<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-820x461.jpeg" alt="" class="wp-image-565548" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A coffee cup with a printed message from Salvadoran President Nayib Bukele’s X account is pictured at Franco’s Pupusa restaurant in San Salvador on July 17, 2024. Marvin Recinos | Afp | Getty Images</figcaption></figure>



A record-breaking rally for coffee prices shows no sign of slowing down, analysts say, with some warning it could take years for one of the world’s most traded commodities to recover.



Arabica coffee futures with March delivery hit a fresh intraday high of 348.35 cents per pound on Tuesday, notching their highest level in nearly 50 years. The contract has since cut some of its gains but remains up a whopping 70% year-to-date.



The last time the price for arabica beans, the world’s most popular variety, traded that high was in 1977 when snow destroyed large areas of Brazilian plantations.



Renowned for their smooth taste and sweet flavor, arabica beans make up between 60% to 70% of the global coffee market. They are commonly used in espressos and other barista-made coffee.



Drought and high temperatures, alongside a global reliance on supplies from relatively few regions, are regarded as the primary drivers for the recent price rise.



Robusta futures, meanwhile, also climbed to a fresh record high in late November. Robusta beans are known for their strong and bitter flavor and are typically used in instant blends.



The extraordinary price rally for coffee, which is considered the second-most traded commodity by volume, after crude oil, comes amid concerns over the 2025 crop in Brazil, by far the world’s largest producer.



“The country experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crop could fail,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said in a research note published Tuesday.



For some, the poor growing weather in Brazil means it could take a long time for coffee prices to unwind.



“History suggests that coffee prices will only ease back as and when supply improves and stocks are replenished,” David Oxley, chief climate and commodities economist at Capital Economics, said in a research note published on Nov. 29.



“Crucially, this is a process that can take years, not months,” Oxley said.



<h2 class="wp-block-heading" id="h-coffee-particularly-vulnerable-to-bad-weather"><a></a>Coffee ‘particularly vulnerable’ to bad weather</h2>



A staple beverage for billions of people across the world, demand for coffee has been boosted in recent years by growing consumption in China. Production, however, has struggled to keep up.



“Like cocoa, coffee is grown in a relatively narrow tropical band, with key producers including Brazil, Vietnam, Colombia, and Ethiopia,” Saxo Bank’s Hansen said.



“This concentration makes it particularly vulnerable to adverse weather conditions, especially in Brazil and Vietnam, which together account for approximately 56% of global production,” he added.



The U.S. Department of Agriculture said in its semi-annual report last month that it expects Brazil’s coffee production for the marketing year 2024/2025 to come in at 66.4 million (60 kilogram per bag) comprising of 45.4 million bags of arabica and 21 million of robusta.



The USDA said its forecast reflected a 5.8% drop from its previous projection, attributing the decrease to irregular weather patterns that negatively affected crop development, particularly for arabica trees.



“In Brazil, this will be the fifth consecutive arabica harvest that is disappointing because of adverse weather,” Carlos Mera, head of agricultural commodities markets at Dutch lender Rabobank, told CNBC via video call.



Asked whether the climate crisis appears to be amplifying the risks for coffee production, Mera said it was difficult to measure accurately, but there are growing concerns across the industry that extreme weather could prevent typical growth in coffee trees.



Looking ahead, Mera said coffee prices “can certainly go even higher” from their current record levels.



<h2 class="wp-block-heading"><a></a>Price increases for coffee drinkers?</h2>



For coffee drinkers, analysts say it is practically inevitable that coffee makers will need to pass on the costs to consumers in order to limit the impact of higher bean prices on their bottom line.



Nestlé, the world’s biggest coffee maker, which owns leading brands including Nescafé and Nespresso, said last month that it would continue raising prices and making packs smaller to offset the impact of higher prices.



“Like every manufacturer, we have seen significant increases in the cost of coffee, making it much more expensive to manufacture our products,” a Nestlé spokesperson told CNBC via email.



“As always, we continue to be more efficient and absorb increasing costs where possible whilst maintaining the same high quality and delicious taste that consumers know and love,” they added.



Italian coffee maker Lavazza and U.S. coffee giant Starbucks both declined to comment when contacted by CNBC.

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Coffee prices climb to near 50-year highs — and it may take years for the rally to run out of steam

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-820x461.jpeg" alt="" class="wp-image-564863" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Customers shop at a supermarket in Foster City, California, the United States, Sept. 13, 2023. Xinhua News Agency | Xinhua News Agency | Getty Images</figcaption></figure>



Consumer prices rose at a faster annual pace in November, a reminder that inflation remains an issue both for households and policymakers.



The consumer price index showed a 12-month inflation rate of 2.7% after increasing 0.3% on the month, the Bureau of Labor Statistics reported Wednesday. The annual rate was 0.1 percentage point higher than October.



Excluding food and energy costs, core CPI was at 3.3% on an annual basis and 0.3% monthly. The 12-month core reading was unchanged from a month ago.



All of the numbers were in line with the Dow Jones consensus estimates.



The readings come with Federal Reserve officials mulling over what to do at their policy meeting next week, Markets strongly expect the Fed to lower its benchmark short-term borrowing rate by a quarter percentage point when the meeting wraps up Dec. 18, but then skip January as they measure the impact successive cuts have had on the economy.



The report further solidified the outlook for a cut, with traders raising the odds to 99%, according to the CME Group’s FedWatch measure. Odds of a January cut also edged higher, hitting about 23%.



“In-line core inflation clears the way for a rate cut at next week’s [Federal Open Market Committee] meeting,” said Whitney Watson, global co-head and co-CIO for fixed income at Goldman Sachs Asset Management. “Following today’s data the Fed will depart for the holiday break still confident in the disinflation process and we think it remains on course for further gradual easing in the new year.”



While inflation is well off the 40-year high it saw in mid-2022, it remains above the Fed’s 2% annual target. Some policymakers in recent days have expressed frustration with inflation’s resilience and have indicated that the pace of rate cuts may need to slow if more progress isn’t made.



If the Fed follows through with a cut next week, it will have taken a full percentage point off the federal funds rate since September.



Much of the November increase in CPI came from shelter costs, which rose 0.3% and have been one of the most stubborn components of inflation. Fed officials and many economists expect housing-related inflation to ease as new rental leases are negotiated, but the item has continued to increase each month.



The BLS estimated that the shelter item, which has about a one-third weighting in the CPI calculation, accounted for about 40% of the total increase in November. The shelter index rose 4.7% on a 12-month basis in November.



Used vehicle prices rose 2% monthly while new vehicle prices increased 0.6%, reversing the recent trend that has seen those items come down.



Elsewhere, food costs rose 0.4% monthly and 2.4% year over year, while the energy index increased 0.2% but was down 3.2% annually.



The increase in the CPI meant that average hourly earnings for workers were basically flat for the month when adjusted for inflation, but increased 1.3% from a year ago, the BLS said in a separate release.

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Annual U.S. inflation rate accelerates to 2.7% in November, as expected

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-820x461.jpeg" alt="" class="wp-image-564731" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man shops at a Target store in Chicago on November 26, 2024. Kamil Krzaczynski | AFP | Getty Images</figcaption></figure>



A key economic report coming Wednesday is expected to show that progress has stalled in bringing down the inflation rate, though not so much that the Federal Reserve won’t lower interest rates next week.



The consumer price index, a broad measure of goods and services costs across the U.S. economy, is expected to show a 2.7% 12-month inflation rate for November, which would mark a 0.1 percentage point acceleration from the previous month, according to the Dow Jones consensus.



Excluding food and energy, so-called core inflation is forecast at 3.3%, or unchanged from October. Both measures are projected to show 0.3% monthly increases.



With the Fed targeting annual inflation at 2%, the report will provide more evidence that the high cost of living remains very much a fact of life for U.S. households.



“Looking at these measures, there’s nothing in there that says the inflation dragon has been slain,” said Dan North, senior economist at Allianz Trade Americas. “Inflation is still here, and it doesn’t show any convincing moves towards 2%.”



Along with the read Wednesday on consumer prices, the Bureau of Labor Statistics on Thursday will release its producer price index, a gauge of wholesale prices that is projected to show a 0.2% monthly gain.



