Donald Trump’s goosey claims on trade, jobs
President Donald Trump is using some goosey numbers to rationalize his aggressive rhetoric on trade, disregarding strong points in U.S. competitiveness to paint a dark portrait of a world taking advantage of his country. Conversely, he’s glossing over aspects of the economy that don’t support his faulty contention that it’s the best it’s ever been. The complexities of health care for veterans are also set aside as he hails a new era in the Department of Veterans Affairs’ system. A look at some of his statements over the past week and the reality behind them: TRUMP: “Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!” — tweet Thursday. TRUMP: “Farmers have not been doing well for 15 years. Mexico, Canada, China and others have treated them unfairly. By the time I finish trade talks, that will change. Big trade barriers against U.S. farmers, and other businesses, will finally be broken. Massive trade deficits no longer!′ — tweet Monday. THE FACTS: Whatever his beef with farm trade with specific countries, he’s wrong in suggesting U.S. agriculture runs a trade deficit. The U.S. exports more food products than it imports, running a $17.4 billion surplus last year. It’s long been a bright spot in the trade picture and it’s why many U.S. farmers are worried about losing markets as Trump retreats from, renegotiates or disparages trade deals. U.S. farmers do brisk business with the three countries he complains about in the tweet, two of them under the umbrella of the North American Free Trade Agreement, which Trump is threatening to leave if it’s not recast to give the U.S. greater advantage. The U.S. exported $20.5 billion in agricultural products last year to Canada, the largest market for U.S. farmers. That made for a modest deficit of $1.8 billion. The U.S. exported $18.6 billion in farm goods to Mexico, running a deficit of $6 billion. The U.S. has a lopsided advantage with China on farm goods, in contrast to manufactured products. It sold $21 billion in agricultural products to China in 2016, for a surplus of $16.7 billion. The Agriculture Department says exports of food products have grown “steadily over the last two decades.” Trump’s unrelievedly negative view of the EU may be grounded in a substantial trade deficit with the continent, but his administration’s trade office takes a longer and more benevolent view of the relationship. “Two-way U.S.-EU trade has been roughly balanced over time,” says the U.S. Trade Representative’s Office, “and the very high levels of foreign investment accounted for by each in the other’s markets means that the transatlantic economy is arguably the most integrated on Earth.” ___ TRUMP: “The EU trade surplus with the U.S. is $151 Billion.” — tweet Thursday. THE FACTS: He’s wrong about the trade deficit with the EU. As he usually does, Trump ignored trade in services in his calculation. The U.S. is more competitive in services than in goods overall, and services are a big part of the trade equation. The U.S. saw a $153 billion trade deficit in goods with the EU last year, but a surplus in services brought the actual trade deficit with the union down to $101 billion. ___ TRUMP: “Best Economy & Jobs EVER, and much more.” — tweet Monday referring to achievement in his first 500 days in office. THE FACTS: May’s unemployment rate of 3.8 percent is not the best ever. And the economy has seen many periods of stronger growth. The lowest unemployment rate since World War II was reached in 1953, when it averaged 2.9 percent, almost a full point lower than today. The job market is certainly strong, with unemployment at an 18-year low, and if it drops another tenth of a point, it’ll be the lowest since 1969. Yet the jobless rate was at or below 4 percent for four straight years back then, from 1966 through 1969, and wages were rising more quickly. The cost of items such as college and health care was much lower then. Overall the economy has yet to show it can sustain growth in excess of 3 percent, as Trump has promised. In the 1990s boom, still the longest on record, the U.S. economy expanded at an average annual pace of 4.3 percent for five years, from 1996 through 2000. In the 1980s, growth averaged 4.6 percent annually from 1983 through 1987. While the economy has picked up from 2016, its best showing since Trump took office was 3.2 percent in last year’s third quarter. ___ TRUMP: “Separating families at the Border is the fault of bad legislation passed by the Democrats. Border Security laws should be changed but the Dems can’t get their act together! Started the Wall.” — tweet Tuesday. THE FACTS: No law mandates that parents must be separated from their children at the border, and it’s not a policy Democrats have pushed or can change alone as the minority in Congress. Children are probably being separated from the parents at the border at an accelerated rate because of a new “zero tolerance policy” being put in place by Trump’s own administration. Announced April 6 by Attorney General Jeff Sessions, the policy directs authorities to prosecute all instances of illegal border crossings, even against people with few or no previous offenses. Administration officials are quick to note that Sessions’ policy makes no mention of separating families. That is correct. But under U.S. protocol, if parents are jailed, their children are separated from them because the children aren’t charged with a crime. So while separating families might not be official U.S. policy, it is a direct consequence of Sessions’ zero-tolerance approach. According to U.S. Customs and Border Protection, more than 650 children were separated from parents at the border during a two-week period in May. ___
Donald Trump renews China tariff threat, complicating talks
