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WASHINGTON — President Donald Trump’s renewed focus on what he calls “unfair” exchange rates could presage a new global battlefield that has the potential to do great damage to the world economy.

Trump has spent two years attacking the underpinnings of the global trading system, launching multifront tariff wars on allies and adversaries alike while complaining that the United States has been taken advantage of.

Under a proposed new rule that could come into effect as early as next month, the US may impose punitive tariffs on any country it determines is manipulating its currency to make its products more competitive than American goods.

Trump has frequently attacked eurozone countries like Germany for benefitting from a relatively weak currency and last week said, “they have been getting away with this for years, along with China and others.”

As Trump’s attack on European Central Bank President Mario Draghi in the past week shows, once-mundane monetary policy moves could be used as ammunition to justify retaliation.

Economists warn this opens the door to a damaging global currency war pitting everyone against everyone.

If Trump follows this new path, likely with the backing of Commerce Secretary and trade hardliner Wilbur Ross, the United States would be vulnerable to retaliation when the Federal Reserve eventually cuts the benchmark interest rate as Trump has demanded they do.

Central banks use interest rate cuts to spur a sluggish economy, weakening a currency’s value in exchange for boosting exports, which then power economic growth.

Mark Sobel, who served in the Treasury for years under Republican and Democratic administrations, said he has “serious reservations” about the new plan.

In his submission to the Commerce Department, he said the rule change is “fundamentally flawed... and could prove counterproductive and harm the US economy”.

Dubious legality 

Over the years, lawmakers and presidents from both the Democratic and Republican parties have floated plans to go after governments that manipulate their exchange rate to compete in the global trading system.

But the efforts — mostly aimed at China — have always been resisted and eventually abandoned, in part because they were viewed as a violation of global trade rules.

Ironically, China has not been intervening in markets in recent years except to keep the yuan from falling, and the currency has instead gained in value since the financial crisis.

Currently, the US Treasury issues a twice-yearly report scrutinising possible currency manipulation. 

But since the mid-1990s, the department has never taken the final step of labelling a country as a manipulator, even in the years when China was very active in its efforts to keep the yuan weak.

Now the Commerce Department has moved to wrest control of the issue away from the Treasury by proposing a rule modification that would allow it to treat currency manipulation the same as it would a foreign government subsidy that harms American manufacturers.

If approved, Commerce could impose tariffs to offset the weaker exchange rate against the US dollar. The department is accepting comments from the public until June 27, and could implement the change any time after that.

According to the proposal, the Commerce Department said it would defer to Treasury’s evaluation of whether a currency is undervalued, “unless we have good reason to believe otherwise”. 

That ambiguity raises red flags for economists, many of whom believe the Commerce Department does not have the technical expertise to make that evaluation.

The plan “would grant the Commerce Department excessive discretion”, Sobel said.

It also is notoriously difficult to calculate objectively whether a particular currency is undervalued and, if so, by how much.

For years, the Peterson Institute for International Economics produced a report evaluating exchange rates but stopped “because they were completely arbitrary”, the think tank’s chief Adam Posen told reporters recently.

“China should have been hammered hard in the early, mid-2000s for massive manipulation of the currency,” Posen said, but to do so now is “pretty close to absurd”.

BANGKOK — Southeast Asian leaders gathered in Bangkok on Saturday determined to drive forward the world’s largest commercial pact, with the trade war between the US and China clouding the outlook for their export-led economies.

Trade is taking centre stage at the two-day Association of Southeast Asian Nations (ASEAN) summit, chaired by Thailand.

ASEAN leaders are keen to hasten the signing of a China-drafted commercial deal covering around half the world’s population.

The Regional Comprehensive Economic Partnership (RCEP) includes all 10 ASEAN economies, plus India, Japan, South Korea, Australia and New Zealand.

It is seen as a mechanism for China to draft the rules of Asia-Pacific trade, following a US retreat from the region.

Shortly after his election, President Donald Trump pulled the US from the Trans-Pacific Partnership — which would have been the world’s largest trade deal — slamming it as an American “job killer”.

While tit-for-tat tariffs between the world’s biggest two economies have seen some manufacturers flee China to safer ASEAN hubs, economists say the big picture for global growth is bleak.

In that context, “RCEP is key to increasing trade volume”, Thai government spokesman Werachon Sukhondhapatipak told reporters.

“The faster it [RCEP] gets implemented the better,” Martin M. Andanar, Philippines communications secretary, told reporters.