<h2 class="wp-block-heading" id="h-halting-progress-but-more-cuts"><a></a>Halting progress, but more cuts</h2>



To be sure, inflation has moved down considerably from its CPI cycle peak around 9% in June 2022. However, the cumulative impact of price increases has been a burden to consumers, particularly those at the lower end of the wage scale. Core CPI has been drifting higher since July after showing a steady series of declines.



Still, traders in futures markets are placing huge odds that policymakers again will cut their benchmark short-term borrowing rate by a quarter of a percentage point when the Federal Open Market Committee concludes its meeting Dec. 18. Odds of a cut were near 88% on Tuesday morning, according to the CME Group’s FedWatch measure.



“When the market is locked in like where it is today, the Fed doesn’t want to make a big surprise,” North said. “So unless something has skyrocketed that we haven’t foreseen, I’m pretty sure the Fed is on a lock here.”



The CPI increase for November likely came from a few key areas, according to Goldman Sachs.



Car prices are expected to show a 2% monthly increase, while air fares are seen as 1% higher, the firm’s economists projected in a note. In addition, the nettlesome increase in auto insurance is likely to continue, rising 0.5% in November after posting a 14% increase over the past year, Goldman estimated.



<h2 class="wp-block-heading"><a></a>More trouble ahead</h2>



While the firm sees “further disinflation in the pipeline over the next year” from easing in the autos and housing rental categories, as well as softening in the labor markets, it also worries that President-elect Donald Trump’s planned tariffs could keep inflation elevated in 2025.



Goldman projects core CPI inflation will soften, but just to 2.7% next year, while the Fed’s target inflation gauge, the personal consumption expenditures price index, will move to 2.4% on the core reading from its most recent 2.8% level.



With inflation projected to run well above 2% and macro economic growth still running near 3%, this wouldn’t normally be an environment in which the Fed would be cutting. The Fed uses higher interest rates to curb demand, which theoretically would force businesses to lower prices.



Markets expect the Fed to skip the January meeting then possibly cut again in March. From there, market pricing is for only one or at most two cuts through the rest of 2025.



“Two percent to me doesn’t mean just touching 2% and bouncing along. It means hitting 2% for a continuous, foreseeable future, and none of that is evident in any of those reports,” North said. “You don’t really want to cut in that environment.”

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The CPI report Wednesday is expected to show that progress on inflation has hit a wall

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-820x547.jpg" alt="" class="wp-image-562084" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">U.S. President Joe Biden stands with Angolan Minister of Transport Ricardo Daniel Sandao Queiros Viegas de Abreu, during a visit to the Lobito Port Terminal to receive a briefing on the Lobito Atlantic Railway, in Lobito, Angola, December 4, 2024. REUTERS/Elizabeth Frantz</figcaption></figure>



LOBITO, Angola, Dec 4 (Reuters) &#8211; U.S. President Joe Biden met African leaders in the Angolan port of Lobito on Wednesday to advance a plan to extend a railway that could channel critical minerals from Congo and Zambia to the West via Lobito, and counter Chinese clout in the region.



As things stand, China is the main foreign player in Democratic Republic of Congo&#8217;s mining sector, which exports minerals considered critical for batteries and other industrial components key to transitioning away from fossil fuels.



The United States has provided a $550 million loan to support the&nbsp;Lobito&nbsp;venture, which involves refurbishing an existing railway through Angola and extending it into Congo&#8217;s mining heartland as part of the first phase.



No date has been given for its completion yet, while a second phase that would link Lobito to Zambia via a new railway line is still at the preparation stage, with an aim to break ground in 2026according to Washington.



The presidents of Angola, Congo and Zambia and the vice president of Tanzania joined Biden for a summit in Lobito on the last day of his first and only trip to Africa as president.



Biden and Congo&#8217;s Felix Tshisekedi affirmed their commitment to promoting investment and peace to allow the central African nation to make the most of its vast mineral wealth, according to a note from the White House issued after the two met.



Biden and Zambian counterpart Hakainde Hichilema also met to discuss the Zambian component of the Lobito project and other issues.



&#8220;This corridor is of vital importance to opening up our countries, to opening up our regions, the continent, and truly the global economy,&#8221; Hichilema said. &#8220;This project is a huge opportunity for investment, for trade.&#8221;



&#8220;The presidents underscored their conviction,&#8221; a White House statement said, &#8220;that countries should not be held back from investing in their development by the need to service unsustainably high debt, and together committed to continue advocating for reform.&#8221;



In June, Zambia&#8217;s international bondholders voted through their part of a $13.4 billion debt restructuring deal, making Zambia the first to complete a full-blown rework under the G20-led &#8220;Common Framework&#8221; architecture.



<h2 class="wp-block-heading" id="h-the-china-factor">THE CHINA FACTOR</h2>



The Lobito Atlantic Railway concession, awarded in 2022 to a consortium of Western companies, has been presented as a win against China, as Washington is increasingly concerned about the Chinese grip on critical minerals, including Congo&#8217;s vast reserves of copper and cobalt.



The second phase of the project&nbsp;envisions extending the Lobito corridor&nbsp;railway&nbsp;through&nbsp;Zambia and connecting it to&nbsp;Tanzania&#8217;s Indian Ocean port of Dar es Salaam.



The U.S. has funded feasibility studies&nbsp;for the second phase, but&nbsp;critics say it&nbsp;could&nbsp;offer&nbsp;China&nbsp;a rival route&nbsp;eastwards, undermining the entire project from Washington&#8217;s perspective.



After Donald Trump is sworn in as U.S. president in January, Washington is expected to take a harsher line with China and some officials have questioned whether U.S. support for the eastern route will continue.



Trump will likely back at least parts of the Lobito project and remain a close partner to Angola when he returns to the White House, according to two officials who served under the previous 2017-21 Trump administration.



The details relating to the funding and construction of the second phase of the project are still in question.



The Lobito project is backed by global commodities trader Trafigura, Portuguese construction group Mota-Engil and railway operator Vecturis. There is no date yet for its completion.



A senior U.S. official said on Tuesday that the Lobito project could be completed by the end of the decade, without providing further details.



The U.S. Development Finance Corporation has provided the $550 million loan to refurbish the 1,300-km (800-mile) rail network from Lobito to Congo.



U.S. officials announced&nbsp;fresh&nbsp;financing&nbsp;for the first phase of the venture&nbsp;this week through the Development Finance Corporation worth $600 million for projects including solar, minerals and telecommunications.



Biden pledged lasting U.S. engagement with Africa on the continent&#8217;s own terms as he met with his Angolan counterpart Joao Lourenco in Luanda on Tuesday. Biden&#8217;s trip delivered on a promise to visit Africa, but came only weeks before his presidency ends.



Despite his repeated pledges to be &#8220;all in on Africa&#8221;, U.S. influence in Africa has declined during his term in office. Washington has lost a military base in the Sahel region and made little progress breaking China&#8217;s commercial dominationin minerals seen as critical to national security.



Angola has long nurtured close ties with China and Russia but has recently moved closer to the West. Itaims to expand its collaboration with the United States on security and military initiatives, Lourenco said during Biden&#8217;s visit on Tuesday.



(Reporting by Jessica Donati and Trevor Hunnicutt; editing by Timothy Heritage, Estelle Shirbon and Mark Heinrich)

U.S. President Joe Biden vistis the Lobito Port Terminal

Biden meets African leaders in Angola to advance Lobito railway project

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108070539-1733239543660-gettyimages-2187495843-AFP_36PB2LJ-1-820x461.jpeg" alt="" class="wp-image-561728" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108070539-1733239543660-gettyimages-2187495843-AFP_36PB2LJ-1-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108070539-1733239543660-gettyimages-2187495843-AFP_36PB2LJ-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108070539-1733239543660-gettyimages-2187495843-AFP_36PB2LJ-1-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108070539-1733239543660-gettyimages-2187495843-AFP_36PB2LJ-1-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108070539-1733239543660-gettyimages-2187495843-AFP_36PB2LJ-1-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108070539-1733239543660-gettyimages-2187495843-AFP_36PB2LJ-1.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Police stand guard in front of the main gate of the National Assembly in Seoul on December 3, 2024, after South Korea’s President Yoon Suk Yeol declared emergency martial law. South Korea President Yoon on December 3 declared emergency martial law, saying the step was necessary to protect the country from “communist forces” amid parliamentary wrangling over a budget bill.&nbsp; Jung Yeon-je | Afp | Getty Images</figcaption></figure>



South Korean stocks dropped in the U.S. on Tuesday after President Yoon Suk Yeol invoked emergency powers and declared martial law, raising fear of instability in the world’s 13th largest economy.