The Trump administration has renewed its threat to place 25 percent tariffs on $50 billion of Chinese goods in retaliation for what it says are China’s unfair trade practices. The White House also said Tuesday that it would place new restrictions on Chinese investment into the United States and limit U.S. exports of high-tech goods to China. The threats come just over a week after trade tensions between the world’s two largest economies had seemingly eased. Treasury Secretary Steven Mnuchin said May 20 that the trade conflict was “on hold.” Mnuchin’s comments followed a commitment by China to significantly increase its purchases of U.S. farm goods and energy products, such as natural gas. Commerce Department Secretary Wilbur Ross is scheduled to visit China on Saturday to negotiate the details of that agreement. Some trade experts said the tariff announcement is likely intended to strengthen Ross’s hand. Other analysts, however, say the newly confrontational stance may be intended to appease congressional critics of a deal the Trump administration made Friday that allowed Chinese telecom giant ZTE Corp. to stay in business. The tariff threat is unlikely to derail ongoing talks, they said. “This is really about Congress,” said Derek Scissors, a China specialist at the conservative American Enterprise Institute. “I don’t think it blows up a deal with the Chinese.” China’s Ministry of Commerce responded in a mild fashion Tuesday. The Ministry said the White House’s announcement “is contrary to the consensus the two sides have previously reached,” according to China’s official news agency, Xinhua. The statement did not reiterate China’s own previous threats to impose $50 billion in retaliatory tariffs on U.S. goods. Members of both parties in the House and Senate slammed the agreement the Trump administration reached with ZTE Friday, in which the Chinese firm agreed to remove its management team, hire American compliance officers, and pay a fine. The fine would be on top of a $1 billion penalty ZTE has already paid for selling high-tech equipment to North Korea and Iran in violation of U.S. sanctions. In return, the Commerce Department lifted a seven-year ban on ZTE’s purchase of U.S. components that it had just imposed earlier in May. China had complained strongly that the ban would put ZTE out of business, costing 70,000 jobs. Trump tweeted last month that the ban threatened too many Chinese jobs and he wanted to get the company “back in business, fast.” GOP and Democratic Senators attacked the deal as insufficient punishment for a company that defied U.S. sanctions policy. The White House said Tuesday that it will focus the tariffs on cutting-edge technologies, including those that China has said it wants to dominate as part of its “Made in China 2025” program. Under that program, China aims to take a leading role in areas such as artificial intelligence, robotics, and electric cars. The list of imports subject to the duties will be announced by June 15, the White House said, and the tariffs will be imposed “shortly thereafter.” The list will be based on a previous compilation of 1,300 goods released in April that will be narrowed based on public comments the administration has received. The list includes computer equipment, aerospace parts, medical devices, and industrial machinery. The tariff threat could still disrupt Ross’s China talks. “If Beijing was under the impression that Trump’s $50 billion of tariffs were actually on hold, they may find this confusing,” Chad Bown, senior fellow at the Peterson Institute for International Economics, said. “It could very well complicate Wilbur Ross’s visit.” Trump has bemoaned the massive U.S. trade deficit with China — $337 billion last year — as evidence that Beijing has been complicit in abusive trading practices. The White House, and many American companies, say that China forces U.S. firms to turn over technology as part of joint ventures with Chinese companies to gain access to its market. China also subsidizes many favored industries. Trump has frequently focused on the trade deficit, urging China to boost its imports and lower the gap by $200 billion, while China has refused to agree to any dollar amounts. Many experts and U.S. companies, however, warn that China’s efforts to protect its high-tech industries and capture U.S. technology represent the larger threat. The Trump administration said Tuesday that it plans to shorten the length of validity of some visas issued to Chinese citizens as part of a push to counter alleged theft of U.S. intellectual property by Beijing. The State Department said that under the new policy, U.S. consular officers may limit how long visas are valid, rather than the usual practice of issuing them for the maximum possible length. Scott Kennedy, a China expert at the Center for Strategic and International Studies, said that many foreign leaders are learning to not overreact to Trump’s threats, which are frequently seen as just part of negotiating strategy. That’s good for global stability, he added. “But that means the United States’ credibility is incredibly low,” he said. “I don’t think you can keep doing about-faces, and have everyone pretend the threat is as ominous as it was before.” Republished with the permission of the Associated Press.
Donald Trump says he’ll speak Tuesday with President Xi Jinping of China
President Donald Trump says he’ll speak Tuesday with President Xi Jinping (shee jihn-peeng) of China. Trump tweets that they’ll discuss trade, an area where he says “good things will happen.” He says they’ll also discuss North Korea, where he says “relationships and trust are building.” China says Xi and North Korean leader Kim Jong Un met Monday and Tuesday in China. It was their second meeting, following Kim’s visit to Beijing in March. The latest Xi-Kim meeting also comes as Trump prepares for a historic summit with the North Korean leader in late May or early June. Trump said last week the time and place will be announced soon. Trump meets at the White House on May 22 with South Korean President Moon Jae-in (jah-YIHN’), who recently met with Kim. Republished with permission from the Associated Press.
