Trump delays some tariffs on Chinese imports

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The US is delaying imposing tariffs on some imports from China until 15 December because of “health, safety, national security and other factors”.

The products include mobile phones, laptops, video game consoles, some toys, computer monitors, and certain footwear and clothing.

The surprise news from the United States Trade Representative office sparked a rally in share prices.

Other items facing a 10% tariff will go ahead as planned on 1 September.

US President Donald Trump, speaking to reporters, said that the delay was in part to avoid hitting US shoppers this Christmas.

The USTR’s announcement was released minutes after China’s Ministry of Commerce said Vice Premier Liu He had conducted a phone call with US trade officials.

Technology investors welcomed news of the exemptions, pushing an index of chip stocks up 2.8%. Retailers and industrial shares also rose, with General Electric up 4.4%.

On Wall Street, the three main share indexes were up more than 2% at one stage. The Dow Jones and S&P 500 finished 1.4% ahead, while the tech-dominated Nasdaq finished up 1.9% – led by a 4% rise in Apple.

In the UK, stocks exposed to global trade also rose, with miner Glencore closing up 2.3%.

Mr Trump said on 1 August he would impose a 10% tariff on $300bn of Chinese goods, blaming China for not following through on promises to buy more American agricultural products.

He also personally criticised Chinese President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl amid an opioid overdosing crisis in the US.

But in a tweet on Tuesday, Mr Trump hinted that he was expecting something in return, suggesting that China’s failure to “buy big” from US farmers could be about to change.

trump tweet

The USTR’s announcement comes amid growing concerns about a global economic slowdown. Goldman Sachs said on Sunday that fears of the US-China trade war leading to a recession were increasing.

Some analysts said Tuesday’s delay does not mean the trade war is over. Elena Duggar, associate managing director at credit rating agency Moody’s, said: “This seeming de-escalation in ongoing tensions may be a temporary reprieve… Relations between the world’s two largest economies will remain contentious, punctuated with occasional steps towards compromise.”

Earlier on Tuesday, China’s chief trade negotiators, Vice Premier Liu He and Commerce Minister Zhong Shan, spoke to their US counterparts, Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

The Xinhua news agency said that the Chinese officials issued “a solemn protest” against the punitive duties set to come into effect on 1 September. Mr Lighthizer and Mr Liu have scheduled another telephone call in two weeks.

The two sides were due to hold another round of meetings in Washington in September, but the deterioration in relations in the past two weeks cast doubt on whether the talks would take place.

Additional details and lists of the specific product types affected by the announcement are due to be published by USTR later.

UK wage growth picks up to 11-year high

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Wage growth in the UK picked up to 3.9% in the year to June, the highest rate for 11 years.

However, the unemployment rate in the April-to-June period edged up slightly to 3.9%.

The employment rate was estimated at 76.1%, the joint highest since comparative records began in 1971.

Figures released last week showed the economy shrank 0.2% in the second quarter, the first fall since 2012.

Wages have been outpacing inflation since March 2018.

Part of the reason for this month’s rise was the unusual timing of annual pay rises for public health workers last year, when a larger-than-usual increase was deferred until July.

In real terms (after adjusting for inflation), regular pay – which excludes bonuses – is estimated to have increased by 1.9%.

ONS deputy head of labour market statistics Matt Hughes said: “”Excluding bonuses, real wages are growing at their fastest in nearly four years, but pay levels still have not returned to their pre-downturn peak.”

Income squeeze graph

The employment rate for women was 72.1% – the highest on record – and for men was 80.1%, slightly lower than the previous three-month period.

Overall, a record high of 32.81 million people were in employment – 425,000 more than a year earlier, largely because of more people working full-time.

Mr Hughes added: “Employment continues to increase, with three-quarters of this year’s growth being due to more women working. However, the number of vacancies has been falling for six months, with fewer now than there were this time last year.”

