Washington apparently believes attempts to shatter Russian economy will have no effect on ordinary Russians
The Biden administration says sanctions that it plans to introduce against Russia in the event of a hypothetical war with Ukraine would target Russian industry and key public figures, but not ordinary people.
“We can’t preview every action, but the intent there really is to have measures that we think will degrade Russia’s industrial capabilities and industrial production capacity over time, not to go after individual, everyday Russian consumers,” White House national security official Peter Harrell said in a speech to the Massachusetts Export Center on Thursday, as cited by Reuters.
Harrell also stated that in the event of military escalation, Washington is ready to immediately impose “crippling financial costs on major Russian financial institutions as well as to impose a range of quite sweeping export controls that will degrade Russian industrial capacity over the mid- and long term.” He went on to specify that the US strategy includes sanctions against major Russian financial institutions aiming “to trigger capital flight, to trigger inflation, to make the Russian Central Bank provide bailouts to its banks… so [Russian President Vladimir] Putin feels costs on day one.” Harrell’s remarks narrow the scope of measures that may be introduced, however, it appears unlikely that the ordinary consumer in Russia would not be affected by the collapse of the country’s economy, as Washington proposes.
Harrell did say he hoped measures would never have to be implemented, but stressed that Washington is fully prepared to introduce them if need be. According to the official, the measures aim to “degrade Russia’s ability to have industrial production in a couple of key sectors.” He did not specify the sectors, but other White House officials did mention the aviation, maritime, robotics, artificial intelligence, quantum computing, and defense industries. According to various sources, the US has the means to stop firms worldwide from shipping items like semiconductor chips made with US technology to Russia, as it did with China’s Huawei. Talks regarding the matter have reportedly been held with Taiwan and South Korea, major manufacturers of chips.
On Friday, Commerce Department official Thea Kendler noted that sanctions would also target Russia’s “key people,” while US President Joe Biden earlier this week vowed to consider personal sanctions against the Russian leader himself.
All measures are to come “in waves,” with US officials “quite confident we will have a very high degree of alignment with Europe if Russia does invade Ukraine.”
The talk of potential sanctions against Russia comes amid the global hype over Moscow’s recent amassing of troops in its regions bordering with neighboring Ukraine. Western states, largely at the behest of Washington, view it as a preface to Russia’s invasion of Ukraine. The Kremlin, however, repeatedly stressed that no such intentions exist and the movement of a country’s troops within its borders should not concern outsiders.
America’s trade deficit continues to widen as exports shrink
The US trade deficit has soared past $1 trillion in 2021 for the first time on record, government estimates from the Census Bureau show. For the past year, the figure rose to an unprecedented $1.08 trillion from $893.5 billion in 2020, a record high of its own.
The goods-trade gap jumped 3% in December alone to $101 billion, posting the biggest monthly increase to date. Analysts explain the situation with the shift of consumer focus to imports of a variety of non-US-made products, like toys, smartphones, and appliances.
“Strong demand and shifting consumer preferences during the pandemic led to a surge in imports that continues to outstrip exports and is contributing to all-time highs in the deficit,” Rubeela Farooqi, chief US economist at New York-based High Frequency Economics, told Reuters.
Analysts add that while the US showed a speedy recovery after the Covid-19 pandemic-induced crisis, enabling citizens to boost their spending on goods, many other countries lagged behind in their economic rebound, which made the demand for US exports slower to recover. More simply put, Americans could afford to purchase more non-US-made goods, and that’s what they did.
Experts say the deficit may narrow when the global recovery catches up, but with the Omicron variant still at large, this may take a while.
“The Omicron variant threatens to fuel an even wider deficit as virus concerns weigh on global growth and tourism, putting downward pressure on US exports, while domestic goods demand stays robust,” Mahir Rasheed of Oxford Economics told Market Watch.
More specific numbers on the trade deficit are expected next week when the full December report on the US trade balance is due to be published.
Shares rallied after firm posted blockbuster profits and hinted at metaverse expansion
The iPhone maker’s shares soared some 7% to $170.33 per share on Friday, marking the biggest one-day jump in a year and a half. Already the globe’s largest company by market value, Apple posted a Wall Street-beating record $123.9 billion in sales for the last three months of 2021, despite pressing supply-chain constraints, the company announced this week. Total revenue increased 11% in the quarter ended December 25, 2021, Apple said, while profits jumped 20%, reaching a record $34.6 billion.
“Apple is known for its supply-chain prowess and many wonder about the actions Apple has taken and will take to better position itself for this calendar year,” Scott Kessler of analytics firm Third Bridge told Reuters.
The figures helped Apple shares make up for the losses it has seen in recent weeks during a sell-off in growth and technology stocks.
The positive market reaction also stemmed from Apple’s announcement of its planned metaverse push. The company’s CEO Tim Cook on Thursday said Apple is mulling expanding its library of 14,000 augmented reality (AR) apps.
“We see a lot of potential in this space and are investing accordingly,” Cook said, responding to a question on Apple’s plans for the metaverse, the increasingly popular virtual world environment that can be accessed via internet.
The global trade regulator has issued a decision on China’s tariff countermeasures against the United States
The World Trade Organization (WTO) allowed China this week to retaliate with duties on $645 million worth of US imports per year over Washington’s failure to comply with international trade rules. The case is part of a decade-old trade dispute over US anti-subsidy duties on Chinese goods.
The dispute dates back to 2012, when Beijing applied to the WTO to challenge countervailing duties that Washington introduced between 2008 and 2012 on 22 Chinese products, including paper, solar panels, and steel wire. Beijing had initially asked the trade body to award it the right to impose tariffs on $2.4 billion of US goods but later scaled that back to $788.75 million.
“China urges the US to stop looking for excuses and immediately take action to correct its wrongdoings in trade remedy investigations against China,” Gao Feng, the spokesman for China’s Ministry of Commerce, said on Thursday, as quoted by the South China Morning Post.
The WTO ruling marks the second time that China has been authorized to fight back against US anti-dumping duties. In November 2019, a WTO arbitrator allowed Beijing to slap duties on up to $3.58 billion worth of US imports. In that separate case, the trade body also found fault in the way Washington determined whether Chinese products are being dumped on the US market.
The US has tariffs on more than $300 billion of Chinese goods imposed by former US President Donald Trump, most of which are still in place.
Arizona Senator pitched a bill to legalize the token, in breach of Constitution
US Senator Wendy Rogers has introduced a bill to make bitcoin legal tender in Arizona this week. With the bill, SB 1341, the Senator is seeking to amend the list of currently accepted legal tender to include bitcoin. This would allow the use of the digital token for the payment of public charges, taxes, debt and other purposes.
However, the US Constitution does not allow individual states to create their own legal tenders. This leaves the question on whether the bill could come into effect as law. The bill would have to pass the Arizona state senate and house and then be signed into law by the State Governor Doug Dukey. However, if indeed passed, the bill could set up a precedent for other US crypto-friendly states.
Many US states have become increasingly interested in Bitcoin and cryptocurrencies in general. Florida Governor Ron DeSantis last month pitched a plan that would allow businesses in the state to pay taxes in cryptoсurrency. Legislators in Wyoming have been mulling using blockchain to boost transparency in the way public funds are spent, while Ohio in 2018 became the first US state to allow taxes on digital assets, but had to scrap the program due to concerns that it was substandard.
New York Mayor-elect Eric Adams took one of his paychecks in bitcoin, while candidate for Texas governor Don Huffines recently said he would make bitcoin legal tender if he’s elected. Moreover, recent reports state that the US government itself has a sizable hoard of cryptotokens.