Donald Trump complains about trade with China
President Donald Trump on Monday complained yet again about “STUPID TRADE” with China, doing little to calm investors anxious about the escalating trade conflict between the two economic superpowers. In a tweet on Monday morning Trump said that when a Chinese-made vehicle is sent to the U.S., the tariff is only 2.5 percent, while American cars exported to China are slapped with a 25 percent tariff. Trump asked, “Does that sound like free or fair trade.” Then answered, “No, it sounds like STUPID TRADE.” China charges total duties of 25 percent on most imported cars — a 10 percent customs tariff plus a 15 percent auto tax. Since December 2016, Beijing also has charged an additional 10 percent on “super-luxury” vehicles priced above 1.3 million yuan ($200,000). Trump’s top economic advisers have offered mixed messages as to the best approach with China. Beijing has threatened to retaliate if Washington follows through with its proposed tariffs, even as Trump emphasized his bond with Chinese President Xi Jinping. “President Xi and I will always be friends, no matter what happens with our dispute on trade,” Trump tweeted Sunday. “China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property. Great future for both countries!” But Trump did not explain why, amid a week of economic saber-rattling between the two countries that shook global markets, he felt confident a deal could be made. The president made fixing the trade imbalance with China a centerpiece of his presidential campaign, where he frequently used incendiary language to describe how Beijing would “rape” the U.S. economically. But even as Trump cozied up to Xi and pressed China for help with derailing North Korea’s nuclear ambitions, he has ratcheted up the economic pressure and threatened tariffs, a move opposed by many fellow Republicans. The Trump administration has said it is taking action as a crackdown on China’s theft of U.S. intellectual property. The U.S. bought more than $500 billion in goods from China last year and now is planning or considering penalties on some $150 billion of those imports. The U.S. sold about $130 billion in goods to China in 2017 and faces a potentially devastating hit to its market there if China responds in kind. China has pledged to “counterattack with great strength” if Trump decides to follow through on his latest threat to impose tariffs on an additional $100 billion in Chinese goods — after an earlier announcement that targeted $50 billion. Beijing also declared that the current rhetoric made negotiations impossible, even as the White House suggested that the tariff talk was a way to spur China to the bargaining table. The new White House economic adviser, Larry Kudlow, said Sunday that a “coalition of the willing” — including Canada, much of Europe and Australia — was being formed to pressure China and that the U.S. would demand that the World Trade Organization, an arbiter of trade disputes, be stricter on Beijing. And he said that although the U.S. hoped to avoid taking action, Trump “was not bluffing.” “This is a problem caused by China, not a problem caused by President Trump,” Kudlow said on “Fox News Sunday.” But he also downplayed the tariff threat as “part of the process,” suggesting on CNN that the impact would be “benign” and said he was hopeful that China would enter negotiations. Kudlow, who started his job a week ago after his predecessor, Gary Cohn, quit over the tariff plan, brushed aside the possibility of economic repercussions. “I don’t think there’s any trade war in sight,” Kudlow told Fox. Treasury Secretary Steve Mnuchin said on CBS’ “Face the Nation” that he didn’t expect the tariffs to have a “meaningful impact on the economy” even as he left the door open for disruption. He allowed that there “could be” a trade war but said he didn’t anticipate one. Another top White House economic adviser, Peter Navarro, took a tougher tack, declaring that China’s behavior was “a wakeup call to Americans.” “They are in competition with us over economic prosperity and national defense,” Navarro said on NBC’s “Meet the Press.” ″Every day of the week China comes into our homes, our business and our government agencies. … This country is losing its strength even as China has grown its economy.” Trump’s latest proposal intensified what was already shaping up to be the biggest trade battle in more than a half century. Trump told advisers last week that he was unhappy with China’s decision to tax $50 billion in American products, including soybeans and small aircraft, in response to a U.S. move to impose tariffs on $50 billion in Chinese goods. Rather than waiting weeks for the U.S. tariffs to be implemented, Trump backed a plan by Robert Lighthizer, his trade representative, to seek the enhanced tariffs. The rising economic tensions pose a test to what has become Trump’s frequent dual-track foreign policy strategy: to establish close personal ties with another head of state even as his administration takes a harder line. The president has long talked up his friendship with Xi, whom he has praised for consolidating power in China despite its limits on democratic reforms. Further escalation could be in the offing. The U.S. Treasury Department is working on plans to restrict Chinese technology investments in the U.S. And there is talk that the U.S. could also put limits on visas for Chinese who want to visit or study in this country. For Trump, the dispute runs the risk of blunting the economic benefits of his tax overhaul, which is at the center of congressional Republicans’ case for voters to keep them in power in the 2018 elections. China’s retaliation so far has targeted Midwest farmers, many of whom were bedrock Trump supporters. Republished with the permission of the Associated Press.
