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Truce on U.S.-China tariffs brings relief for now — but risks extending a trade war later

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It’s a matter of he said, Xi said.

U.S. President Donald Trump and his Chinese counterpart Xi Jinping on Saturday negotiated a temporary pause in a trade war between the world’s two largest economies. A 90-day pause on further tariffs started on Dec. 1, with many economists hoping the detente will be extended.

Each country, however, released markedly distinct diplomatic pronouncements at the G20 summit in Argentina on the same truce-building talks. .

According to the White House account, the U.S. would hold off on imposing 25 per cent tariffs on $200 billion of imports on Jan. 1, and China would agree to immediately enter negotiations to resolve thorny issues such as forced technology transfer, protection of intellectual property, non-tariff barriers and cyber theft.

China would also buy a “very substantial” amount of American farm, energy and industrial products, the U.S. announced.

Beijing’s official account focused elsewhere, making no mention of any such purchases. Nor did it reference a 90-day deadline to reach a deal before the existing 10 per cent tariffs would be hiked to 25 per cent. There was no mention, either, of the trade issues the U.S. wanted settled immediately; Beijing only said both Trump and Xi emphasized the need to reach a win-win deal.

New timelines

To Edward Alden, a U.S. trade policy expert and fellow at the Council on Foreign Relations, the mismatch spells trouble for reaching a consensus in future talks.

“The notion that you’re going to do a deal that takes on all these fundamental differences between the two economies — in three months — is probably not realistic,” he said. “This is a process that, if progress can be made, is going to take years, not months.”

Trump and Jinping arrive at a state dinner at the Great Hall of the People in Beijing, China, Nov. 9, 2017. (Thomas Peter/Reuters)

Under the new timeline, tariffs will come into force on March 1, unless a deal can be reached. Alden warns the ceasefire might simply postpone a trade war until the spring. Trump could lose leverage by then if the U.S. economy starts to slow down after a “sugar high” fed by corporate tax cuts, he said.

So far, Trump has been politically insulated by a strong economy after imposing tariffs, despite some pains in the agriculture and manufacturing sectors. But the domestic backlash may not be so mild once the next round of tariffs — jumping to 25 per cent — take effect. Price hikes on smartphones and electronics that use U.S.-made but Chinese-assembled chips could hit consumers, for example.

“The longer this gets played out, the harder it’s going to be for Trump to use the tariffs for leverage,” Alden said.

In that sense, he said, a delay could end up being a win for China. Markets have already been gyrating recently amid anxieties over a possible escalation.

“The markets didn’t like this trade war before,” he said. “They’re going to like it even less three months from now.”

Decreased U.S. leverage

Economists project that the U.S. could be heading into a period of slower growth, which could amplify negative consequences of tariffs later.

That’s probably what Xi is counting on, said Yukon Huang, an expert on China’s economy and a senior fellow in the Carnegie Asia Program. The Chinese appear to believe that Trump’s economy has “peaked,” and that “three or four months from now, the [U.S.] economy won’t be as strong,” he said.

Spring 2019 will also bring new political distractions as campaigns ratchet up for the 2020 U.S. general election.

“How many problems can Trump deal with at the same time?” Huang asked. “Can they really achieve in the next 90 days what they’ve not managed to achieve in the last year, or the last several years?”

Huang said selective omissions from official G20 accounts and the vagueness of Beijing’s statement showed the lack of a solid framework — or starting point — for the talks. That’s a problem when sticking points aren’t merely over specific technicalities. 

What’s controversial in the U.S.-China dispute is what Trump and many critics have generically described as “unfair” investment tactics; Huang said those are harder to handle through one-off actions.

“‘Unfairness’ is a behaviour issue,” Huang said. “[U.S. negotiators] have never been able to define a specific act that China can do, or a way of enforcing it … You actually need arbitration courts or a [World Trade Organization] to deal with these things, act by act, where you can get rulings.”

In this Nov. 9, 2017 photo, Trump and Jinping participate in a welcome ceremony at the Great Hall of the People in Beijing. (Andrew Harnik/Associated Press)

For the time being, Carla Hills, a former U.S. trade representative during George H.W. Bush’s administration, welcomes the cool-down period.

“A pause is better than a trade war, no matter if it produces the outcome we want or not,” she said. “So let’s hope that intelligence prevails and that we work together to find a solution.”

While the timeline for addressing China’s trade policies might sound overly aspirational, Hills noted that her work negotiating NAFTA began in June, 1991 and ended in August 1992, lasting just 14 months.

In spite of the strategic rivalry between the U.S. and China, Xi and Trump have shown themselves to be chummy — a point Larry Kudlow, director of the White House economic council, stressed in a phone briefing on Monday, describing the leaders’ “chemistry.”

“We’ve been hearing they’re friends,” Kudlow told reporters. 

Jinping told Trump that only through co-operation could the U.S. and China achieve peace and prosperity. The world’s two biggest economies have also increasingly been at odds over security in the Asia-Pacific region. (Pablo Martinez Monsivais/Associated Press)

That counts for something, said Cheng Li, director of the John L. Thornton China Center at Washington’s Brookings Institution.

Trade and economic ties are “pillars” of the U.S.-China relationship, Li said. If that foundation collapses, he imagines both nations “heading toward a very dangerous, confrontational future.”

But Li sees reason for optimism. He believes the outcome of trade negotiations may now depend on U.S. patience as well as China’s willingness to change to a culture that takes intellectual property rights more seriously.

“I hope China will use the opportunity to make such improvements.”

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7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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Real Estate

10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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