Brexit: Next boss says UK can avoid no-deal chaos

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The UK can avoid severe disruption in the event of a no-deal Brexit, the boss of one of the country’s leading retailers has told the BBC.

Lord Wolfson, chief executive of clothing firm Next, said he still hoped a deal could be done before 31 October.

But he said the government’s increased focus on contingency planning meant the UK was close to being well prepared.

Simplified customs and border procedures had made the chance of hold-ups of goods far less likely, he said.

Lord Wolfson was a strong advocate of Brexit in the run-up to the referendum but has previously warned that a no-deal Brexit would bring about “chaos and disorder”, while stopping short of a catastrophe.

In an exclusive interview with the BBC Today programme, he said the last government had failed to adequately prepare – a situation that was now being addressed.

“We are a long way from disorder and chaos, the fact that HMRC has introduced these transition methods will make an enormous difference. I think the encouraging thing is that we are rapidly moving from the disorder and chaos camp to the well-prepared camp.

“I should stress that I would much prefer a deal to no deal, but I am much less frightened by no deal if the government is prepared, and there is every indication it’s taking it more seriously.”

He said he was still hopeful a deal could be done before 31 October and that increased preparation for no deal would help secure one.

“In the vast majority of deals I’ve done, if the deadline is midnight, the deal gets done at 11:55 but we need to have nerves of steel and prepare ourselves for either outcome.”

Next store

Even if the UK ports wave everything through, Lord Wolfson concedes that the government cannot influence what will happen on the other side. He said that Next had moved all its imports and exports out of Calais to other ports.

There will be some who will say that redirecting all your business away from Calais does not square with being confident that all will go smoothly.

He did concede that at bottlenecks like Calais, there was a chance that smaller companies without the right preparation could cause a big problem by getting in the way of everyone else. If that was the case, we would need to get them out of the way – sending them back to the EU empty if necessary.

‘Scared of no deal’

The Next chief also had sharp criticism for the last government’s lack of preparation.

“There was a wilful attempt to not prepare. They were so scared of no deal they couldn’t allow anyone to admit it could happen. That’s changing and I think that means in the worst case you get mild disruption – in the best case – you get a deal.”

Lord Wolfson was however critical of the government’s approach towards future immigration. He said the imposition of a minimum salary of over ¬£30,000 was a mistake.

“I think it is a very unwise way to measuring need by looking at someone’s salary”.

Lord Wolfson summed up his guide to a successful Brexit with four P’s: Ports, people, prices and perception. If you can get those right the UK can both cope with no deal and in so doing, increase the chances of getting one.

His stoic position is at odds with dire warnings from some business groups and some former cabinet ministers who have described no deal as a catastrophic outcome and here will be many who say that it’s all very well for a business with a turnover of over ¬£4bn a year to be well prepared.

Lord Wolfson acknowledges there will be many smaller businesses who may struggle. But he also argues the government is now doing its job – the rest is down to them.

Brexit: What happens now?

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New UK Prime Minister Boris Johnson says he plans to renegotiate the Brexit deal agreed with the EU by his predecessor Theresa May. He says he is committed to leaving on 31 October come what may.

That does not mean we can be certain about what will happen. There are still many possible outcomes.

Chart on how the government could seek renegotiation of the Brexit deal.

Mrs May’s deal with the EU had two main elements – a binding withdrawal agreement (on the terms of the UK’s departure) and a non-binding political declaration (on the shape of the long-term future relationship). The deal was resoundingly rejected by MPs.

Mr Johnson’s plan is to negotiate with the EU to remove the Northern Ireland backstop from the withdrawal agreement (WA). The backstop was designed to ensure there could be no return to a hard border on the island of Ireland. (It would keep the UK in a customs union with the EU if there is no free trade agreement that avoids a hard border ie physical infrastructure and checks on goods.)

Mr Johnson would also like changes to the political declaration.

The difficulty is that up to now the EU has consistently said it will not reopen the withdrawal agreement, although the EU is open to changes to the political declaration. Mr Johnson insists they will reconsider now it is clear that the British government is prepared to leave without a deal. And he says that the backstop is unnecessary to prevent a hard border.

