International Economics: IB Economics

Is the US-China trade war set to continue? It appears that way with calls for the US to ban imports of Chinese electric vehicles. 

I'd love to know the grounds for this: it's no doubt populist, but it would seem to have adverse effects on consumer choice and economic efficiency. 

The US is imposing an embargo on products imported from Xinjiang Province in China, on the grounds that they believe that forced labour may have been involved. Is this a reasonable position to hold?

Ukraine's Finance Minister has called - again - for an embargo on Russian energy, given the role that the sector plays in funding President Putin's government. 

And whilst that's got slightly closer for the EU - although Hungary and Slovakia may get exceptions - the problem remains that India and China and other developing economies are still going to want energy, particularly if it becomes cheaper - you'd have thought the falling demand for Russian energy would make it cheaper. 

The war in Ukraine has escalated with Russia cutting off gas supplies to Poland and Bulgaria - so-called 'unfriendly countries' because they refuse to pay for their gas in roubles. 

I hesitate to think where this war is headed...

Sanctions get serious - the West is looking to target the Russian energy sector by banning imports of oil, and banning or phasing out imports of natural gas. But look at how energy prices have spiked in the UK and EU as a result.

This is an excellent little bit of economic history, with Larry Elliott highlighting the fact that previous instances where sanctions have been imposed on a nation with little effect. 

He looks at a number of countries that were faced with sanctions in various guises, noting that in the case of Cuba and Iran they seemed to have little obvious effect but that they did have more of an impact in South Africa, although the different context of the latter might have meant that their success was ever more likely.  

As predicted, the final week of the Trump Presidency has been marked by another raft of measures directed at China's large companies. You have to wonder what the point is? 

For all the talk about adopting a tough negotiating position, and a trade war being "easy to win", what has the trade war achieved? It hasn't improved the US trade position with China, nor has it created  jobs. But it might serve to make a 'weak' President (and man) feel stronger. 

The US-China trade war continues with the US looking to block key imports from Xinjiang over allegations that they're made using forced labour. Whilst this ethical position appears an easy one to support, such claims can often be used inappropriately, much as in the same way health and safety legislation is. 

However, the net result is that there's going to be less trade which, on balance, probably adversely affects welfare.

We've just been looking at the US-China trade war, and you might be forgiven for thinking that in the post-Trump era it's over.

But it isn't. Joe Biden has introduced curbs on US companies selling semi-conductors to China - largely as a way of trying to protect US economic supremacy. The article is quick to highlight that whilst China consumes three quarters of the world's semi-conductors, it only produces 15% of them, and those it does make are of inferior quality.

However, the flip side is that China is likely to retaliate with adverse implications for global trade, and the continued dispute creates greater uncertainty and that too is bad for the global economy. 

D&S basics - as the supply of oil to the EU is expected to fall, markets are starting to price in the consequences of this, and thus the price rises. 

However, might the price of oil in other parts of the world fall? Well, the situation is a little bit more complicated than this because much of Russia energy exporting infrastructure is West-facing, and thus establishing equivalent facilities to export to Asia, for example, is going to cost money and take time. 

The EU is proposing to phase out Russian oil, and reduce the extent to which it can earn the revenues to fund the war in Ukraine. 

It looks like the sanctions are being ratcheted up; however, doubts remain about the willingness of countries like Hungary and Slovakia, which are the most heavily dependent upon Russian oil, and there are thoughts that some sort of exemptions are likely.  

Larry Elliot comments on the difference between the US ban on Russian oil - which will come at relatively little cost, given the small quantity of Russian oil that the US imports, and Europe's far greater dependence on Russian energy. He wonders whether it might split the Western alliance on the issue. 

He might  have a point - however, I would argue that with Spring just around the corner, and then Summer approaching, the real pinch point is likely to be more than 6 months away, and by then, I suspect, the West is banking on the war being over. 

A call to arms: Putin must fail, and here's how.

In short, Orysia Lutsevych asks for embargoes on oil and natural gas and a further ramping up of sanctions. And she's probably right in as much as it would bring the Russian economy to its knees. But what are the consequences of this? 

Another lovely example of a policy pronouncement that means next to nothing. Canada has banned imports of crude oil - and yet, as the article notes: "Canada imported just C$289m (£170m) worth of energy products in 2021, according to Statistics Canada."

Much sound and fury....

The US is going to block some Chinese exports from Xinjiang and Anhui provinces because of alleged human rights abuses including the use of forced labour. 

The goods targeted include cotton; China produces 20% of the world's cotton, much of it in Xinjiang.

An interesting look at how Qatar has coped with an embargo by four of its neighbours. The result is surprisingly well, actually. It looks at how they've adapted their economy to find alternative sources of imports and restructure the economy.