New the trump tax on all Chinese exports have fallen off the cool barrel

5 August 2019

The collapse in oil prices for the week was the coolest for the last 4 years

Oil prices have fallen just one week more than in the last four years, according to the RBC website, citing Bloomberg, starting in February of 2015.
So on August 1, 2019 Brent crude oil prices fell 7% to $60 per barrel. The price of Texas WTI has fallen even more – by 8% to $53.9 per barrel.
The last time a similar one-day fall was recorded 9 February 2016, when Brent had lost a day of 7.79% of its price.

The reason for this sharp reduction is in the area policies of American President Donald trump, who still decided to impose additional duties on Chinese imports. Accordingly, the package 10 percent tariffs on goods worth $300 billion, will take effect from 1 September of the current year. Thus, the U.S. imposed duties on 100% of Chinese imports. This news was a complete surprise for the markets and, of course, first of all, has fallen off the most speculative segment of the market – the oil market.

These measures are introduced in addition to already existing 25 percent duty on Chinese imports in the amount of $250 billion.

However, trump did not stop there and threatened new increase of duties in case of failure of trade negotiations with China.

The Ministry of Commerce of China, maintaining a hard-line Beijing to dialogue with the United States, of course, promised responsively to enter their own restrictions against the American side, reports Reuters. So, it is highly likely a Chinese ban on the export of U.S. rare earth metals (read: lithium and cobalt are necessary for the production of lithium-ion batteries for electric vehicles and storage devices, and other gadgets that will put very serious "stick in the wheel", for example, Tesla – ed.).

Impact on the world economy

However, the Russian experts, for example, chief analyst at Promsvyazbank Ekaterina Krylova argued that the additional 10% tax "appendage" will not have much negative impact on the US economy, China and around the world. A negative scenario could lead to a decline in GDP for both supereconomic less than 1 PPT within 2019-2020
Hence, experts do not expect any additional action from the fed, however, China's Central Bank may lower reserve requirements for commercial banks from the current 13.5 per cent to 11.5%. Analysts believe that the introduction of the U.S. a 25 percent anti-Chinese duties seriously – this will lead to a drop in U.S. GDP by 1.1 percentage points and entering their economy in a mild recession in 2020. While the fed may further cut interest rates. So, Promsvyazbank, believes that, instead of the expected three depressions in 2019 and 2020 fed rate can be reduced four times.

China's GDP in the case of increasing American tariffs to 25% will fall by 1.2 percentage points in 2019 and 2020 In response, Beijing prostimulirujte own economy by $0.5 trillion, will lower the reserve requirements for banks up to 10%, reduce rate for one-year loans from 4.35% to 3.6%, and the main thing – devalue the yuan to Ұ7,5 for $1. However, such a scenario experts believe PSB stressful and I hope to never use it.

PS today, China is already so strong economically that it can fight back America in trade conflicts. Anyway, to put the bandwagon in terms of the supply of lithium, which he is now a monopoly, the United States, he is quite capable, and this can have far-reaching implications (however, the world of ecology that does not help). A side result of the new duties and the response may well be, in my opinion, even the bankruptcy of Tesla Inc. Elon musk, since his company has managed to come up with a "planned loss" in stable or even falling prices for the main raw material for batteries of her electric vehicles is lithium, but this "tenth wave" from a sharp increase in costs with the purchase of rare earth materials outside of China,

and it is possible problems with running Girafarig-3 (pictured) in China, may not survive.

In addition, the drop in oil prices, and therefore gasoline, automatically slows the demand for electric cars and hybrids, at least in the North American market.

P. P. S. Russia apart such American-Chinese "black swans" will not remain as you would not want. For a start, the falling barrel drags the ruble, and so already fallen into recession, the Russian economy (at least the segments of small and medium business) new major (tens and hundreds of p. p.) devaluation of the ruble can not worry that will significantly reduce the solvency of buyers, and increase the army of unemployed, and this is directly gets in the car market, which in this case can finish the second half of 2019 in a much more negative values of "growth" than the first half of the new markets legkovushek and LCV.      
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