Another factor is time. Nothing much is usually done in Brussels during August, and the new European Commission does not take office until 1 November.

Mr Johnson is determined that Brexit should happen on 31 October, even if a new deal has been agreed in principle but not ratified and brought into law. In those circumstances there would almost certainly be questions about whether a short delay was sensible.

Perhaps the biggest question, though, is what would happen if no new deal is negotiated – or if MPs reject whatever new deal is brought back.

1. No deal
No-deal Brexit is still the default outcome if MPs cannot agree anything else and there are no further extensions. The deadline is 31 October.

It would also be possible for MPs to back a no-deal Brexit, although there has been a majority against that option when they have voted on it before.

There has been considerable discussion about whether MPs would be able to stop no deal if the new prime minister was determined to press ahead.

It has been suggested Mr Johnson could prorogue Parliament to let a no-deal Brexit happen. Proroguing effectively means Parliament is shut down – there would be no debates or votes.

In July, MPs and Lords voted for a measure that attempts to stop Parliament being closed down.

If MPs did want to oppose no-deal Brexit and did get a chance to do so, their ultimate weapon would be ousting the prime minster through a confidence vote.

2. Another no-confidence vote
Theresa May’s government survived a vote of no confidence on 16 January by 325 votes to 306. Labour could table a no confidence motion in the new government at any time.

Flowchart explaining process of vote of no confidence

Under the Fixed Term Parliaments Act 2011, UK general elections are only supposed to happen every five years. The next one is due in 2022.

But a vote of no confidence lets MPs vote on whether they want the government to continue. The motion must be worded: “That this House has no confidence in Her Majesty’s Government.”

If a majority of MPs vote for the motion then it starts a 14-day countdown.

If during that time the current government or any other alternative government cannot win a new vote of confidence, then an early general election would be called.

That election cannot happen for at least 25 working days but the precise date is set by royal proclamation on the advice of the prime minister. So the election could come after Brexit has happened if there’s no further delay.

3. Request a general election
A vote of no confidence isn’t the only way to bring about an early election. It could be that Boris Johnson decides it’s his best way forward.

Chart on how the government could call an election.

The prime minister does not have the power just to call an election. But, as in 2017, Mr Johnson could ask MPs to vote for an early election under the terms of the Fixed Term Parliaments Act.

Two-thirds of all MPs would need to support the move. The earliest date for the election would be 25 working days later but it could be after that – the prime minister would choose the precise date.

4. Another referendum
A further possibility is to hold another referendum.

It could have the same status as the 2016 referendum, which was legally non-binding and advisory. But some MPs want to hold a binding referendum where the result would automatically take effect – like with the 2011 referendum on changing the voting system for UK general elections.

One widely discussed option would be for a “confirmatory vote” – where the public would be given the choice between accepting a deal or remaining in the EU.

Chart on referendum options

Others argue that any further referendum should have the option of leaving the EU without a deal.

Either way, a referendum cannot just happen automatically. The rules for referendums are set out in a law called the Political Parties, Elections and Referendums Act 2000.

There would have to be a new piece of legislation to make a referendum happen and to determine the rules, such as who would be allowed to vote.

It could not be rushed through, because there has to be time for the Electoral Commission to consider and advise on the referendum question.

The question is then defined in the legislation.

Once the legislation has been passed, the referendum could not happen immediately either. There would have to be a statutory “referendum period” before the vote takes place.

Experts at University College London’s Constitution Unit suggest that the minimum time for all of the required steps above is about 22 weeks. That already takes us beyond 31 October.

5. Cancel Brexit
The European Court of Justice has ruled that it would be legal for the UK to unilaterally revoke Article 50 to cancel Brexit (without the need for agreement from the other 27 EU countries).

It is not totally clear what the process would be. But an act of Parliament calling for Article 50 to be revoked would probably be sufficient.