Ewald Nowotny, governor of Austria’s central bank and European Central Bank (ECB) governing council member, speaks during the “New Opportunities in the Sign of International Networking” event in Vienna, Austria.
Bloomberg | Bloomberg | Getty Images
There could be some upside for the euro area from the ongoing trade war between the U.S. and China, ECB Governing Council Member Ewald Nowotny told CNBC Tuesday.
Escalating trade war has been a concern for the European Central Bank (ECB), partly due to the export-driven nature of the euro area economy. However, speaking to CNBC in Sintra, Portugal, the Austrian central bank governor noted that there could be some opportunities for Europe.
“The euro zone is affected like everybody else but again in a trade conflict (between) China and the U.S. there are a number of options for the euro zone. It might be on the losing side, frankly speaking in some cases it might be on the winning side. So, this depends very much on the specific perspectives,” Nowotny told CNBC’s Annette Weisbach.
“There might be cases of trade diversions,” he pointed out. “If the U.S. is isolating itself increasingly from world trade that would mean there’s a number of trade relationships, there might be more going…to the euro zone, we might have stronger cooperation also in technological ways between Europe and China.
Both sides of the Atlantic have been at odds over trade ever since President Donald Trump took office back in 2016. Since then, the president ended trade negotiations between the U.S. and the EU over a wide-ranging deal (the Transatlantic trade and investment partnership – TTIP), has imposed tariffs on European steel and aluminium products, as well as threatened to slap further duties on European carmakers.
Trump announced last month that he would delay tariffs on cars and auto part imports for up to six months as discussions with the European Union and Japan take place and while he seeks to conclude talks with China. The president had threatened as early as last year that he would slap a 25% tariff on car imports from the European Union.
On Trump’s approach to international trade and remarks that trade wars are easy to win, Nowotny said: “I think it’s totally wrong, one has to be aware that trade wars are extremely risky.”
‘We have it totally under control’
President Donald Trump told CNBC on Wednesday that he trusts the information coming out of China on the coronavirus as the Centers for Disease Control and Prevention confirms the first case of it in the United States.
“We have it totally under control,” Trump told “Squawk Box” co-host Joe Kernen in an interview from the World Economic Forum in Davos, Switzerland. “It’s one person coming in from China. We have it under control. It’s going to be just fine.”
The CDC on Tuesday said a Snohomish County, Washington state, resident who was returning from China on Jan. 15 was diagnosed with the Wuhan coronavirus, which has killed nine people in China and sickened hundreds more.
Trump told CNBC he believes that Chinese President Xi Jinping and health officials there are going to continue to tell authorities around the world everything they need to know about the virus.
“I do. I do. I have a great relationship with President Xi,” said Trump, addressing a question about whether he’s concerned about transparency in China. “The relationship is very good.”
This weekend, the CDC and Homeland Security began screening people traveling to major airports in California and New York from Wuhan, China, where the outbreak is believed to have started. Health officials have also confirmed cases in Thailand, South Korea, Japan and Taiwan.
The coronavirus evoked memories of the 2003 outbreak of severe acute respiratory syndrome in China. SARS, which killed nearly 800 people worldwide, hit Asian cities such as Hong Kong, Singapore, Taipei and Beijing the hardest and triggered a severe economic downturn in the region.
Coronaviruses are a large family of viruses that usually infect animals but can sometimes evolve and spread to humans. Symptoms in humans include fever, coughing and shortness of breath, which can progress to pneumonia.
— CNBC’s Berkeley Lovelace contributed to this report.
Trump says GDP, Dow would be higher if it weren’t for the Fed
President Donald Trump on Wednesday said that the U.S. economy’s GDP growth would have been closer to 4% if it weren’t for the lingering effect of Federal Reserve rate hikes.
“That was a big blip that should not have taken place. It should not have happened. But it’s one of those things. But we had Boeing. We had the big strike with General Motors. We had things happen that are very unusual to happen,” Trump told CNBC’s Joe Kernen in an interview from the World Economic Forum in Davos, Switzerland.
The president also suggested that the stock market would be even higher than its already record-setting highs if the Fed hadn’t raised rates so quickly before cutting them three times during 2019.
“Now, with all of that, had we not done the big raise on interest, I think we would have been close to 4%,” Trump said. “And I – I could see 5,000 to 10,000 points more on the Dow. But that was a killer when they raised the rate. It was just a big mistake.”
The president has repeatedly taken the Fed and its chair, Jerome Powell, to task for raising rates too quickly, in his view. Trump nominated Powell to the role in November 2017, and the Fed raised rates four times in 2018.
The president’s remarks Wednesday echoed those his top economic advisor, Larry Kudlow, made to CNBC on Tuesday, when he predicted 3% growth in U.S. gross domestic product in 2020.
“This is a long cycle, and what you’ve got here in the Trump years is essentially a mini upcycle,” Kudlow said Tuesday. “You’ve gone from 1.5% to 2% growth. We had it going at almost 4%, then the Fed tightened.”
Manufacturing and trade data released this month suggested the American economy ended 2019 on a strong note. The economy is expected to grow more than 2% in the fourth quarter. That would represent a slowdown from the 2.9% increase in 2018, and 2% growth would still suggest the decade-old expansion is set to continue into this pivotal election year.
The Trump interview came hours after the first full day of impeachment proceedings wrapped up in the U.S. Senate and a day after Trump gave a speech to the World Economic Forum in which he boasted about U.S. economic gains under his watch.
Several observers said the address sounded like a campaign speech as the president seeks reelection in November’s election.
From a policy standpoint, Trump stood firm on his use of tariffs in trade negotiations, particularly as his administration looks to follow its so-called phase one trade deal with China with a second-phase pact. This stance has made business leaders in Davos skeptical that the two nations would reach an agreement before Trump’s term is up in a year.
—CNBC’s Thomas Franck contributed to this article.
Mnuchin says there’s no deadlines for ‘phase two’ trade deal
Steven Mnuchin, U.S. Treasury secretary, speaks during a press briefing at the White House in Washington, D.C., U.S., on Monday, July 15, 2019.
Al Drago | Bloomberg | Getty Images
There is no deadline for the “phase two” China deal, U.S. Treasury Secretary Steven Mnuchin said while speaking at a CNBC panel during the World Economic in Davos, Switzerland on Wednesday.
“As it relates to phase 2, I would say there’s no deadlines,” Mnuchin told CNBC’s Geoff Cutmore. “So the first issue we’re very focused on the next 30 days is implementing phase 1.”
The secretary added that the deal can be concluded before or after the U.S. election in November, suggesting there was no rush to get it done before the vote.
“There’s also, as part of this, a real implementation office as part of enforcement, and we’ll start on phase 2,” the secretary added. “If we get that done before the election, great — if it takes longer, that’s fine.”
The comment comes just a day after Mnuchin told press that the long-anticipated trade deal may not remove all of the American tariffs imposed on China.
The U.S. and China officially signed the first phase of the trade deal last week in Washington, D.C. after 22 months of tit-for-tat tariffs and negotiations.
This is a breaking news story, please check back later for more.
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