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Japan’s Exports Slump, Hopes Turn to Trump-Xi

Malcolm Scott
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Japan’s Exports Slump, Hopes Turn to Trump-Xi

(Bloomberg) -- Terms of Trade is a coming daily newsletter that untangles a world embroiled in trade wars. Sign up here. The stage for next week’s Trump-Xi trade war summit is also the scene of mounting casualties.Japan’s exports fell for a sixth straight month in May, the government said Wednesday, as escalating trade tensions add to concerns about global demand. The unsurprising drop serves as a reminder of a headwind buffeting the Bank of Japan, which meets to set policy on Thursday.The latest bad news on Japan’s economy came just after things were looking up in the trade world. U.S. President Donald Trump said Tuesday that he and his Chinese counterpart Xi Jinping will hold an “extended meeting” at the Group of 20 summit on June 28-29 in Osaka. Markets cheered. Analysts advised caution for a few reasons:At a rally in Florida later on Tuesday to kick off his reelection bid, Trump maintained his poker face. “We’re either going to have a good deal, and a fair deal, or we’re not going to have a deal at all."Their hopes of progress dashed in the past, economists are watchful. “We do not believe that the meeting will deliver a trade deal” and is more likely to end with both sides repeating already-known views, Iris Pang, an economist at ING Bank N.V. in Hong Kong, wrote in a report.Huawei, the Chinese telecom giant that’s hurting under a U.S. export ban, is a wild card. “China may not be willing to strike any deal or agreement without putting Huawei into the equation,” according to Edison Lee, head of telecom research at Jefferies.In search of their own deal later this year, Japanese and U.S. officials plan to hold staff-level discussions soon and the chief trade negotiators of both countries may talk before the Osaka G-20. Two big topics: agriculture and automobiles.Charting the Trade WarThe value of Japan’s shipments abroad fell 7.8% from a year earlier, as exports to China continued to slide. Further drops in shipments of chip-making equipment offered additional signs of softness in overseas tech demand.Today’s Must ReadsShots fired in FX wars | Trump bemoans weaker euro, yuan as unfair to U.S. Exporting people | Central America uses migration in economic model Apple’s supply chain | iPhone maker is diversifying production, Nikkei reportsChina tariffs distillers | China will keep hefty tariffs on a U.S. grain before G-20Mexico fumes at Trump | Mood in Mexico City turning to anger at U.S. policyTide turns on Huawei | Nokia and Ericsson capitalize on Huawei’s strugglesSteelworkers’ LatestEconomic AnalysisBracing for a long trade war -- China’s 2H outlook: EconomicsTrade war fallout in Asia is leaving a mark on Japan: EconomicsChip-equipment spending hurt in trade war crossfire: IntelligenceComing UpLighthizer testifies to House Ways and Means, 9:30 ET WednesdayWTO chief Roberto Azevedo holds press briefing in Geneva ThursdayG-20 leaders meet in Osaka, Japan, June 28-29\--With assistance from Jiyeun Lee, Henry Hoenig and Jenny Leonard.To contact the reporter on this story: Malcolm Scott in Hong Kong at mscott23@bloomberg.netTo contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Zoe SchneeweissFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

(Bloomberg) -- Terms of Trade is a coming daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

The stage for next week’s Trump-Xi trade war summit is also the scene of mounting casualties.

Japan’s exports fell for a sixth straight month in May, the government said Wednesday, as escalating trade tensions add to concerns about global demand. The unsurprising drop serves as a reminder of a headwind buffeting the Bank of Japan, which meets to set policy on Thursday.

The latest bad news on Japan’s economy came just after things were looking up in the trade world. U.S. President Donald Trump said Tuesday that he and his Chinese counterpart Xi Jinping will hold an “extended meeting” at the Group of 20 summit on June 28-29 in Osaka. Markets cheered. Analysts advised caution for a few reasons:

At a rally in Florida later on Tuesday to kick off his reelection bid, Trump maintained his poker face. “We’re either going to have a good deal, and a fair deal, or we’re not going to have a deal at all."Their hopes of progress dashed in the past, economists are watchful. “We do not believe that the meeting will deliver a trade deal” and is more likely to end with both sides repeating already-known views, Iris Pang, an economist at ING Bank N.V. in Hong Kong, wrote in a report.Huawei, the Chinese telecom giant that’s hurting under a U.S. export ban, is a wild card. “China may not be willing to strike any deal or agreement without putting Huawei into the equation,” according to Edison Lee, head of telecom research at Jefferies.In search of their own deal later this year, Japanese and U.S. officials plan to hold staff-level discussions soon and the chief trade negotiators of both countries may talk before the Osaka G-20. Two big topics: agriculture and automobiles.

Charting the Trade War

The value of Japan’s shipments abroad fell 7.8% from a year earlier, as exports to China continued to slide. Further drops in shipments of chip-making equipment offered additional signs of softness in overseas tech demand.

Today’s Must Reads

Shots fired in FX wars | Trump bemoans weaker euro, yuan as unfair to U.S. Exporting people | Central America uses migration in economic model Apple’s supply chain | iPhone maker is diversifying production, Nikkei reportsChina tariffs distillers | China will keep hefty tariffs on a U.S. grain before G-20Mexico fumes at Trump | Mood in Mexico City turning to anger at U.S. policyTide turns on Huawei | Nokia and Ericsson capitalize on Huawei’s struggles

Steelworkers’ Latest

Economic Analysis

Bracing for a long trade war -- China’s 2H outlook: EconomicsTrade war fallout in Asia is leaving a mark on Japan: EconomicsChip-equipment spending hurt in trade war crossfire: Intelligence

Coming Up

Lighthizer testifies to House Ways and Means, 9:30 ET WednesdayWTO chief Roberto Azevedo holds press briefing in Geneva ThursdayG-20 leaders meet in Osaka, Japan, June 28-29

--With assistance from Jiyeun Lee, Henry Hoenig and Jenny Leonard.

To contact the reporter on this story: Malcolm Scott in Hong Kong at mscott23@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Zoe Schneeweiss

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.