Steel tariffs and the devil’s in the details: USMCA
Author: Portfolio Specialist Group
October 15, 2018
A recap of last week’s top economic news and what’s to come
- Finance Minister Bill Morneau said last week the government will impose immediate global tariffs and quotas designed to deflect a damaging flood of steel imports into Canadian markets as a result of U.S. levies. The “provisional safeguard” measures on seven steel products — considered emergency actions by the World Trade Organization — will apply to all countries including China, but will provide specific exemptions for the United States, Mexico, and developing countries.
- New rules in the United States-Mexico-Canada trade agreement place unusual restrictions on Canadian dairy exports that could limit both the growth of the industry and its ability to clear a glut of milk products from domestic markets, experts said last week. The controversial Class 7 pricing system places unexpected restrictions on Canada’s global exports of certain dairy products.
Canadian Housing starts slow, U.S. CPI rises less than expected
- Canadian housing starts fell by 5.9% in September to 188,683 units, down from 198,843 in August and below analysts estimates of 210,000. The Canada Mortgage and Housing Corp. said that urban starts were down 5.9% to 175,653 units. Meanwhile, starts of urban multiple-unit projects such as condos, apartments and townhouses fell 8.9% to 122,656 units.
- U.S. consumer prices rose less than expected in September, dampened by a slower increase in the cost of rent and falling energy prices, as underlying inflation pressures appeared to cool slightly. The Consumer Price Index increased 0.1% last month after rising 0.2% in August.
Hurricane Michael’s economic wallop, a dire report on climate change
- Hurricane Michael, the powerful Category 4 hurricane bearing down on Florida’s Gulf Coast last week, is projected to have caused roughly anywhere between $20 to $30 billion in damage and lost economic productivity.
- The UN Intergovernmental Panel on Climate Change warned governments around the world that they must take “rapid, far-reaching and unprecedented changes in all aspects of society” to avoid disastrous levels of global warming. The scientific authority said the planet will reach the crucial threshold of 1.5 degrees Celsius above pre-industrial levels by as early as 2030, precipitating the risk of extreme drought, wildfires, floods and food shortages for hundreds of millions of people.
IMF cuts global economic growth forecasts, raises concerns over demand for oil
- The International Monetary Fund (IMF) slashed its global growth forecasts for 2018 and 2019 by 0.2 percentage points to 3.7%. The Washington D.C.-based institute also raised concerns that demand for oil may slump over the coming months.
- Meanwhile, the IMF also said ongoing trade tensions could shave 1.6 percentage points off China’s economic growth over the first two years. However, much of that impact is expected to be offset by the Chinese government’s policies to stimulate the economy.
What’s to come
Canada’s CPI numbers, several U.S. data releases including housing
In Canada, a lot of attention will be focused on the release of CPI numbers. Meanwhile, a slew of data will be released in the U.S., including retail sales, housing starts and existing home sales as well as industrial production numbers.
Source: BMO Economics, TD Economics, Reuters, CNBC as of October 12, 2018
Source: Bloomberg, as of October 12, 2018
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