The iShares MSCI South Korea ETF, which tracks more than 90 large and mid-sized companies in South Korea, tumbled as much as 7% to hit a 52-week low. The ETF cut losses to about 2.4% after lawmakers in the South Korean National Assembly voted to overturn Yoon’s martial law decree early Wednesday morning in Seoul.



Korea Electric Power’s American Depositary Receipts (ADRs) dropped 5%, and Korean e-commerce giant Coupang shed 6%. KT Corporation, formerly Korea Telecom, saw shares fall 3%. Posco, a South Korean steel manufacturer, declined more than 6%.



Within three hours of Yoon declaring martial law late Tuesday night, 190 out of the 300 National Assembly lawmakers gathered to overturn the emergency martial law.



The president accused opposition parties of sympathizing with North Korea and controlling parliament. Yoon did not specify how martial law — a temporary rule by military authorities in a time of emergency — would affect governance and democracy in the country.



“The Administration is in contact with the ROK government and is monitoring the situation closely,” said the White House National Security Council in a statement to NBC News.



Under the martial law declaration, all political activities and acts that “incite social disorder” are prohibited. This is the first time since 1980 a South Korean leader has issued a martial law declaration.



The Korea Exchange announced it would hold an emergency meeting “to prepare response measures” and&nbsp; later decide whether the market would open on Wednesday, according to local media reports.



The U.S. dollar jumped 1.9% against the South Korean won Tuesday.

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South Korean stocks rocked in U.S. trading after martial law declared

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="552" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics-820x552.jpeg" alt="" class="wp-image-561143" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics-820x552.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics-300x202.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics-134x90.jpeg 134w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics-768x517.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics-1536x1034.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Officials, including Chinese President Xi Jinping, Russian President Vladimir Putin and Indian Prime Minister Narendra Modi, attend the BRICS summit in Kazan, Russia October 23, 2024.&nbsp; Alexei Danichev | Reuters</figcaption></figure>



MOSCOW, Dec 2 (Reuters)&nbsp;&#8211;&nbsp;The Kremlin said on Monday that any U.S. attempt to compel countries to use the dollar would backfireafter&nbsp;U.S. President-elect Donald Trump&nbsp;threatened to&nbsp;impose tariffs on BRICS countries if they created their own currency.



Trump on Saturday demanded that BRICS member countries commit to not creating a new currency or supporting another currency that would replace the United States dollar, saying they would otherwise face 100% tariffs.



The BRIC grouping initially included Brazil, Russia, India and China, but has since expanded to take in other countries. The grouping does not have a common currency, but long-running discussions on the subject have gained some momentum after the West imposed sanctions on Russia over the war in Ukraine.



Asked about Trump&#8217;s comments, Kremlin spokesman Dmitry Peskov&nbsp;said the dollar was losing its appeal as a reserve currency for many countries,&nbsp;a trend he said was&nbsp;gathering pace.



&#8220;More and more countries are switching to the use of national currencies in their trade and foreign economic activities,&#8221; Peskov told reporters.



If Washington resorted to &#8220;economic force&#8221; to compel countries to use the dollar it would backfire, he predicted.



&#8220;If the U.S. uses force, as they say economic force, to compel countries to use the dollar it will further strengthen the trend of switching to national currencies (in international trade),&#8221; said Peskov.



&#8220;The dollar is beginning to lose its appeal as a reserve currency for a number of countries.&#8221;



Dollar dominance — the outsized role of the U.S. dollar in the world economy — has in fact been strengthened of late, thanks to the robust U.S. economy, tighter monetary policy and heightened geopolitical risks, even as economic fragmentation has boosted a push by BRICS countries to shift away from the dollar into other currencies.



A study by the Atlantic Council&#8217;s GeoEconomics Center this year showed that the U.S. dollar remains the world&#8217;s primary reserve currency, and neither the euro nor the so-called BRICS countries have been able to reduce global reliance on the dollar.



(Reporting by Reuters; Writing by Alexander Marrow/Anastasia Teterevleva; Editing by Andrew Osborn)

108051586-17296890292024-10-23t105709z_1019049937_rc2aqaac1wbu_rtrmadp_0_russia-brics

Kremlin says Trump threat to BRICS nations over US dollar will backfire

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="546" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/OKONJO-IWAELA-820x546.jpg" alt="" class="wp-image-560115" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/OKONJO-IWAELA-820x546.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/OKONJO-IWAELA-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/OKONJO-IWAELA-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/OKONJO-IWAELA-768x511.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/OKONJO-IWAELA.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Director-General of the World Trade Organization Ngozi Okonjo-Iweala speaks during the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 19, 2024. REUTERS/Denis Balibouse/File Photo</figcaption></figure>



GENEVA, Nov 29 (Reuters)&nbsp;&#8211;&nbsp;World Trade Organization chief Ngozi Okonjo-Iweala was reappointed for a second term at a special meeting on Friday, the trade watchdog said, meaning her&nbsp;tenure&nbsp;will coincide with U.S. President-elect Donald Trump&#8217;s&nbsp;second administration.



Analysts expect the road ahead for the three-decade-old WTO will be challenging, likely characterised by trade wars with Trump, who returns to the White House on Jan. 20, threatening hefty tariffs on goods from Mexico, Canada and China.



Okonjo-Iweala, a former Nigerian finance minister who made history in 2021 by becoming the WTO&#8217;s first female and first African director-general, announced in September that she would run again, aiming to complete &#8220;unfinished business&#8221;.



No other candidates ran against her&nbsp;and all of the WTO&#8217;s 166 members agreed by consensus to a proposal to reappoint her.



&#8220;We have a full agenda to deliver&#8230;and we fully intend to get to work immediately, no stopping, to try and deliver on these results,&#8221; Okonjo-Iweala told journalists, citing WTO reforms and fishing negotiations as among her priorities.



Trade sources said the meeting created a means of fast-tracking her appointment process to avoid any risk of it being blocked by Trump, whose teams and allies have criticised both Okonjo-Iweala and the WTO in the past.



In 2020, his administration gave its support to a rival candidate and sought to block her first term. She secured U.S. backing only when President Joe Biden succeeded Trump in the White House&nbsp;in January 2021.



WTO General Council Chair and Norwegian Ambassador Petter Ølberg said the process had been fair and transparent. &#8220;We feel that we now are really fit for the next four years,&#8221; he said.



MOUNTING U.S.-CHINA TENSIONS



Even in the Biden era, WTO negotiations have made limited progress although a handful of deals were struck in Geneva in 2022. Efforts to revamp the WTO&#8217;s dispute settlement system, brought to its knees under Trump due to U.S. opposition to judge appointments, have so far failed to deliver ahead of an end-December deadline.



Many predict the WTO will be a theatre where mounting trade tensions between the U.S. and China will play out, with Trump&#8217;s new trade team expected to challenge Beijing&#8217;s official developing country status at the WTO that critics say endows it with unfair advantages.



China&#8217;s mission sent a message on X congratulating Okonjo-Iweala and saying it was looking forward to working with her and other members &#8220;to safeguard the multilateral trading system&#8221;.



Okonjo-Iweala said she was looking forward to working with the incoming Trump administration and that she saw common ground between them on areas like intellectual property rights. &#8220;I think we should come into things with a very constructive and creative approach to trying to deal with the issues that will face the world trading system,&#8221; she said.



She declined to comment on Trump&#8217;s tariff plans, calling it premature.



Asked to respond to remarks by Trump&#8217;s former U.S. trade representative Robert Lighthizer that she was &#8220;China&#8217;s ally in Geneva&#8221;, she said: &#8220;The WTO has 166 members and I hope they all believe I&#8217;m their ally.&#8221;



(Reporting by Emma Farge, editing by Thomas Seythal, Kevin Liffey and Mark Heinrich)

OKONJO-IWAELA

WTO chief Okonjo-Iweala reinstated for second term as trade wars loom

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="410" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-1-820x410.jpeg" alt="" class="wp-image-558826" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-1-820x410.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-1-300x150.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-1-160x80.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-1-768x384.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-1.jpeg 884w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. Aly Song | Reuters</figcaption></figure>



BEIJING — President-elect Donald Trump plans to raise tariffs by an additional 10% on all Chinese goods coming into the U.S., according to a post on his social media platform Truth Social.