China vows ‘counterattack’ on Trump administration tariffs
The Latest on a U.S. trade dispute with China (all times local): 9:45 a.m. China’s government says it will “counterattack with great strength” if President Donald Trump goes ahead with plans to raise U.S. tariffs on an additional $100 billion worth of Chinese goods. A Commerce Ministry spokesman said Friday that negotiations were impossible after Trump responded to Beijing’s protests about his earlier plan to raise duties on $50 billion of Chinese goods by announcing still more possible tariff hikes. The spokesman, Gao Feng, said at a news conference: “If the U.S. side announces the list of products for $100 billion in tariffs, the Chinese side has fully prepared and will without hesitation counterattack with great strength.” Gao gave no details of what measures Beijing might take. Gao said, “under these circumstances, the two sides cannot possibly conduct any negotiations about this issue.” 8:45 a.m. President Donald Trump is pleased that that aluminum prices are down after he imposed new tariffs. He tweets, “People are surprised, I’m not!” Trump tweeted Friday: “Despite the Aluminum Tariffs, Aluminum prices are DOWN 4%. People are surprised, I’m not! Lots of money coming into U.S. coffers and Jobs, Jobs, Jobs!” In March, Trump imposed tariffs on imported steel and aluminum but exempted most major countries except China and Japan. The trade dispute between the U.S. and China has escalated in recent days. Trump spoke about the clash in an interview with the “Bernie and Sid” radio show on 77 WABC Radio that was taped Thursday and aired Friday. He said there “could be a little pain.” But he added, “We’re going to have a much stronger country when we’re finished.” 1:30 a.m. China’s commerce ministry says Beijing is prepared to fight the U.S. “at any cost” as a trade dispute between the world’s two largest economies escalated with President Donald Trump ordering the U.S. trade representative to consider slapping an additional $100 billion in tariffs on Chinese goods. The ministry said in a statement Friday that if Washington persisted in what Beijing describes as protectionism, China would “dedicate itself to the end and at any cost and will definitely fight back firmly.” Trump’s surprise directive Thursday came a day after Beijing announced plans to tax $50 billion in American products, including soybeans and small aircraft, in response to a U.S. move this week to slap tariffs on $50 billion in Chinese imports. 1 a.m. President Donald Trump has instructed the U.S. trade representative to consider slapping $100 billion in additional tariffs on Chinese goods. The move comes a day after China issued a $50 billion list of U.S. goods including soybeans and small aircraft for possible tariff hikes in an escalating and potentially damaging dispute. The White House says Trump has instructed the Office of the United States Trade Representative to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify which products they should apply to. He’s also instructed his secretary of agriculture “to implement a plan to protect our farmers and agricultural interests.” Trump argues China’s trade practices have led to the closure of American factories and the loss of millions of American jobs. Republished with the permission of the Associated Press.
China-U.S. tariffs: Mostly losers, but some winners too
China’s threat to raise tariffs on U.S. exports could be a disaster for American soybean farmers but a boon to their Brazilian and Argentine competitors, European aerospace companies and Japanese whiskey distillers. Regulators picked products China can get elsewhere when they made a $50 billion list including soybeans and small aircraft for possible retaliation in a trade spat with Washington. That should help minimize China’s losses if U.S. President Donald Trump goes ahead with a planned tariff hike and Beijing responds, said economist Lu Feng at Peking University’s School of National Development. “Compared with the U.S. list, which focuses on high-tech, China’s list is more diversified,” said Lu. “The impact to China’s overall economy is under control.” The two sides have not set a date for raising duties. Trump has approved higher duties on Chinese telecoms, aerospace and other technology goods but left time to negotiate by announcing a comment period through May 11. Beijing says its timing depends on what Trump does. Already, the threat of disruption has jolted the business world. Share prices of American exporters of aircraft, farm equipment and grain sagged Wednesday after Beijing announced its list of 106 products. Others picked for a possible 25 percent rise in Chinese import duty include beef, electric vehicles, industrial chemicals, orange juice and tobacco. Losers, including Chinese consumers who might face higher food prices, will likely outnumber winners. “It definitely will affect my choices,” said Wang Xiaoyu, a 20-year-old student in Beijing. “For daily necessities, mobile phones or electronics, I am more likely to choose domestic brands or choose products with the same price as U.S. products before the price hike.” While importers that buy big volumes of American soybeans and other goods might struggle to fill the whole gap, those shortfalls could create business opportunities for rival suppliers. “The obvious ‘winners’ would be the other major suppliers of these products,” said Adam Slater of Oxford Economics in an email. The biggest impact of higher Chinese duties would fall on American soybean farmers. China accounted for almost 60 percent of their exports and $12.4 billion in revenue for the year that ended on Aug. 31. Farmers in Brazil, Argentina or Australia might step up to supply Chinese buyers who use soybeans as animal feed and to produce cooking oil. A 25 percent price hike for American pork, whiskey and tobacco could make sources in Europe, Russia, Japan and elsewhere more attractive. It was unclear whether Beijing might try to make an exception for Chinese-owned U.S. exporters such as pork producer Smithfield Foods. WH Group, which bought Smithfield in 2013, opened a facility in the center Chinese city of Zhengzhou to produce its brands but uses meat imported from the United States. At the same time, American meat producers might save money if weaker Chinese demand depresses the price of soybeans they use to feed cows and pigs. Higher prices for American small aircraft and aviation technology also could give French and German competitors a chance to gain market share. U.S. aviation-related exports to China totaled $13.2 billion in 2016. That accounted for 58 percent of Chinese imports, giving potential rivals plenty of room to grow. “We will continue in our own efforts to proactively engage both governments,” said Boeing Co. in a statement. “A strong and vibrant aerospace industry is important to the economic prosperity and national security of both countries. Other potential winners include developing countries that might replace China as a supplier to American markets, according to William Jackson of Capital Economics. Mexico produces many of the goods targeted for U.S. tariffs on Chinese imports such as televisions and electrical circuits, he said in a report. South Korea, Malaysia and Thailand export semiconductors and other technology. “To the extent that the tariffs do result in the U.S. importing from elsewhere, other emerging markets might stand to benefit,” wrote Jackson. Republished with the permission of the Associated Press.