“Free trade is definitely what we need here in this region,” he said, adding that the US-China trade row has resulted in “the entire world catching a cold”.

Progress on the deal has stuttered in recent months with India digging in over fears cheap Chinese goods could flood its massive consumer market.

Australia and New Zealand have also raised concerns over a lack of labour and environmental safeguards.

Goldman Sachs on Thursday cut its price target on Tesla Inc. by 21 per cent, to third lowest on the Street, on concerns about the sustainability of demand for the electric car maker’s models.

Earlier this month, Chief Executive Officer Elon Musk told shareholders that Tesla was on track to hit its volume production goal for the year and had “a decent shot at a record quarter on every level”.

Goldman Sachs analyst David Tamberrino believes although the second quarter has been witnessing a better environment for demand for Tesla’s cars, he does not think it is sustainable.

“While there is potential upside surprise from a faster ramp or pull forward of Model Y ahead of schedule, there is likely cannibalisation of current Model X and Model 3 product demand with a crossover variant,” Tamberrino wrote in a note.

Analysts have questioned if there is global demand for the hundreds of thousands of Model 3 sedans and other vehicles Tesla aims to produce, after deliveries fell 31 per cent in the first quarter.

“We believe that is the largest question for investors to underwrite at this point — what are sustainable demand levels for the Model S, Model X, and Model 3 — and how does that change with the introduction of Model Y production,” Tamberrino said.

The brokerage maintained his “sell” rating on the stock and cut its target by $42 to $158, 34 per cent below the median target, saying the Street is “still modeling too optimistic sustainable volumes for Tesla”.

Tesla stock has seen more session wins in June than losses, a rare for the company which has lost 33 per cent in value so far this year. However, led by Musk’s near-term delivery promises, shares have bounced back lately. June so far has been the best month since October for Tesla stock.

Tamberrino expects the downward spiral for shares to resume as it becomes more clear that sustainable demand for Tesla’s products are below expectations.

Shares of the company were marginally down at $226.10 in early trading.

Twelve of 31 brokerages covering the stock rate it “buy” or higher, 7 “hold” and 12 “sell” or lower, according to IBES data from Refinitiv.

FRANKFURT — Deutsche Bank is aiming to cut up to a quarter of its riskiest assets in the next few years, people familiar with the matter said, shedding more light on how the German lender is trying to overhaul its business and revive profitability.

The plan provides more detail on a restructuring expected since Chief Executive Officer Christian Sewing promised shareholders “tough cutbacks” to turn the bank around after it botched an attempted merger with rival Commerzbank.

The bank’s shares, which have hit record lows in June, have perked up on expectations that a major overhaul is under way.

Deutsche is expected to talk to top investors within days to elaborate on its plans, a person with direct knowledge of the matter said. The group will unveil the strategy in July, other people say.

The bank has struggled to bounce back after the 2008 financial crisis and has been plagued by failed regulatory stress tests, multibillion dollar fines and management upheavals and most recently a failed merger.

Deutsche’s biggest business by revenues is its investment bank, which holds swathes of high-risk assets such as complex derivatives. Cutting back on risky assets would in theory allow Deutsche to hold less capital and use this money for other purposes to try to boost profit.

Under the plan, Deutsche will reduce its so-called risk-weighted assets by between 20 per cent and 25 per cent over the next three-to-five years, the people said, speaking on condition of anonymity.

Risk weighting is where a bank assigns a risk of losses to an asset, such as a derivative or loan. That, in turn, determines how much capital it needs to cover such a loss.

The bank held 347 billion euros ($388.61 billion) in such assets at the end of the first quarter, according to Deutsche’s quarterly results. A 25 per cent reduction would bring assets to about 260 billion euros.

Deutsche Bank declined to comment but said it was working on measures to accelerate its transformation so as to improve its sustainable profitability. “We will update all stakeholders if and when required,” the bank said.

Other changes include shrinking or shutting equity and rates trading businesses outside of Europe. Deutsche is also planning to create a “bad bank” for non-core assets, which can be a way to reduce risky assets over time. In an internal bad bank, risk weighted assets remain on the bank’s balance sheet until they are wound down.

One of the big open questions is how many jobs Deutsche will cut. The bank has already pledged to reduce headcount to under 90,000, from the current 91,463.

Analysts and some investors would like to see a staff reduction of more than 10 per cent for the overhaul to be credible.