The post immediately followed one in which Trump said his first of “many” executive orders on Jan. 20 would impose tariffs of 25% on all products from Mexico and Canada. Such a move would end a regional free trade agreement.



Trump is set to be inaugurated as the next U.S. president on Jan. 20. He cited illegal immigration and illicit drug trade as reasons for the tariffs.



“I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail,” Trump said.&nbsp;He claimed that contrary to promises, Beijing did not impose the death penalty on such drug dealers.



Fentanyl, a synthetic opioid, is an addictive drug that’s led to tens of thousands of overdose deaths each year in the U.S.



Reducing illicit supplies of the drug, precursors of which are mostly produced in China and Mexico, has been an area in which Washington and Beijing have agreed to cooperate.



“No one will win a trade war or a tariff war,” Liu Pengyu, a spokesperson for China’s embassy in the U.S., said on X. He described bilateral economic and trade cooperation as “mutually beneficial in nature.”



Liu pushed back on Trump’s claim that China has done little to stem the flow of fentanyl to the U.S. He said that both countries’ counternarcotics teams have regularly communicated since Chinese President Xi Jinping met with U.S. President Joe Biden in November 2023.



“Drugs are pouring into our Country, mostly through Mexico, at levels never seen before,” Trump said. “Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America.”



Trump had threatened tariffs of 60% on Chinese goods while campaigning for president.



A 10% tariff on China is lower than the 20% to 30% that markets expected, Kinger Lau, chief China equity strategist at Goldman Sachs, said Tuesday on CNBC’s “Squawk Box Asia.” He expects China will cut rates, increase fiscal stimulus and moderately depreciate its currency in order to counter the economic impact of increased duties.



Mexico is the largest trading partner of the U.S., followed by Canada and China, according to U.S. data as of September.



The U.S. is China’s largest trading partner on a single country basis, according to China customs data. The Asian country’s largest regional trading partners are the Association of Southeast Asian Nations and the European Union.



China and the U.S. still have a “really important commercial and economic relationship,” Andy Rothman, investment strategist at Matthews Asia, told CNBC’s “Street Signs Asia” on Tuesday. He said that China is unlikely to take reciprocal action for now, and noted that Beijing has not typically responded aggressively.



The U.S. dollar traded about 1% stronger versus the Mexican peso, and 1.4% higher against the Canadian dollar as of Tuesday morning. The greenback climbed around 0.2% against the Hong Kong-traded Chinese yuan.



— CNBC’s Hui Jie Lim and Anniek Bao contributed to this report.

106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech (1)

Trump vows an additional 10% tariff on China, 25% tariffs on Canada and Mexico

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT-820x461.jpeg" alt="" class="wp-image-556053" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">He Lifeng, China’s vice premier, during the Global Financial Leaders’ Investment Summit in Hong Kong, China, on Tuesday, Nov. 19, 2024.  Paul Yeung | Bloomberg | Getty Images</figcaption></figure>



Chinese Vice Premier He Lifeng on Tuesday vowed to boost Hong Kong’s competitiveness by investing in the city’s innovation and delivering supportive financial policies.



Speaking at the third Global Financial Leaders Investment Summit, hosted by the Hong Kong Monetary Authority, He reiterated Beijing’s commitment to “explore and implement” measures aimed at building Hong Kong as an “international financial center.” That’s according to CNBC’s translation of his spoken Mandarin.



Beijing’s stimulus measures have already “benefited” Hong Kong, said He, who oversees a key economic and financial policymaking body. “The upward trajectory of the economy is more certain.”



To strengthen its financial industry, Hong Kong needs to leverage measures from mainland China as well as its global connections, Li Yunze, minister of China’s National Financial Regulatory Administration, said in a panel following He’s speech.



Almost 80% of mainland businesses that seek an offshore listing would go to Hong Kong, Li said, stressing the city’s future “has always been intertwined with” China.



During the same panel, Wu Qing, head of China’s securities regulator, said that Hong Kong will continue pursuing policies that attract more foreign investment.



Some of the world’s largest banks have moved to scale back operations and cut jobs in Hong Kong and mainland China amid a prolonged dearth in listing and deal-making activities.



An exodus of capital made the city’s Hang Seng the worst-performing major index last year, marking fourth straight years of decline. And Hong Kong’s stock market saw proceeds from initial public listings (IPOs) and follow-on share sales shrink 16% in the first six months this year, compared to a year ago, according to LSEG data.



Still, operators of Hong Kong’s stock exchange have pointed to signs of pickup in the third quarter as Beijing unveiled a raft of stimulus measures to bolster its flagging economy.



Vice premier He, a close confidant of President Xi Jinping, has been tasked with tackling China’s government debt crisis and protracted property downturn, which have strained the regions financial stability and stunted economic growth momentum.



Earlier this month, Chinese authorities took further steps to attract foreign investment, including lowering the capital threshold for foreign investors holding a non-controlling stake in an enterprise. Under the new regulations, foreign individuals are now allowed to invest in publicly-listed companies.



PBOC governor Pan Gongsheng also said in a meeting on Nov. 7 that that China would continue to implement accommodative monetary policy and bolster ties between domestic and foreign financial markets. Representatives from 11 foreign institutions including HSBC, Standard Chartered and Citigroup attended that meeting, according to a statement.

108064788-1731985547539-gettyimages-2184866467-HK_FINANCE_SUMMIT

China’s vice premier vows to boost Hong Kong competitiveness, says stimulus push has ‘benefited’ the city

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002-820x461.jpeg" alt="" class="wp-image-554559" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Bank of England in the City of London on 6th November 2024 in London, United Kingdom. The City of London is a city, ceremonial county and local government district that contains the primary central business district CBD of London. The City of London is widely referred to simply as the City is also colloquially known as the Square Mile. (photo by Mike Kemp/In Pictures via Getty Images) Mike Kemp | In Pictures | Getty Images</figcaption></figure>



The U.K. economy grew less than expected in the third quarter of the year, showing only marginal growth following a rebound at the start of the year, initial figures showed Friday.



Gross domestic product came in at&nbsp;0.1% in the&nbsp;three months to September compared to the previous quarter. That’s&nbsp;below the 0.2% growth expected by economists polled by Reuters and&nbsp;follows an expansion of 0.5% in the second quarter of the year.



U.K.’s dominant services sector also grew just 0.1% on the quarter, the Office for National Statistics said. Construction rose by 0.8%, while production slipped 0.2% in the month.



It comes after inflation in the U.K. fell sharply to 1.7% in September, dipping below the Bank of England’s 2% target for the first time since April 2021. The fall in inflation helped pave the way for the central bank to cut rates by 25 basis points on Nov. 7, bringing its key rate to 4.75%.



The Bank of England said last week it expects the Labour Government’s tax-raising budget to boost GDP by 0.75 percentage points in a year’s time. Policymakers also noted that the government’s fiscal plan had led to an increase in their inflation forecasts.



U.K. Finance Minister Rachel Reeves said Friday she was “not satisfied” with the numbers.



“At my Budget, I took the difficult choices to fix the foundations and stabilise our public finances.&nbsp;Now we are going to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal,” she said in a release.



A rate cut at the BOE’s next meeting in December now looks “improbable,” according to Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales. He said inflation risks and growing global headwinds will likely prevent policymakers from pursuing back-to-back rate cuts.



“These figures suggest that the economy went off the boil even before the budget, as weaker business and consumer confidence helped weaken output across the third quarter, particularly in September,” Thiru said in emailed comments.



The outcome of the recent U.S. election has fostered much uncertainty about the global economic impact of another term from President-elect Donald Trump. While Trump’s proposed tariffs are expected to be widely inflationary and hit the European economy hard, some analysts have said such measures could provide opportunities for the British economy.



Bank of England Governor Andrew Bailey gave little away last week on the bank’s views of Trump’s tariff agenda, but he did reference risks around global fragmentation.



“Let’s wait and see where things get to. I’m not going to prejudge what might happen, what might not happen,” he told reporters during a press briefing.



The British pound ticked slightly higher by 0.1% against the U.S. dollar at 7:33 a.m. in London. It dipped 0.15% against the euro following Friday’s GDP release.