US proposes tariffs on $50 billion in Chinese imports
The Trump administration on Tuesday escalated its aggressive actions on trade by proposing 25 percent tariffs on $50 billion in Chinese imports to protest Beijing’s policies that require foreign companies to hand over their technology. China immediately said it would retaliate against the new tariffs, which target high-tech industries that Beijing has been nurturing, from advanced manufacturing and aerospace to information technology and robotics. The Office of the U.S. Trade Representative issued a list targeting 1,300 Chinese products, including industrial robots and telecommunications equipment. The suggested tariffs wouldn’t take effect right away: A public comment period will last until May 11, and a hearing on the tariffs is set for May 15. Companies and consumers will have the opportunity to lobby to have some products taken off the list or have others added. The latest U.S. move risks heightening trade tensions with China, which on Monday had slapped taxes on $3 billion in U.S. products in response to earlier U.S. tariffs on steel and aluminum imports. “China’s going to be compelled to lash back,” warned Philip Levy, a senior fellow at the Chicago Council on Global Affairs and an economic adviser to President George W. Bush. The cherry industry in Washington state is worried its exports to China will be hurt by a growing trade war that escalated Monday when that country raised import duties on a $3 billion list of products. (April 3) Early Wednesday in Beijing, China’s Commerce Ministry said it “strongly condemns and firmly opposes” the proposed U.S. tariffs and warned of retaliatory action. “We will prepare equal measures for U.S. products with the same scale” according to regulations in Chinese trade law, a ministry spokesman said in comments carried by the official Xinhua News Agency. The U.S. sanctions are intended to punish China for deploying strong-arm tactics in its drive to become a global technology power. These include pressuring American companies to share technology to gain access to the Chinese market, forcing U.S. firms to license their technology in China on unfavorable terms and even hacking into U.S. companies’ computers to steal trade secrets. The administration sought to draw up the list of targeted Chinese goods in a way that might limit the impact of the tariffs — a tax on imports — on American consumers while hitting Chinese imports that benefit from Beijing’s sharp-elbowed tech policies. But some critics warned that Americans will end up being hurt. “If you’re hitting $50 billion in trade, you’re inevitably going to hurt somebody, and somebody is going to complain,” said Rod Hunter, a former economic official at the National Security Council and now a partner at Baker & McKenzie LLP. Kathy Bostjancic of Oxford Economics predicted that the tariffs “would have just a marginal impact on the U.S. economy” — unless they spark “a tit-for-tat retaliation that results in a broad-based global trade war.” Representatives of American business, which have complained for years that China has pilfered U.S. technology and discriminated against U.S. companies, were nevertheless critical of the administration’s latest action. “Unilateral tariffs may do more harm than good and do little to address the problems in China’s (intellectual property) and tech transfer policies,” said John Frisbie, president of the U.S.-China Business Council. Even some technology groups that are contending directly with Chinese competition expressed misgivings. “The Trump administration is right to push back against China’s abuse of economic and trade policy,” said Robert Atkinson, president of the Information Technology and Innovation Foundation think tank. However, he said the proposed U.S. tariffs “would hurt companies in the U.S. by raising the prices and reducing consumption of the capital equipment they rely on to produce their goods and services.” “The focus should be on things that will create the most leverage over China without raising prices and dampening investment in the kinds of machinery, equipment, and other technology that drives innovation and productivity across the economy,” Atkinson added. The United States has become increasingly frustrated with China’s aggressive efforts to overtake American technological supremacy. And many have argued that Washington needed to respond aggressively. “The Chinese are bad trading partners because they steal intellectual property,” said Derek Scissors, a China specialist at the conservative American Enterprise Institute. In January, a federal court in Wisconsin convicted a Chinese manufacturer of wind turbines, Sinovel Wind Group, of stealing trade secrets from the American company AMSC and nearly putting it out of business. And in 2014, a Pennsylvania grand jury indicted five officers in the Chinese People’s Liberation Army on charges of hacking into the computers of Westinghouse, US Steel and other major American companies to steal information that would benefit their Chinese competitors. To target China, Trump dusted off a Cold War weapon for trade disputes: Section 301 of the U.S. Trade Act of 1974, which lets the president unilaterally impose tariffs. It was meant for a world in which much of global commerce wasn’t covered by trade agreements. With the arrival in 1995 of the Geneva-based World Trade Organization, Section 301 largely faded from use. Dean Pinkert of the law firm Hughes Hubbard & Reed, found it reassuring that the administration didn’t completely bypass the WTO: As part of its complaint, the U.S. is bringing a WTO case against Chinese licensing policies that put U.S. companies at a disadvantage. China has been urging the United States to seek a negotiated solution and warning that it would retaliate against any trade sanctions. Beijing could counterpunch by targeting American businesses that depend on the Chinese market: Aircraft manufacturer Boeing, for instance, or American soybean farmers, who send nearly 60 percent of their exports to China. Rural America has been especially worried about the risk of a trade war. Farmers are especially vulnerable targets in trade spats because they rely so much on foreign sales. “Beijing right now is trying to motivate US stakeholders to press the Trump Administration to enter into direct negotiations with China and reach a settlement before tariffs are imposed,” the Eurasia Group consultancy said in a
China raises tariffs on US pork, fruit in trade dispute
