🧀 China's raising a stink about cheese

What’s going on here?

China is taking a hard look at its imports of Europe’s cheese, as trade tensions escalate between the two economies.

What does this mean?

China thinks there’s something funky about the price of the bloc’s cheese, accusing Europe of exporting dairy wheels for less than they cost to make (a tactic that’s referred to as “dumping”). It’s launched a cheese probe to find out, interestingly announced just a day after the European Union said it would increase tariffs on imports of electric cars from China. That’d slap them with an additional 9% to 36% tax on top of the existing 10%. And this is just the latest in the tit-for-tat dispute between the two economic giants. Earlier this year, the EU determined that Chinese government cash injections were unfairly deflating its export prices, particularly on green machines like solar panels and wind turbines. Meanwhile, China’s been gnawing at Europe’s pork industry and taking shots at French cognac.

Why should I care?

Zooming out: Wave goodbye.

Once an investor darling, China has seen an exodus of foreign cash as its economy struggles with a debilitating property crisis and sharply weaker consumer demand. Walmart's the latest company to get its skates on, announcing the sale of its 5% stake in online retailer JD.com – worth around $3.6 billion. Europe’s couture brands, meanwhile, have said a reluctant au revoir to Chinese customers as they’ve tightened their designer purse strings – at least until their economy is back on form.

The bigger picture: Going nowhere.

It’s not just the EU and China duking it out on trade: the US has thrown some punches too, and it seems intent on going a few more rounds. Higher tariffs can disrupt supply chains, increase prices for consumers, and take a toll on economic growth. So with the three of the world’s biggest trading nations ready to rumble, no economy is likely to go unbruised.

What’s going on here?

The American economy added far fewer jobs than previously believed, hinting at potential cracks in the seemingly impenetrable armor of the US labor market.

What does this mean?

The revisions suggest that the key monthly employment report from the Bureau of Labor Statistics overstated the number of new jobs created by 818,000 from April 2023 to March 2024 – a whole year. That would mean average monthly gains of about 174,000 – far lower than the previously reported 242,000. The new figures are the first step in an annual process the government follows to update older payroll figures, using detailed (but less timely) data from state tax records. And this revision – the biggest since 2009 – will keep investors firmly focused on the Federal Reserve (Fed): the central bank will be weighing up when to start slashing interest rates after its aggressive run of hikes.

Why should I care?

Zooming in: Storms in teacups.

The size of the revision is big, but it’s likely exaggerated. That’s because the key source for the new figures – the Quarterly Census of Employment and Wages – is taken from state unemployment records. And those tend to exclude unauthorized immigrants, since they don’t qualify for jobless benefits. Goldman Sachs, for one, has been warning that this factor is likely to skew the results: its estimates for the revision ranged from 600,000 to a million. At least the official figures landed smack bang in the middle.

The bigger picture: Saddle up.

America’s abundance of workers has lent some strength to its economy: more folks in the workforce have helped keep wage growth down. And that’s been essential in nudging inflation down toward the Fed’s 2% target. But now with consumer prices seemingly under wraps and the job market showing signs of weakness, the bells are ringing louder for an interest rate cut. And the size of that trim may become clearer on Friday, at the Fed’s annual conference.