Deutsche management is also in flux. Pressure to step down has been building on Garth Ritchie, head of the investment bank, and Sylvie Matherat, chief regulatory officer, according to people with direct knowledge of the matter.

The bank has declined to comment on the possible shake-up.

The revamp will delay further some of the bank’s goals. Deutsche is widely expected to miss its key profitability target — a return on tangible equity of 4 per cent - in 2019.

Swiss banks UBS and Credit Suisse have already restructured by paring down their investment banks and are today on stronger footing, providing hope for Deutsche Bank, analysts say.

But competition is heating up on Deutsche’s home turf. Standard Chartered earlier this year opened its new European Union headquarters in Frankfurt next door to Deutsche’s head office.

The bank aims to take on Deutsche’s core clientele — big German corporations — by offering them services in far flung countries, Standard Chartered CEO Bill Winters told reporters on Tuesday.

FRANKFURT AM MAIN — Industrial conglomerate Siemens said on Tuesday it would slash 2,700 jobs worldwide at its gas and power unit, including 1,400 in its home country Germany, "over several years".

The division — set for an independent stock market flotation in 2020 — will "require further savings of 500 million euros" ($560 million), Siemens said in a statement.

"Measures are required in order to reduce costs [and] adjust to the declining numbers of major projects," the company added.

Around 7,000 jobs cuts and site closures had already been announced at the unit.

"Siemens will now begin consultations with the relevant employee representatives and then implement the planned measures... in a way that is socially responsible," the company said.

Gas and power brings together Munich-based Siemens' oil and gas, conventional power generation, power transmission and related services businesses.

With 64,000 employees in 80 countries, it booked sales of 12.4 billion euros in 2018 and 377 million euros in profit, including large contracts in Egypt and Iraq.

But its profitability is declining year on year, due to falling demand for power plant equipment as a result of the global shift from fossil fuels to renewable energy.

In 2018, its margin was just 3.8 per cent, while Siemens' group-wide target is between 11 and 15 per cent.

The group has in recent years spun off its medical devices unit, known as Healthineers, its wind turbines division Gamesa and lightbulb maker Osram.

SHENZHEN, China — Huawei's founder said on Monday the Chinese telecom giant's overseas smartphone sales have tumbled since the US last month threatened to blacklist the company, and he warned that the firm would slash production to weather the US drive to isolate it.

The announcements by Huawei founder and CEO Ren Zhengfei marked the first clear indication from the company of the impact of the US pressure, which is being applied over concerns in Washington that Huawei is in bed with China's security apparatus.

Speaking at a panel discussion, organised by the company at headquarters in the city of Shenzhen in southern China, Ren was asked if he could confirm media reports citing anonymous sources which said its overseas smartphone sales had fallen by up to 40 per cent.

"Yes, [sales] have fallen 40 per cent," said Ren.

He gave no further details on the sales plunge but a Huawei spokeswoman later clarified that he was referring to a 40 per cent fall from May to June in the wake of the US blacklist threat.

Ren added, however, that sales growth in China's domestic market remained "very fast".

Huawei was the world's number two smartphone producer last year, ahead of Apple and behind South Korea's Samsung, as well as the largest provider of telecom networking equipment.

Huawei has said it shipped a total of 206 million smartphones in 2018, about half in China and half overseas.

Ren, 74, said Huawei planned to cut production by $30 billion over the next two years to ride out the storm. He did not specify which lines of business would be hit most.

Huawei earned just over $100 billion in revenue in 2018, so a $30 billion reduction would equate to about 30 per cent of last year's overall business. 

But Ren, who compared Huawei to a damaged but still-flying aircraft, added that he expected the company to soon back on track.

"In 2021, we will regain our vitality and [continue to] provide services to human society," he said.

Grim outlook 

Huawei has emerged as a key bone of contention in the wider China-US trade war that has seen tit-for-tat tariffs imposed on hundreds of billions of dollars worth of goods.

US President Donald Trump's administration has essentially banned Huawei from the huge US market.

Last month it also added Huawei to an "entity list" of companies barred from receiving US-made components without permission from Washington, though the company was granted a 90-day reprieve for now.

The US fears that systems built by Huawei could be used by China's government for espionage via secret security "backdoors" built into telecom networking equipment.

Those fears have revolved in large part around Ren's background as a former Chinese army engineer, and questions over the privately-held Huawei's corporate ownership structure.

Huawei strongly denies any links to China's government and says the United States has never provided proof of its accusations. 