China raised import duties on a $3 billion list of U.S. pork, fruit and other products Monday in an escalating tariff dispute with President Donald Trump that companies worry might depress global commerce. The Finance Ministry said it was responding to a U.S. tariff hike on steel and aluminum that took effect March 23. But a bigger clash looms over Trump’s approval of possible higher duties on nearly $50 billion of Chinese goods in a separate argument over technology policy. The tariff spat is one aspect of wide-ranging tensions between Washington and Beijing over China’s multibillion-dollar trade surplus with the United States and its policies on technology, industry development and access to its state-dominated economy. Forecasters say the immediate impact should be limited, but investors worry the global recovery might be set back if it prompts other governments to raise import barriers. Those fears temporarily depressed financial markets, though stocks have recovered some of their losses. On Monday, stock market indexes in Tokyo and Shanghai were up 0.5 percent at midmorning. Beijing faces complaints by Washington, the European Union and other trading partners that it hampers market access despite its free-trading pledges and is flooding global markets with improperly low-priced steel and aluminum. But the EU, Japan and other governments criticized Trump’s unilateral move as disruptive. The United States buys little Chinese steel and aluminum following earlier tariff hikes to offset what Washington says is improper subsidies. Still, economists expected Beijing to respond to avoid looking weak in a high-profile dispute. Effective Monday, Beijing raised tariffs on pork, aluminum scrap and some other products by 25 percent, the Finance Ministry said. A 15 percent tariff was imposed on apples, almonds and some other goods. The tariff hike has “has seriously damaged our interests,” said a Finance Ministry statement. “Our country advocates and supports the multilateral trading system,” said the statement. China’s tariff increase “is a proper measure adopted by our country using World Trade Organization rules to protect our interests.” The White House didn’t respond to a message from The Associated Press on Sunday seeking comment. China’s government said earlier its imports of those goods last year totaled $3 billion. The latest Chinese move targets farm areas, many of which voted for Trump in the 2016 presidential election. U.S. farmers sent nearly $20 billion of goods to China in 2017. The American pork industry sent $1.1 billion in products, making China the No. 3 market for U.S. pork. “American politicians better realize sooner rather than later that China would never submit if the U.S. launched a trade war,” said the Global Times, a newspaper published by the ruling Communist Party. Washington granted EU, South Korea and some other exporters, but not ally Japan, exemptions to the steel and aluminum tariffs on March 22. European governments had threatened to retaliate by raising duties on American bourbon, peanut butter and other goods. Beijing has yet to say how it might respond to Trump’s March 22 order approving possible tariff hikes in response to complaints China steals or pressures foreign companies to hand over technology. Trump ordered U.S. trade officials to bring a WTO case challenging Chinese technology licensing. It proposed 25 percent tariffs on Chinese products including aerospace, communications technology and machinery and said Washington will step up restrictions on Chinese investment in key U.S. technology sectors. Trump administration officials have identified as potential targets 1,300 product lines worth about $48 billion. That list will then be open to a 30-day comment period for businesses. Beijing reported a trade surplus of $275.8 billion with the United States last year, or two-thirds of its global total. Washington reports different figures that put the gap at a record $375.2 billion. Republished with the permission of the Associated Press.
Donald Trump: Good chance NKorean leader will do ‘what is right’
President Donald Trump said Wednesday there’s “a good chance” that North Korean leader Kim Jong Un will “do what is right for his people and for humanity” and make moves toward peace. In a pair of morning tweets, Trump says he received a message from Chinese President Xi Jinping that a meeting Xi had with Kim this week “went very well.” Trump says that according to Xi, the North Korean leader “looks forward” to meeting the American president. The White House has said Trump plans to meet Kim by May amid nuclear tensions between the two nations. Trump has agreed to historic talks after South Korean officials relayed that Kim was committed to ridding the Korean Peninsula of nuclear weapons and was willing to halt nuclear and missile tests. In the meanwhile, Trump says, “unfortunately, maximum sanctions and pressure must be maintained at all cost!” The Trump administration has slapped sanctions on companies across the globe to punish illicit trade with North Korea. Received message last night from XI JINPING of China that his meeting with KIM JONG UN went very well and that KIM looks forward to his meeting with me. In the meantime, and unfortunately, maximum sanctions and pressure must be maintained at all cost! — Donald J. Trump (@realDonaldTrump) March 28, 2018 “For years and through many administrations, everyone said that peace and the denuclearization of the Korean Peninsula was not even a small possibility,” Trump tweeted Wednesday. “Now there is a good chance that Kim Jong Un will do what is right for his people and for humanity. Look forward to our meeting!” State Department spokeswoman Heather Nauert said that Kim’s visit to China “was an unprecedented, historic step in the right direction.” For years and through many administrations, everyone said that peace and the denuclearization of the Korean Peninsula was not even a small possibility. Now there is a good chance that Kim Jong Un will do what is right for his people and for humanity. Look forward to our meeting! — Donald J. Trump (@realDonaldTrump) March 28, 2018 “It is also evidence that @POTUS’ maximum pressure campaign is working. We look forward to sitting down with Kim Jong Un to talk about a better future for his people,” Nauert said in a tweet. However, it remains unclear if there has been direct communication between Washington and Pyongyang on the planned Trump-Kim summit that is slated for May, and under what conditions North Korea would agree to give up the nuclear arsenal it has spent decades building. According to the Chinese state news agency Xinhua, Kim told China’s Xi that North Korea is willing to have dialogue with the United States and hold a summit of the two countries. Kim also said the issue of denuclearization can be resolved if South Korea and the U.S. take “progressive and synchronous measures for the realization of peace.” Republished with permission from the Associated Press.
