More economic nationalism – UBS

Following Canada’s decision to impose a drastic tax on Canadian consumers of Chinese-made electric vehicles, China has launched anti-dumping investigations into Canadian exports, notes Paul Donovan, macro strategist at UBS.

US ISM survey on manufacturing sentiment to be released

“Dumping is the deliberate sale of exports at below market price. It is not a common phenomenon, but it is a convenient way to pursue economic nationalism (as per US and EU dumping allegations against China). The environment of economic nationalism is most evident in traded goods, but it is also occurring in other areas.”

“Restrictions on capital flows have been a feature of economic nationalism in the past. Regulation can also be used to promote national interests (and markets such as the EU, with a sizeable middle-class consumer base, have an advantage in this area). Economists must distinguish the destructive tendencies of economic nationalism from the more positive forces of localization efficiency.”

“The US ISM survey on manufacturing sentiment is due out. Although the questions are supposedly objective, political bias can easily creep into the answers. The survey has tended to surprise negatively from the consensus this year. The UK BRC shop sales index showed modestly positive growth in sales value. Several parts of the durable goods sector are in deflation, which naturally reduces the total value of goods sold.”

Source: Fx Street

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