108063216-1731601889272-gettyimages-2183863696-20241106_city_skyline_mist_002

UK economy ekes out 0.1% growth in the third quarter, below expectations

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WTO-820x547.jpg" alt="" class="wp-image-553664" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WTO-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WTO-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WTO-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WTO-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WTO-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/WTO-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Meghan, Duchess of Sussex (not pictured), co-hosts an event of Women in Leadership with Dr Ngozi Okonjo-Iweala, Director General of the World Trade Organization in Abuja, Nigeria, May 11, 2024. REUTERS/Marvellous Durowaiye/File Photo</figcaption></figure>



GENEVA, Nov 12 (Reuters)&nbsp;&#8211;&nbsp;The World Trade Organization&nbsp;is&nbsp;planning&nbsp;a special meeting of its top decision-making body later this month where a call could be made on the reappointment of its&nbsp;Director-General Ngozi Okonjo-Iweala, a document showed on Tuesday.



Trade sources said such a meeting appeared to be a route that could fast-track the appointment process to avoid any risk of it getting blocked by U.S. President-elect Donald Trump, whose teams and allies have criticised both Okonjo-Iweala and the trade watchdog in the past.



The&nbsp;WTO document sent by the General Council chair said the first day of the Nov. 28-29 meeting would allow Okonjo-Iweala, a former Nigerian finance minister, to present her vision for the 166-member organisation and answer delegates&#8217; questions. The second day could provide &#8220;an opportunity for Members to take a decision on the appointment of the next Director-General&#8221;, it said.



Okonjo-Iweala, 70, is the sole candidate for the job and told Reuters she wants to complete &#8220;unfinished business&#8221; from her first term which includes new rules on cutting fishing subsidies and finding a fix for its hobbled appeals court.



Dozens of countries have voiced support in recent WTO meetings for her reappointment after her term expires on Aug. 31,&nbsp;2025. But some have privately observed that the WTO&#8217;s election process, which typically lasts months, could allow for Trump&#8217;s team to oppose her candidacy.



Trump is set to be inaugurated on Jan. 20.



In 2020, his administration gave its support to a rival candidate and sought to block her first term. She secured U.S. backing only when President Joe Biden succeeded Trump in the White House.



Those who follow the trade body say it is likely to face a messy, recriminatory period for trade under Trump. He has vowed to impose new tariffs of 10%-20% on global imports and 60% on goods from China, well above the rates it has committed to under WTO rules and upending global trade flows.



Asked about the potential to speed the WTO&#8217;s reappointment of Okonjo-Iweala, Trump&#8217;s transition team responded with a non-specific answer.



&#8220;The American people reelected President Trump because they trust him to lead our country and restore peace through strength around the world. When he returns to the White House, he will take the necessary action to do just that,&#8221; a Trump-Vance transition spokesperson said in an emailed statement.



The U.S. Trade Representative&#8217;s office, still controlled by the Biden administration, declined to comment.



There is no guarantee that WTO members, which approve decisions by consensus, will agree to a second term for Okonjo-Iweala at the November meeting and the chair could opt to postpone the decision, trade sources said.



If they do pursue it, it might backfire, suggested Keith Rockwell, a former WTO director and senior fellow at the Hinrich Foundation. &#8220;Let&#8217;s see how the United States likes being pushed into a corner,&#8221; he said, calling the actions to speed up the appointment process &#8220;unprecedented.&#8221;



(Reporting by Emma Farge; Additional reporting by David Lawder in Washington; editing by Thomas Seythal, Alexandra Hudson and Richard Chang)

Meghan, Duchess of Sussex, co-hosts an event of Women in Leadership with Dr Ngozi Okonjo-Iweala, Director General of the World Trade Organization in Abuja

WTO may seek to reappoint chief ahead of Trump presidency

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="800" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/TJORLERHRFO4NIRPMFSZ32CFMA.jpg" alt="" class="wp-image-529012" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/TJORLERHRFO4NIRPMFSZ32CFMA.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/TJORLERHRFO4NIRPMFSZ32CFMA-300x205.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/TJORLERHRFO4NIRPMFSZ32CFMA-132x90.jpg 132w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/TJORLERHRFO4NIRPMFSZ32CFMA-768x525.jpg 768w" sizes="auto, (max-width: 800px) 100vw, 800px" /><figcaption class="wp-element-caption">FILE PHOTO: An oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo</figcaption></figure>



Oil prices may see a drastic fall in the event that oil alliance OPEC+ unwinds its existing output cuts, said market watchers who are predicting a bearish year ahead for crude.



“There is more fear about 2025′s oil prices than there has been since years — any year I can remember, since the Arab Spring,” said Tom Kloza, global head of energy analysis at OPIS, an oil price reporting agency.



“You could get down to $30 or $40 a barrel if OPEC unwound and didn’t have any kind of real agreement to rein in production. They’ve seen their market share really dwindle through the years,” Kloza added.



A decline to $40 a barrel would mean around a 40% erasure of current crude prices. Global benchmark Brent is currently trading at $72 a barrel, while U.S. West Texas Intermediate futures are around $68 per barrel.



Given that oil demand growth next year probably won’t be much more than 1 million barrels a day, a full unwinding of OPEC+ supply cuts in 2025 would “undoubtedly see a very steep slide in crude prices, possibly toward $40 a barrel,” Henning Gloystein, head of energy, climate and resources at Eurasia Group, told CNBC.&nbsp;



Similarly, MST Marquee’s senior energy analyst Saul Kavonic posited that should OPEC+ unwind cuts without regard to demand, it would “effectively amount to a price war over market share that could send oil to lows not seen since Covid.”



However, the alliance is more likely to opt for a gradual unwinding early next year, compared to a full scale and immediate one, the analysts said.



The oil cartel has been exercising discipline in maintaining its voluntary output cuts, to the point of extending them.



In September, OPEC+ postponed plans to begin gradually rolling back on the 2.2 million barrels per day of voluntary cuts by two months in an effort to stem the slide of oil prices. The 2.2 million bpd cut, which was implemented over the second and third quarters, had been due to expire at the end of September.&nbsp;



At the start of this month, the oil cartel again decided to delay the planned oil output increase by another month to the end of December.



Oil prices have been weighed by a sluggish post-Covid recovery in demand from China, the world’s second-largest economy and leading crude oil importer. In its monthly report released Tuesday, OPEC lowered its 2025 global oil demand growth forecast from 1.6 million barrels per day to 1.5 million barrels per day.



The pressured prices were also conflagrated by a perceivably oversupplied market, especially as key oil producers outside the OPEC alliance like the U.S., Canada, Guyana and Brazil are also planning to add supply, Gloystein highlighted.



<h2 class="wp-block-heading" id="h-bearish-year-ahead-for-oil"><a></a>Bearish year ahead for oil</h2>



The market consensus is that there’ll be a “substantial” oil stock build next year, said Citibank energy strategist Martoccia Francesco.



“Should the producers group proceed with their production plan, the market surplus could nearly double… reaching as much as 1.6 million barrels per day,” said Francesco.&nbsp;



Even if OPEC+ doesn’t unwind the cuts, the future ofl prices is still looking break. Citi analysts expect Brent price to average $60 per barrel next year.



Further fueling the bearish outlook is the incoming administration of U.S. President-elect Donald Trump, whose return is associated by some with a potential trade war, said analysts who spoke to CNBC.



“If we do get a trade war — and a lot of economists think that a trade war is possible, and particularly against China — we could see much, much lower prices,” said OPIS’ Kloza.



Trump has also touted a “drill baby drill” policy for U.S. producers, vowing to cut energy prices in half.



For that to happen to retail gasoline prices, oil would need to drop to “below $40” per barrel, said Matt Smith, Kpler’s lead oil analyst.



Right now, retail gasoline prices are at a “sweet spot” at $3 per gallon, where consumers do not feel the pinch and input prices are still sufficiently high for producers, Smith added.

FILE PHOTO: An oil pump jack outside Almetyevsk, Russia

Oil could plunge to $40 in 2025 if OPEC unwinds voluntary production cuts, analysts say

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/104823443-GettyImages-869487498-820x461.jpg" alt="" class="wp-image-551642" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/104823443-GettyImages-869487498-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/104823443-GettyImages-869487498-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/104823443-GettyImages-869487498-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/104823443-GettyImages-869487498-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/104823443-GettyImages-869487498-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/104823443-GettyImages-869487498.jpg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chairman Jerome Powell said Thursday that he will not step down if President-elect Donald Trump asks for his resignation.