Ivanka Trump’s business ties shrouded in secrecy in China
It is no secret that the bulk of Ivanka Trump’s merchandise comes from China. But just which Chinese companies manufacture and export her handbags, shoes and clothes is more secret than ever, an Associated Press investigation has found. In the months since she took her White House role, public information about the companies importing Ivanka Trump goods to the U.S. has become harder to find. Information that once routinely appeared in private trade tracking data has vanished, leaving the identities of companies involved in 90 percent of shipments unknown. Even less is known about her manufacturers. Trump’s brand, which is still owned by the first daughter and presidential adviser, declined to disclose the information. The deepening secrecy means it’s unclear who Ivanka Trump’s company is doing business with in China, even as she and her husband, Jared Kushner, have emerged as important conduits for top Chinese officials in Washington. The lack of disclosure makes it difficult to understand whether foreign governments could use business ties with her brand to try to influence the White House — and whether her company stands to profit from foreign government subsidies that can destroy American jobs. Such questions are especially pronounced in China, where state-owned and state-subsidized companies dominate large swaths of commercial activity. “There should be more transparency, but right now we do not have the legal mechanism to enforce transparency unless Congress requests information through a subpoena,” said Richard Painter, who served as chief White House ethics lawyer for George W. Bush, and is part of a lawsuit against President Donald Trump for alleged constitutional violations. “I don’t know how much money she’s making on this and why it’s worth it. I think it’s putting our trade policy in a very awkward situation.” An AP review of the records that are available about Ivanka Trump’s supply chain found two potential red flags. In one case, a province in eastern China announced the award of export subsidies to a company that shipped thousands of Ivanka Trump handbags between March 2016 and February of this year, Chinese public records show — a possible violation by China of global fair trade rules, trade experts said. The AP also found that tons of Ivanka Trump clothing were exported from 2013 to 2015 by a company owned by the Chinese government, according to public records and trade data. It is unclear whether the brand is still working with that company, or other state-owned entities. Her brand has pledged to avoid business with state-owned companies now that she’s a White House adviser, but contends that its supply chains are not its direct responsibility. Ivanka Trump’s brand doesn’t actually make its products directly. Instead, it contracts with licensees who oversee production of her merchandise. In exchange, those licensees pay the brand royalties. The AP asked Ivanka Trump’s brand for a list of its suppliers. The company declined to disclose them. The clothing, footwear and handbag licensees contacted by AP also declined to reveal source factories. Abigail Klem, president of IT Operations LLC, which manages Ivanka Trump’s brand, said the company does not contract with foreign state-owned companies or benefit from Chinese government subsidies. However, she acknowledged that its licensees might. “We license the rights to our brand name to licensing companies that have their own supply chains and distribution networks,” Klem said in an email. “The brand receives royalties on sales to wholesalers and would not benefit if a licensee increased its profit margin by obtaining goods at a lower cost,” she added. But Michael Stone, chairman of Beanstalk, a global brand licensing agency, said lower production costs for licensees would ultimately benefit Ivanka Trump by freeing up money for marketing or lower retail prices, both of which drive sales. “It gives her a competitive advantage and an indirect benefit to her financially,” Stone said. “The more successful the licensee is the more successful Ivanka Trump is going to be.” The AP identified companies that sent Ivanka Trump products to the United States by looking at shipment data maintained by ImportGenius and Panjiva Inc., private companies that independently track global trade. Panjiva’s records show that 85 percent of shipments of her goods to the U.S. this year originated in China and Hong Kong, but beyond that, it’s becoming more difficult to map the brand’s global footprint. The companies that shipped Ivanka Trump merchandise to the U.S. are listed for just five of 57 shipments logged by Panjiva from the end of March, when she officially became a presidential adviser, through mid-September. Panjiva collects data from U.S. Customs and Border Protection, which did not immediately release the missing data to AP. While in many cases the manufacturer ships goods directly, merchandise can also be made by one company and shipped by another trading or consolidation company. There used to be more visibility. Last year, 27 percent of the companies that exported Ivanka Trump merchandise to the U.S. were identified in Panjiva’s records, and back in 2014 a full 95 percent were named. For two of Ivanka Trump’s licensees — G-III Apparel Group Ltd. and Marc Fisher Footwear — the number of shipments appears to plunge in 2015, likely because they “requested to hide” their shipment activity, according to Panjiva records. Neither company responded to AP’s questions. The brand declined to comment on the growing murkiness of its supply chain. Chris Rogers, an analyst at Panjiva, said any company can ask customs authorities to redact its information for any reason. About a quarter of companies request anonymity, he said, but the majority don’t mind disclosing who they’re doing business with. “A lot of companies have said, ‘yes there might be a commercial disadvantage, but we want to be transparent about our supply chain,’” he explained. “‘Why would we want to cover up the fact that we’re working with this particular company?’” While ethics lawyers may see disclosure as the best antidote to conflict of interest, many brands see it as a tool to keep supply chains scandal-free. Public outcry over
