unclear where the ships are headed or if their destinations have changed.
They were both loaded at Archer-Daniels-Midland Co.’s terminal, according to the port. Jackie Anderson, a spokeswoman for the Chicago-based company, declined to comment on the vessels, but she did say that ADM is “very disappointed” about China’s decision to impose the tariffs and is analysing their impact.
At least 10 other vessels have also been loaded from the US with sorghum destined for China in the past month, a US Department of Agriculture website shows.