When asked whether he would resign if requested to by Trump, the Fed chair simply said: “No.” Powell subsequently told reporters that the president does not have the power to fire or demote him.



“Not permitted under the law,” Powell told reporters at a news conference, after the Fed cut interest rates by a quarter percentage point. 



Investors will be closely watching the president-elect’s contentious relationship with the Fed chair. Trump appointed Powell in 2017, but repeatedly lashed out against the central bank chief during his first term as president, arguing Powell was not easing monetary policy quickly enough.



Trump said in an October interview that the president should be able to weigh in on interest rate decisions.



“I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether the interest rates should go up or down,” Trump told Bloomberg News at the Economic Club of Chicago on Oct. 15.



As Covid-19 swept the nation in March 2020, Trump claimed the authority to remove Powell from office. The Fed chair’s term ends in 2026.



Powell also said Thursday that Trump’s election victory this week will not have any immediate impact on the central bank’s policy.&nbsp;



“In the near term, the election will have no effects on our policy decisions,” Powell told reporters.



The Republican Party also won a majority in the Senate in Tuesday’s election. If the GOP takes the House of Representatives as well, Trump should have an easier path to pass his economic agenda.&nbsp;



Steve Mnuchin, Trump’s former Treasury secretary, said the president-elect will likely focus on cutting taxes and imposing tariffs, particularly on China.  



Powell said the next administration’s policies could have an economic effect that would impact the Fed’s dual mandate of maximum employment and price stability.&nbsp;But it is still too early to tell and the Fed is not making any assumptions, Powell said.&nbsp;



“It’s such an early stage,” Powell said. “We don’t know what the policies are, and once we know what they are, we won’t have a sense of when they’ll be implemented,” he said.

104823443-GettyImages-869487498

Powell says he would not resign as Fed chief if Trump asked for his resignation

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="2048" height="1365" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108059394-1730955309734-gettyimages-2182206041-fc_1208661-scaled.jpeg" alt="" class="wp-image-551572" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108059394-1730955309734-gettyimages-2182206041-fc_1208661-scaled.jpeg 2048w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108059394-1730955309734-gettyimages-2182206041-fc_1208661-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108059394-1730955309734-gettyimages-2182206041-fc_1208661-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108059394-1730955309734-gettyimages-2182206041-fc_1208661-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108059394-1730955309734-gettyimages-2182206041-fc_1208661-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108059394-1730955309734-gettyimages-2182206041-fc_1208661-1536x1024.jpeg 1536w" sizes="auto, (max-width: 2048px) 100vw, 2048px" /><figcaption class="wp-element-caption">Pictured here is a construction site of property developer Hongkong Land, in Shanghai on Nov. 4, 2024. Feature China | Future Publishing | Getty Images</figcaption></figure>



BEIJING – China is widely expected to unveil more stimulus on Friday after its parliament ends a five-day meeting.



Authorities here have ramped up stimulus announcements since late September, fueling a stock rally. President Xi Jinping led a meeting on Sept. 26 that called for strengthening fiscal and monetary support, and stopping the real estate market slump.



While the People’s Bank of China has already cut several interest rates, major increases in government debt and spending requires approval by the country’s parliament, called the National People’s Congress.



That approval could be granted at the weeklong meeting of the legislature’s standing committee. During a similar meeting in October of last year, authorities had approved a rare increase in China’s deficit to 3.8%, from 3%, according to state media.



Analysts expect an increase in the scale of fiscal support after Donald Trump — who has threatened harsh tariffs on Chinese goods — won the U.S. presidential election this week. But some are still cautious, warning that Beijing may remain conservative and not issue direct support to consumers.



When discussing planned fiscal support at a press conference last month, Minister of Finance Lan Fo’an emphasized the need to address local government debt problems.



At the parliamentary meeting so far, officials have reviewed a plan to increase the limit on how much debt local governments can issue, according to state media. The additional quota would go toward swapping out local governments’ hidden debt.



Nomura estimates that China has 50 trillion yuan to 60 trillion yuan ($7 trillion to $8.4 trillion) in such hidden debt, and expects Beijing could allow local authorities to increase deb issuance by 10 trillion yuan over the next few years.



That could save local governments 300 billion yuan in interest payments a year, Nomura said.



In recent years, the country’s real estate slump has drastically limited a significant source of local government revenues. Regional authorities have also had to spend on Covid-19 controls during the pandemic.



Even before then, local Chinese government debt had grown to 22% of GDP by the end of 2019, far more than the growth in revenue available to pay that debt, according to an International Monetary Fund report.

108059394-1730955309734-gettyimages-2182206041-fc_1208661

China expected to announce highly anticipated fiscal stimulus package

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV-820x461.jpeg" alt="" class="wp-image-551327" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Tesla CEO Elon Musk (R) joins former U.S. President and Republican presidential candidate Donald Trump during a campaign rally at the site of his first assassination attempt in Butler, Pennsylvania, on Oct. 5, 2024. Jim Watson | Afp | Getty Images</figcaption></figure>



As Donald Trump celebrated his presidential victory early Wednesday morning, Elon Musk was right there with him.



“A star is born. Elon,” Trump said onstage at his Mar-a-Lago resort, thanking the world’s richest person for spending two weeks campaigning in Pennsylvania.



Musk, who poured at least $130 million into a pro-Trump campaign effort, turned Trump support into yet another full-time job in recent months, funding a swing-state operation to register voters and using his social media platform X to constantly tout his preferred candidate, frequently with misinformation.



Musk’s investment in Trump is already paying off, even though Trump doesn’t take office until Jan. 20.



Tesla shares soared 15% on Wednesday, adding roughly $15 billion in paper value to Musk’s net worth. The electric vehicle maker faces headwinds in the global market from China-based competitors, declining European sales and consumers’ growing distaste for his political views.



But with Musk cozying up to Trump, and the president-elect promising to slash the types of regulations that Musk abhors, Wall Street is betting Tesla, on balance, will be a beneficiary.



For Musk, the potential gains go well beyond Tesla.



During his victory speech, Trump also praised Musk’s SpaceX and thanked Musk for delivering Starlink Wi-Fi terminals to Hurricane-stricken parts of the U.S. That all leaves Musk with plenty of reasons to be optimistic that a second Trump administration will pay healthy dividends to him and his businesses.



Musk’s companies are currently embroiled in a range of probes and lawsuits from federal agencies pertaining to matters including alleged securities law violations, workplace safety, labor and civil rights violations, violations of federal environmental laws, consumer fraud and vehicle safety defects.



Given the executive branch’s outsized control over federal regulatory bodies, Musk can look forward to regulators and intelligence agencies winding down some or all of the 19 known ongoing federal investigations and lawsuits against Tesla, SpaceX and X, formerly known as Twitter.



At New York’s Madison Square Garden on Oct. 27, Musk was one of many Trump fans and surrogates to speak during an all-day rally. Much of the coverage of the event focused on comedian Tony Hinchcliffe’s bigoted quips, including his description of Puerto Rico as a “floating island of garbage.”



Musk was introduced by Cantor Fitzgerald CEO Howard Lutnick, who called the Tesla CEO the “greatest capitalist” in U.S. history. Lutnick said he and Musk were co-founders of the envisioned “Department of Government Efficiency” and he asked Musk how much he thought could be cut from the federal budget.



Musk answered “at least $2 trillion,” which is more than the federal government’s discretionary budget of $1.7 trillion. The remark received a scream from Lutnick and applause from the crowd.



Musk didn’t specify what he sought to cut, but he previously accused agencies including the SEC, Environmental Protection Agency and Federal Aviation Administration of regulatory overreach or infringing on his free speech rights.



He also accused the Biden administration of hiring too many IRS personnel, and has vocally objected to a so-called billionaires tax.



Having a role in a bespoke commission could give Musk power over federal agencies’ budgets, staffing and the ability to push for the elimination of inconvenient regulations.



Musk also said during a Tesla earnings call on Oct. 23, that he intended to use his sway with Trump to establish a “federal approval process for autonomous vehicles.” Currently, approvals happen at the state level.



Tesla has been working on driverless technology for more than a decade but hasn’t yet produced a robotaxi or vehicle safe to use without a human ready to steer or brake at any time.



