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can u give what is the summary for this topic Navigating Trade Wars in an Unpredictable Market by Christie Citranglo

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In the 1972 film Cabaret, Liza Minnelli and Joel Grey’s characters said it best when they sang “money makes the world go ‘round.” What they probably didn’t know was just how accurate the lyric was to the construction industry, in particular, the flow of money down the chain of command from project owner to general contractor (GC) to subcontractors (subs) and sub-subcontractors and, finally, material suppliers.

GCs not only recognize the importance of prompt payment but also actively seek projects with prompt-paying project owners. Separating those from late payers is a challenge in itself, but industry experts offered a few tips on how to spot a paying project owner in the Construction Dive article, “How contractors ensure the project owner can pay. What some contractors might not realize, though, is that their contracts, including one of the most commonly used forms, might give them the right to ask for proof that the owner has enough financing in place to pay its bills referring to the American Institute of Architects’ A201-2017 General Conditions of the Contract for Construction.

For example, before the GC begins any work on the project, they can submit a written request to the owner for “reasonable evidence” showing the owner has the necessary finances, according to Section 2.2 of A201, i.e., a commitment letter from a lender, financial statements, bank statements or a bond commitment. Should the owner fail or decline to share this information, the GC is allowed to delay any work on the project until the information is received.

A201 also allows GCs to obtain owner’s financial information when work on the project is already underway; however, there are limited circumstances upon which this can be done:

1. The owner’s payments are late and do not meet the terms of the contract.
2. There is “reasonable concern” regarding the owner’s ability to pay.
3. There are changes to the contract amount due to more or less work on behalf of the contractor.

If the owner doesn’t provide the contractor with the requested information within 14 days under this scenario, the contractor could stop work and bill the owner for demobilization and remobilization costs plus interest. In the case of significant changes, contractors must proceed with the portion of their work that is unaffected by the change. A recent finding states over 70% of owners and contractors agree that better communication and coordination across complex projects can significantly improve project outcomes.

After further negotiations, the U.S. and China reached a “cease-fire” Oct. 11, according to the Associated Press. Representatives from both nations met and reached an agreement to cancel the Oct. 15 tariffs, provided China purchases $40-50 billion in U.S. farm products. If no true agreement is reached, the U.S. has threatened to move forward with more tariffs in December, which will be 15% on $160 billion worth of Chinese goods. The trade war and tariff deals have shaken the world economy for more than a year, tossing creditors across different industries from metals to agriculture into precarious situations.

The Trump administration calls the deal made Oct. 11 a “Phase 1” agreement that will take several weeks to draft and sign by November, according to The New York Times. The Oct. 15 tariffs would have increased from 25% to 30% on $250 billion worth of Chinese imports, leaving creditors and customers in a further struggle in terms of over-buying, pricing, paying back creditors, etc. Nobody seems to be getting too excited over the latest ‘deal’ between the U.S. and China, although there is some sense both countries are walking away from the edge of the cliff. The White House has reminded China that these more punitive tariffs will return to the table in December if a real agreement is not struck, while China has made it clear it wants everything in writing before it goes another step.

The metal industry has been particularly impacted by the Chinese tariffs, causing companies to call into question whether to import, where to import from and how to deal with pricing. “The higher tariffs are forcing those companies to look at cheap alternatives, which typically means source material from domestic steel mills,” Wine said. “In the credit department we are getting a bunch of new credit applications.” Deciding how to best mitigate risk in the space of tariffs has altered the way companies handle their customer bases. “Domestic suppliers were raising their prices to match or to be right underneath those tariffed materials. The other opportunities Marthinson’s company looked toward were finding alternative elements and creating new alloys to sell, incorporating elements free from tariff exploitation and yet still the right compound to sell to its customers which the company explained to customers before they purchased materials. But even with risk mitigation tactics, the unpredictability of the market still keeps creditors in an anxious space. The fact remains that none of the major issues [around the trade war] have been addressed, and there is no sign these will be dealt with anytime soon. “The Chinese have simply agreed to do what they had already been doing buying more farm output from the U.S.

he Australian government is reviewing insolvency practices. Announced earlier this month, Small Business and Family Enterprise Ombudsman (ASBFEO) will investigate the current system in place. This inquiry will shine a light on the insolvency system and uncover if it encourages practitioners, in the first instance, to restructure the small or family business to turn it around. According to the announcement, restructuring in Australia is not a very successful venture for small businesses. Few small businesses that enter formal insolvency administration are able to navigate their way through the process to reach a restructuring agreement. More than 8,000 businesses took the external administration route in 2018-19, and small rural and regional Australia businesses were among those hit the hardest. The new insolvency practice investigation will review the current system; transparency, processes and costs; insolvencies relation to owner bankruptcy; and the framework and fees of insolvency practitioners. It is most important that small businesses and farmers who find themselves in financial difficulty are treated with respect and fairness. This inquiry is essential to see if any systemic improvements can be made.

A prior Small Business Loans Inquiry by ASBFEO found transparency a major issue for small business owners. Among the results were less than ideal outcomes for the owner, the lender and creditors of the business and there was a lack of transparency for the small business owner when a creditor commenced debt recovery action. Despite the struggle of small businesses in Australia, the economy continues to thrive, according to the International Monetary Fund (IMF). Overall, the IMF’s October World Economic Outlook is not positive as the global economy was downgraded to its slowest growth since the global financial crisis. Global growth is expected to hit 3.4% in 2020, which is a downward revision from six months ago. Much of this 180-degree turn is due to trade tensions, Brexit and other country-specific factors. For sustainable growth, it is important that countries undertake structural reforms to boost productivity, improve resilience and lower inequality. The global outlook remains precarious with a synchronized slowdown and uncertain recovery.