The Trump administration is pressing other countries to ban Huawei equipment from their networks, particularly in the coming rollout of super-fast 5G networks, a global project in which Huawei had been expected to play a leading role.

The US campaign has already spurred a number of major technology companies, including leading semi-conductor suppliers and brands such as Facebook and Google, to suspend cooperation with Huawei.

In an analysis last week, global consultancy Eurasia Group said Huawei "has little hope of staying on the global cutting edge in either smartphones or networking technology as long as it remains on the US Entity List".

"Over time, this will erode Huawei's ability to offer globally competitive products, and the company will likely be forced to resort to selling second-best products in the domestic Chinese market as it seeks to rebuild its international business without US technology," it said.

HANOI — Vietnam’s homegrown carmaker VinFast will deliver its first cars on June 17, the company said on Friday as it showcased a factory in one of Asia’s fastest growing economies.

VinFast said it will supply a domestic market that is rapidly expanding, thanks to a mushrooming middle class with a growing appetite for cars — though it will face stiff competition from well-established players like Toyota and Ford.

The carmaker is a subsidiary of Vietnam’s largest private conglomerate, Vingroup, which is owned by the country’s richest man, a press-shy billionaire who started his career selling dried noodles in Ukraine. 

It is seeking to tap into national pride with vehicles that include sedan and SUV models, along with e-scooters and even electric buses.

“In less than 72 hours, the first Vietnamese branded cars will officially be driven on the streets of Vietnam,” said Vingroup director general Nguyen Viet Quanghe.

Quang — speaking at the sprawling factory in Haiphong where rows of red, white and grey cars were being assembled — said the company has received orders for 10,000 cars and “tens of thousands” of e-scooters. 

Vietnam’s Prime Minister said he hoped the vehicles would help Vietnam become a household name — alongside auto-making heavyweights Japan and Germany.

“Vietnamese are able to do what the world can,” Nguyen Xuan Phuc said.

Vietnam’s fast-growing economy has largely been buoyed by cheaply manufactured goods like sneakers, T-shirts and computer processors.

GDP growth hit 7.1 per cent last year, and the World Bank says annual growth is expected to reach 6.6 per cent later this year.

The country has said it hopes to move into value-added and high-tech manufacturing like more developed neighbours like South Korea and Japan.

Vietnam currently assembles foreign-branded cars for a growing domestic market: auto sales are up 22 per cent year-on-year over the past five months, according to Vietnam Automobile Manufacturers’ Association.

The cradle-to-grave Vingroup empire includes housing, resorts, farms, schools, hospitals, shopping malls and smartphones.

CEO Vuong is worth an estimated $7.7 billion, according to Forbes.

NEW YORK — Oil prices rose again on Friday in reaction to geopolitical tension, building on the previous day’s surge sparked by blasts on two tankers in the Gulf of Oman.

The US government blamed Iran for explosions on the tankers, and there were growing fears that Tehran could close the Strait of Hormuz, a major choke point for world oil shipments.

Despite a potentially disastrous stand-off between the two foes, oil traders were “not getting carried away”, said Craig Erlam, senior market analyst at OANDA.

Prices jumped by more than 4 per cent at one stage on Thursday as reports of the attacks in the Gulf of Oman flashed onto traders’ screens, and added around 1 per cent on Friday.

‘Not risen too much’ 

“Oil prices may have spiked following the attacks, but they have not risen too much considering the risk that an escalation poses,” Erlam said.

The International Energy Agency (IEA) said on Friday that tepid growth in demand for oil along with ample supplies from non-OPEC countries will complicate efforts by the cartel and its allies to boost prices.

In its monthly report, the agency cut its forecast for demand growth this year for the second month straight -- and trimmed its second quarter forecast as well.

“Global slowdown fears and trade war risks have intensified which has led to the latest downward revision from IEA,” Erlam told AFP.

Markets in the red 

Global stock markets, meanwhile, fell on geopolitical fears, uncertainty over the China-US trade row and the gloomy outlook for the global economy, especially following negative economic data out of China.

In Asia, the Hong Kong stock market was again on the back foot, losing 0.7 per cent, after the city was rocked this week by violent protests against government plans for a law that would allow extraditions to China and which observers warn could erode its attraction for businesses.

Wall Street sagged back into the red, brushing off positive news on the economy, but clung to slender gains for the week. European stocks were lower at the closet.

Trading floors have been the scene of unease for weeks since US President Donald Trump’s shock decision to hit China with higher tariffs despite expectations the two sides were close to a deal to end their long-running stand-off.