Additionally, a Trump administration may agree to ramp up the government’s work with his companies.



Musk’s newest startup, xAI, is developing large language models and generative artificial intelligence software that aims to compete with similar products from Microsoft-backed OpenAI, Meta and others.&nbsp;



Meta recently announced its open-source Llama models were available to U.S. government agencies in the areas of defense and national security. And OpenAI is already working with the U.S. military after adding a retired U.S. Army general and former director of the National Security Agency to its board in June.



Musk didn’t respond to a request for comment.



<h2 class="wp-block-heading" id="h-spacex-s-billions-in-federal-contracts">SpaceX’s billions in federal contracts</h2>



According to research on federal spending and prime contracts by FedScout, SpaceX has received more than $19 billion from contracts with the federal government since 2008, including from NASA, the U.S. Air Force and Space Force.



The company is on track to take in several billions of dollars annually from prime contracts with the federal government for years to come, according to FedScout CEO Geoff Orazem.



That number doesn’t include classified spending, smaller items like Starlink terminals, or spending that’s done at the state level via block grants from the federal government, like when the Federal Emergency Management Agency gives states assistance to help recover from natural disasters.



Meanwhile, Tesla has reported around $10 billion in sales of “automotive regulatory credits,” or environmental credits, since 2015, Orazem found by evaluating the company’s financial filings.



These incentives are largely derived from federal and state regulations in the U.S. that require automakers to sell some number of low-emission vehicles or buy credits from companies like Tesla, which often have an excess.



Regulatory credits were about 60% of Tesla’s net income in the second quarter of 2024, and 39% in the third quarter. Other government rebates on EV sales represented about 50% of Tesla’s third-quarter profit.



Trump hasn’t made clear whether he’ll maintain those rebates and regulatory credit programs. He previously said he may cut the federal $7,500 EV tax credit.



Additionally, Trump has promised to slash income taxes and to implement steep tariffs. While tariffs&nbsp;could help protect Tesla from Chinese competitors, such a move could involve significant disruption to Tesla’s automotive supply chain, which relies on some materials and parts from China.



When it comes to worker protections, Musk has been seeking to strike down the constitutional authority of the National Labor Relations Board through litigation. He may find such lawsuits are no longer needed if Trump is willing to eliminate or reduce the power of the agency, which is supposed to ensure that companies follow federal laws allowing workers to form unions and engage in collective bargaining with their employers.



Then there’s Musk’s involvement with sanctioned governments.



At SpaceX, Musk has withheld the use of Starlink, the company’s satellite internet service, over Taiwan, even for U.S. troops based there. The Wall Street Journal reported that Musk cut off access as a favor requested by Russian President Vladimir Putin allegedly on behalf of Chinese President Xi Jinping during a series of ongoing, frequent talks between the two men.



In response to the reports, NASA Administrator Bill Nelson said if they were true, Musk’s conversations with Putin should be be federally investigated.



According to analysis by NBC News, Musk has repeatedly posted pro-Kremlin content to his hundreds of millions of followers on X. He even engaged with content from Tenet Media and its creators at least 60 times on the social network. Tenet was at the center of an alleged Russian covert operation to manipulate U.S. public opinion ahead of the 2024 election, according to the Department of Justice. 



While Vice President-elect JD Vance recently called Putin a U.S. adversary, Trump has frequently spoken of his affection for the Russian president, even since Russia’s devastating invasion of Ukraine in 2022. Kremlin officials have celebrated Trump’s victory in this week’s election.



Musk, who publicly endorsed Trump moments after the first assassination attempt on the former president in July, has said he intends to remain involved in U.S. politics for the long haul.



He said in a discussion on X on Tuesday that his super PAC would continue its work after the presidential election and would seek to influence the outcomes of midterms, intermediate elections and elections of local prosecutors across the U.S.



A priority, Musk said, would be to help elect district attorneys “who prosecute repeat violent criminals who are obviously a danger to people.”

108057984-1730831808377-gettyimages-2176083179-AFP_36JD9UV

How Elon Musk stands to cash in on Trump’s presidential victory

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108058872-1730902372279-gettyimages-1197718058-jm1_4964-820x461.jpeg" alt="" class="wp-image-551324" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108058872-1730902372279-gettyimages-1197718058-jm1_4964-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108058872-1730902372279-gettyimages-1197718058-jm1_4964-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108058872-1730902372279-gettyimages-1197718058-jm1_4964-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108058872-1730902372279-gettyimages-1197718058-jm1_4964-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108058872-1730902372279-gettyimages-1197718058-jm1_4964-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/108058872-1730902372279-gettyimages-1197718058-jm1_4964.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man holds an American flag depicting president-elect Donald Trump at Parliament Square in London in 2020. Jeff J Mitchell | Getty Images News | Getty Images</figcaption></figure>



The U.K. holds dear to its so-called “special relationship” with the U.S., priding itself on a long history of shared values and cultural, diplomatic, linguistic and commercial ties with the States.



London feels those long-standing bonds and geopolitical interests make its relationship with the U.S., well, special.



Whether that feeling of exceptionalism and unique closeness is appreciate or felt as keenly across the Atlantic has always been a bone of contention for London, however, and the bond between the U.S. and U.K. could be tested further when Donald Trump returns to the White House following his election win.



In the run-up to the vote, Britain’s Prime Minister Keir Starmer had looked to strengthen the relationship with Trump, checking in on the Republican leader after an assassination attempt against him, and traveling to New York with Foreign Secretary David Lammy to dine with him at Trump Tower in September.



Congratulating the president-elect on his decisive win, Starmer posted on X that he looked forward to a collaborative partnership with Trump



“As the closest of allies, we stand shoulder to shoulder in defence of our shared values of freedom, democracy and enterprise,” he commented, adding, “From growth and security to innovation and tech, I know that the U.K.-U.S. special relationship will continue to prosper on both sides of the Atlantic for years to come.”



Still, Starmer might have some groveling to do with a new Trump administration.



Tensions flared last month when Trump’s campaign team in October accused the Labour Party of “blatant foreign interference” in the presidential election after party activists travelled to the U.S. to help Harris’ campaign. Starmer and the party denied the accusations.



There’s no doubt that the leaders are cut from different cloths — the brash and unpredictable character of businessman-turned-politician Trump is a far cry from the more measured style of the former human rights lawyer who once took on big business in high-profile court cases.



Addressing British lawmakers on Wednesday, Starmer reacted to Trump’s win by reaffirming his commitment to good relations with the U.S., stating “it is absolutely crucial that we have a strong relationship, that strong special relationship forged in difficult circumstances, between the U.S. and the U.K.”



But Kemi Badenoch, the new leader of Britain’s opposition Conservative Party, which is more ideologically aligned with the Republicans, goaded Starmer over past criticism of Trump by the current Labour foreign minister who, in 2018, called Trump a “woman-hating, neo-Nazi-sympathising sociopath” and a “profound threat to the international order” in a magazine article. Lammy has since said he would work with Trump and would look to persuade the infamously NATO-skeptic Republican to remain in the military alliance.



<h2 class="wp-block-heading" id="h-the-uk-can-lie-low"><a></a>The UK can lie low</h2>



Economists say Britain should not expect any special treatment when a new Trump administration comes into force, but they note it’s unlikely the U.K would be a prime target for punitive policies, such as import tariffs, that could be levied on the European Union and China as Trump looks to boost America’s growth and competitiveness.



Trump has already threatened to revive a trade war that began during his first term in office, stating in his election campaign that he would raise tariffs on Chinese goods by 60-100%, and would impose a blanket 10% tariff (or potentially 20%) on all U.S. imports, a move opening up a new front in trade tensions with two of its largest trading partners, the EU and China. The U.K., now outside the European bloc, might find its post-Brexit position an advantage.



“The U.K. is, quite frankly, probably small enough to be off the radar,” Kallum Pickering, chief economist at Peel Hunt, told CNBC after Trump’s election win.



“We’re not part of the EU anymore. China and the EU are the big two [that will be targeted by Trump]. We won’t come into any issues around NATO commitments, because we meet our own. Whereas with Europe, Trump could conceivably say, ‘we’ll threaten you with a trade war, but if you increase your military spend and meet your NATO commitments, we’ll not put tariffs on,’” Pickering said, noting that “Trump likes to trade everything off.”



