Election outcomes shape the global economy

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The election year's bearing on trade | More tariffs on Chinese EVs | Currency valuation and trade balances | More research from Hinrich Foundation

The election year's bearing on trade

In the aftermath of the EU elections, all eyes are on France and Germany, writes Maria Demertzis in Bruegel. Europe’s swing to the right won’t change trade policy, per Alan Beattie in the Financial Times.  William A. Reinsch of the Center for Strategic and International Studies (CSIS) discusses the consequences for election season.  Turning to India, Modi’s new government will prioritize manufacturing, according to David Lubin in Chatham House, while Josh Felman and Arvind Subramanian in Foreign Policy contemplate whether India is really the next China. CSIS keeps score of India’s economic reforms. Dan Harris in China Law Blog contemplates Mexico’s election and business future, and the Wilson Center hosts a bilingual webinar on trade and investment under the USMCA after the vote.  Lastly, the G7 convened this weekend, and Victor Cha and John Hamre of CSIS consider a reimagined G7.

Mentioned publications

1. European elections results: all eyes are on France and Germany – Maria Demertzis, Bruegel, June 11, 2024
   The shift to the right is present, but more subtle than in national elections. 

2. Europe’s rightward swing won’t knock trade policy off course – Alan Beattie, Financial Times, June 10, 2024
   Political shifts are unlikely to weaken EU attachment to open trade. 

3. Election Season – William A. Reinsch, Center for Strategic and International Studies, June 10, 2024
   Electoral results from Mexico, India, and South Africa will have a bearing on trade.  

4. To achieve ‘Developed India’, Modi’s new government will prioritize the manufacturing sector – for better or worse – David Lubin, Chatham House, June 6, 2024
   Should India prioritize economic growth through trade in services or manufacturing? 

5. Is India Really the Next China? – Josh Felman and Arvind Subramanian, Foreign Policy, April 8, 2024
   What has Modi accomplished, and what challenges remain?  

6. India Reforms Scorecard 3.0 (2024-2029) – Center for Strategic and International Studies, June 2024
   CSIS keeps score of economic reforms desired by foreign investors to improve the domestic business environment. 

7. Mexico’s Election and Business Future – Dan Harris, Harris Sliwoski China Law Blog, June 11, 2024
   What impact might President Sheinbaum have on trade and investment in Mexico?  

8. Mexico Election Series | After the Vote: Navigating USMCA Trade & Investment in Mexico – Wilson Center (Webinar in English and Spanish), May 3, 2024
   A bilingual deep dive into trade and investment in Mexico under the USMCA. 

9. A Reimagined G7 – Victor Cha and John Hamre, Center for Strategic and International Studies, June 14, 2024
   What role should the G7 play in global governance?  

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More tariffs on Chinese EVs

The EU just announced the results of its subsidies investigation, hitting Chinese EVs with extra tariffs up to 38%, reports the New York Times. Reuters compiles global reactions to the tariffs. Many Chinese automakers already have a plan to respond to higher tariffs, writes the Wall Street Journal. Turkey imposes a 40% additional tariff on car imports from China, per Nikkei Asia. 

Mentioned publications

1. European Union Hits E.V.s From China with Extra Tariffs up to 38% – Melissa Eddy, The New York Times, June 12, 2024
   The increases come on top of the existing 10% duties. 

2. EU tariffs on China: Global reaction – Reuters, June 12, 2024
   How is the world responding to the news of new EU tariffs on Chinese EV imports?  

3. China’s EV Makers Saw Europe Tariffs Coming, and Many Already Have a Plan – Selina Cheng, The Wall Street Journal, June 13, 2024
   What actions are China’s EV companies taking to avoid EU tariffs? 

4. Turkey to impose 40% additional tariff on vehicle imports from China – Nikkei Asia, June 8, 2024
   Turkey adds more tariffs on imports of Chinese vehicles. 

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Currency valuation and trade balances

Qiyuan Xu in Project Syndicate argues that an undervalued RMB, not overcapacity, is to blame for the latest surge in exports from China, while George Magnus says that the risk of an RMB devaluation is real, in the Financial Times.  Jared Cohen in Foreign Policy says don’t bet against the dollar.  Trump trade advisers plot dollar devaluation reports Gavin Bade in Politico. Barry Eichengreen asks whether anything can be done about US dollar strength, in Project Syndicate. 

Mentioned publications

1. Why the US Can’t Win the Trade War With China – and Shouldn’t Try – Qiyuan Xu, Project Syndicate, May 13, 2024
   Is it an undervalued RMB or overcapacity triggering a surge in exports from China?  

2. Risk of a renminbi devaluation is real – George Magnus Op-Ed, Financial Times, May 6, 2024
   Will RMB depreciation trigger more stress in China’s trade relations?  

3. Don’t Bet Against the Dollar – Jared Cohen, Foreign Policy, June 10, 2024
   “The move towards de-dollarization is marginal but meaningful and moving.” 

4. Trump trade advisers plot dollar devaluation – Gavin Bade, Politico, April 15, 2024
   Could an international accord to devalue the dollar lead to an improved balance of trade?  

5. Barry Eichengreen asks whether anything can or should be done about the US greenback's strength, especially against Asian currencies – Project Syndicate, May 14, 2024 (reprinted by interest.co.nz)
   Should actions be taken to devalue the US dollar? 

More related analysis from HF:

• Modi's troubled victory in India
• Is China going to devalue the yuan?
• China’s structural slowdown augurs more global trade wars

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