The uneasiness over the past week has seen the price of gold hit a 15-month high of around $1,360 per ounce as traders look for safer assets to shelter from the uncertainty on world markets.

Eyes are now on the G-20 summit in Japan later this month where Trump and his Chinese counterpart Xi Jinping are expected to meet to discuss the trade frictions. But Trump has threatened tariffs on another $300 billion in Chinese goods if Xi fails to show.

Markets are taking some comfort from the view the Federal Reserve is prepared to cut interest rates soon as the economy stutters and the trade war rumbles along. But it is highly unlikely to happen at next week’s policy meeting.

HONG KONG — China’s biggest e-commerce company Alibaba Group Holding has filed confidentially for a Hong Kong listing that could raise up to $20 billion as early as the third quarter of this year, a person with direct knowledge of the matter said.

A deal of that size would be the biggest follow-on share sale globally in seven years and give Alibaba funds for technology investment — a priority for China as economic growth slows and a trade spat with the United States intensifies.

Alibaba holds the record for the world’s largest initial public offering with its $25 billion float in New York five years ago.

Then, the company had initially hoped to float in Hong Kong but the tech firm’s management structure clashed with the city’s listing rules. Hong Kong Exchanges & Clearing, the city’s bourse operator, changed its listing rules last year — primarily with the aim of attracting Chinese tech groups.

Alibaba declined to comment on the deal when contacted by Reuters. Japan’s SoftBank Group, which is Alibaba’s largest shareholder with a 28.7 per cent stake, did not immediately respond to a request for comment. 

The person with knowledge of the matter was not authorised to speak with media and so declined to be identified. News of the filing was first reported by Bloomberg.

Investment banks China International Capital Corp. and Credit Suisse Group AG are leading the deal. Both banks declined to comment. No other banks have been formally mandated as yet.

Big deal for Hong Kong 

A listing by Alibaba in Hong Kong will be seen as a victory for the city by its stock-focused market professionals, who mourned the lost trading revenue when the e-commerce group chose to float in New York. 

Trading in Alibaba shares averaged $2.2 billion a day in the first quarter of this year, according to Refinitiv data, compared with average daily turnover on the Hong Kong exchange of $12.9 billion in the same period.

Listing in Hong Kong would also give mainland Chinese investors their first direct access to one of their country’s biggest success stories, via the stock connect trading link between Hong Kong, Shanghai and Shenzhen.

Since its US listing, Alibaba’s market value has nearly doubled and is now $423 billion, the largest in Asia-Pacific.

The filing comes amid growing political unrest in Hong Kong this week that raised concerns over the potential impact on the city’s financial market and businesses.

Thousands of protesters have taken to the streets in the southern Chinese territory this week over a planned extradition agreement with mainland China.

Logistics real estate developer ESR Cayman on Thursday pulled what would have been the largest Hong Kong listing so far this year, citing “current market conditions”.

So far this year, the benchmark Hang Seng index has gained 5.6 per cent compared with a 22.4 per cent jump in China’s blue-chip CSI 300 and a 14.9 per cent rise in the US S&P 500.

SYDNEY — Uber Technologies said it will use Australia’s second-largest city, Melbourne, as the first international test site for the group’s planned flying taxi service.

The US ride sharing firm had previously chosen Dubai as the first test site outside the United States for its UberAIR service but reopened its request for proposals last month after launch delays in the Middle Eastern city.

Uber said on Tuesday it will begin test flights of the pilotless aircraft in Melbourne and US cities Dallas and Los Angles in 2020 before commercial operations begin in 2023.

“Australian governments have adopted a forward-looking approach to ridesharing and future transport technology,” Susan Anderson, regional general ganager for Uber in Australia, New Zealand and North Asia, said in an e-mailed statement.

“This, coupled with Melbourne’s unique demographic and geospatial factors, and culture of innovation and technology, makes Melbourne the perfect third launch city for UberAir.”

The test flights will transport passengers from one of seven Westfield shopping centres in Melbourne to the city’s main international airport. The 19km journey from the central business district to the airport is expected to take 10 minutes by air, compared with the 25 minutes it usually takes by car.

The electric, on-demand air taxis can be ordered by customers through smartphone apps in the same way Uber’s road-based taxi alternatives are hailed.

Uber’s planned air fleet includes electric jet-powered vehicles — part helicopter, part drone and part fixed-wing aircraft — running multiple small rotors capable of both vertical take-off and landing and rapid horizontal flight.