While “Starmer may have offended Trump at some point, or David Lammy might have offended America,” Pickering noted that “these are relatively small potatoes versus Trump’s issues with Europe and NATO or China containment. So I think with a bit of careful diplomacy, the U.K. and the U.S. can get on good terms quickly,” he said.



<h2 class="wp-block-heading"><a></a>Not so special anymore</h2>



Describing the “special relationship” as one of convenience for the U.S., Pickering said the U.K. could still maneuver itself to be useful to an incoming Trump government.



“The key thing for the U.K. is, can it reassert itself as this mid-Atlantic broker between America and Europe now that it’s outside of the EU? This was always the U.K.’s advantage — to be the English speaking common-law, American partner within the European Union, and by brokering that relationship, that allowed us to punch above our weight diplomatically.”



Whisper it, but the “special relationship” ceased to be special long ago, according to Holger Schmieding, chief economist at Berenberg.



“Apart from strong cooperation on intelligence gathering and few military aspects, all recent U.S. administrations have treated the U.K. as a normal mid-size European country,” Schmieding told CNBC Wednesday.



“That Trump and Starmer are apparently not fans of each other, to put it mildly, will not help in future U.S.-U.K. talks. But it is not the decisive factor, largely because for the U.S. will probably not be inclined to give any special treatment to any country in Europe,” he said.



Schmieding said it’s advisable for the U.K. to coordinate its response to Trump with its European neighbors, notably on how to react if Trump cuts U.S. military aid to Ukraine, as expected, meaning Europe is on the hook for the funding gap left by Ukraine’s strongest ally since Russia invaded in February 2022.



Although the picture has improved since Trump was last in office, from 2017 to 2021, the president-elect is likely to continue to harangue European members of NATO to increase their defense spending, a perennial bugbear for Trump.



NATO members committed in 2014 to spending 2% of their national gross domestic product on defense but laggards remain, including Germany, France, Italy, Turkey, Spain and Canada. Even the Netherlands, whose former leader Mark Rutte is now NATO chief, has failed to meet the spending pledge.



After being elected to office in July, Starmer made a “cast-iron commitment” to raise U.K. defense spending to 2.5% of GDP, but has refused to give a timetable for the increase. Still, the U.K. is in Trump’s good books when it comes to defense spend, with its expenditure in the arena standing at 2.3% of GDP in 2023, NATO figures show. The U.S. spent 3.2%, making it the second-largest spender after Poland, at 3.9%.



Trump rattled NATO members in February when he said he would not provide military protection to any member state that had not met its financial obligations to the bloc, and would even “encourage” adversaries “to do whatever the hell they want” to that nation.

108058872-1730902372279-gettyimages-1197718058-jm1_4964

Britain loves its ‘special relationship’ with the U.S. — but that doesn’t mean Trump will love it back

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-820x461.jpeg" alt="" class="wp-image-551143" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106677114-15983545702020-08-25t100023z_1719720997_rc2yki97n9wc_rtrmadp_0_usa-china-tech.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. Aly Song | Reuters</figcaption></figure>



BEIJING — Donald Trump’s 2024 presidential win has raised the bar for China’s fiscal stimulus plans, expected Friday.



On the campaign trial, Trump threatened to impose additional tariffs of 60% or more on Chinese goods sold to the U.S. Increased duties of at least 10% under Trump’s first term as president did not dent America’s position as China’s largest trading partner.



But new tariffs — potentially on a larger scale — would come at a pivotal time for China. The country is relying more on exports for growth as it battles with a real estate slump and tepid consumer spending.



If Trump raises tariffs to 60%, that could reduce China’s exports by $200 billion, causing a 1 percentage point drag on GDP, Zhu Baoliang, a former chief economist at China’s economic planning agency, said at a Citigroup conference.



Since late September, Chinese authorities have ramped up efforts to support slowing economic growth. The standing committee of the National People’s Congress — the country’s parliament — is expected to approve additional fiscal stimulus at its meeting this week, which wraps up Friday.



“In response to potential ‘Trump shocks,’ the Chinese government is likely to introduce greater stimulus measures,” said Yue Su, principal economist at the Economist Intelligence Unit. “The overlap of the NPC meeting with the U.S. election outcome suggests the government is prepared to take swift action.”



She expects a stimulus package of more than 10 trillion yuan ($1.39 billion), with about 6 trillion yuan going towards local government debt swaps and bank recapitalization. More than 4 trillion yuan will likely go towards local government special bonds for supporting real estate, Su said. She did not specify over what time period.



<h2 class="wp-block-heading" id="h-stock-market-divergence"><a></a>Stock market divergence</h2>



Mainland China and Hong Kong stocks fell Wednesday as it became clear that Trump would win the election. U.S. stocks then soared with the three major indexes hitting record highs. In Thursday morning trading, Chinese stocks tried to hold mild gains.



That divergence in stock performance indicates China’s stimulus “will be slightly bigger than the baseline scenario,” said Liqian Ren, who leads WisdomTree’s quantitative investment capabilities. She estimates Beijing will add about 2 trillion yuan to 3 trillion yuan a year in support.



Ren doesn’t expect significantly larger support due to uncertainties around how Trump might act. She pointed out that tariffs hurt both countries, but restrictions on tech and investment have a greater impact on China.



Trump, during his first term as president, put Chinese telecommunications giant Huawei on a blacklist that restricted it from using U.S. suppliers. The Biden administration expanded on those moves by limiting U.S. sales of advanced semiconductors to China, and pressuring allies to do the same.



Both Democrats and Republicans supported the passage of those newer export controls and efforts to boost semiconductor manufacturing investment in the U.S., Chris Miller, author of “Chip War,” pointed out earlier this year. He expected the U.S. to increase such restrictions regardless of who won the election.



China has doubled down on bolstering its own tech by encouraging bank loans to high-end manufacturing. But the country had long benefited from U.S. capital as well as the ability to use U.S. software and high-end parts.



Republicans gained a majority in the Senate for the next two years, according to NBC News projections, though control of the House of Representatives remains unclear.



“If the Republican Party gains control of Congress, protectionist measures could be accelerated, amplifying impacts on the global economy and presenting significant downside risks,” Su said.



She expects Trump will likely impose such tariffs in the first half of next year, and could speed up the process by invoking the International Emergency Economic Powers Act or Section 122 of the Trade Act of 1974, which allows the president to impose tariffs of up to 15% in response to a serious balance-of-payments deficit.



U.S. data shows that the trade deficit with China narrowed to $279.11 billion in 2023, from $346.83 billion in 2016.



Su estimated that a 10% tariff increase on Chinese exports to the U.S. could reduce Beijing’s real GDP growth by an average of 0.3 to 0.4 percentage points in the next two years, assuming other factors remain constant.



China’s exports to the U.S. fell by 14% last year to $500.29 billion, according to customs data on Wind Information. That’s still up from $385.08 billion in 2016, before Trump was sworn in for his first term.



Meanwhile, China’s annual imports from the U.S. climbed to $164.16 billion in 2023, up from $134.4 billion in 2016, the Chinese data showed.



Other analysts believe that Beijing will remain conservative, and trickle out stimulus over the coming months rather than release a large package on Friday.



China’s top leaders typically meet in mid-December to discuss economic plans for the year ahead. Then, officials would announce the growth target for the year at an annual parliamentary meeting in March.



“China will likely face much higher tariff from the U.S. next year. I expect policy response from China to also take place next year when higher tariff is imposed,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a note Wednesday afternoon.



“I also don’t think the government will change the policies they already proposed to the NPC because of US election,” he said.



<h2 class="wp-block-heading"><a></a>China’s growing global trade influence</h2>



Regardless of tariffs, China remains an export powerhouse to markets outside the U.S.



“Chinese exports have indeed shifted a bit in the past few years in terms of destination, with the U.S. representing less than 15% of total Chinese exports in 2023, compared with nearly 18% on average in the 2010s,” Francoise Huang, senior economist for Asia-Pacific and global trade at&nbsp;Allianz&nbsp;Trade, said in September.



“While China has lost market share in the U.S., it’s clearly been gaining in other places,” she said. “For example, China now represents more than 25% of ASEAN imports, compared with less than 18% in the 2010s.”



China’s exports have also grown to countries that sell to the U.S., a Federal Reserve report found in August.



— CNBC’s Dylan Butts contributed to this report.

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