‘Maniacal’ focus on China puts Donald Trump aide out of mainstream
White House adviser Steve Bannon isn’t alone in pondering America’s possibly generation-defining question about China’s emerging superpower status – but his call for an “economic war” puts him far outside the mainstream. In an interview reflecting on some of his big-thinking projects, Bannon said the country should be “maniacally focused” on a confrontation with Beijing over who will be the global “hegemon” of the next 25 to 30 years. The former Breitbart News executive – who works steps from President Donald Trump in the West Wing – told The American Prospect that “the economic war with China is everything.” For decades, American economists, military strategists and policymakers of all stripes have wrestled with how the United States and China, the world’s biggest and soon-to-be biggest economies, manage differences on trade and security. But no one in a position of power has adopted a strategy that entails the almost messianic zeal of Bannon’s world view. For good reason, according to advocates of more measured approaches to dealing with China, who argue that an economic war would hurt everyone. “Steve Bannon’s view is too simplistic and arrogant,” Seattle trade attorney William Perry declared, saying such talk “could get the U.S. in big trouble.” He said Bannon’s position is “built around the idea that the United States is the biggest market in the world and everybody has to kowtow to us.” Bannon’s comments do reflect sentiments Trump himself has channeled on narrowing America’s vast trade deficit with China and bringing manufacturing jobs back home. They also underscore the ways in which the U.S. administration is in conflict with itself on China and other foreign policy issues. Bannon was stunningly candid about purging rivals from the Defense and State departments who supposedly resist the tough trade line with China. And he contradicted Trump by calling his boss’ bluff on threatening to attack North Korea, saying there is no military solution to the nuclear standoff. Bannon characterized the focus on North Korea as a “sideshow” to a more significant, U.S.-Chinese struggle for world control. Past U.S. administrations, Republican and Democrat, have cooperated with China since it initiated market-opening reforms more than three decades ago. The Clinton administration, for example, supported China’s World Trade Organization entry in 2001. But as China’s economic and military might has grown, hopes it would open its markets and play by WTO rules like other rising economies have receded. U.S. views have hardened. While American consumers have benefited from cheaper Chinese-made goods, the imports have caused massive U.S. trade deficits. Last year, for instance, America’s trade gap in goods with China was $347 billion. That represented nearly half the U.S. trade deficit with the entire world. Researchers from the Massachusetts Institute of Technology, the University of Zurich and the University of California, San Diego, found the U.S. lost 2.4 million jobs from 1999 to 2011 because of Chinese import competition. For Americans, that is the biggest concern and one Trump tapped into among blue-collar voters, at Bannon’s urging. Of his economic war with China, Bannon said: “We have to be maniacally focused on that. If we continue to lose it, we’re five years away, I think, ten years at the most, of hitting an inflection point from which we’ll never be able to recover.” Such doom-and-gloom talk may be getting Trump’s receptive ear. His administration has recently dusted off some little-used trade weapons, starting a process that could lead to penalties on Chinese steel and aluminum imports. On Monday, Trump announced the U.S. is investigating China for allegedly stealing American technology and intellectual property. But Bannon is surrounded by rivals for the president’s favor, clashing with top officials such as H.R. McMaster, Trump’s national security adviser. Trump himself passed up an opportunity this week to express confidence in Bannon, who has been with Trump since before the presidential election. Of The American Prospect interview, a White House spokeswoman on Thursday only said, “Bannon’s comments stand on their own.” An individual outside government who met recently with Bannon described him ordering up voluminous dossiers about China from various government agencies in recent weeks, possibly to prepare for Trump’s trade action this week. Trump’s announcement drew an angry reaction from Beijing, which also pushed back on Bannon’s remarks. Chinese Foreign Ministry spokeswoman Hua Chunyin called Thursday for “sound and steady growth of China-U.S. relations.” “There is no winner in a trade war,” Hua told reporters in Beijing. For years, China manipulated its currency to give its exporters an advantage over foreign competition. It demanded foreign companies turn over technology to access China’s vast market, and its firms rampantly stole the intellectual property of foreign companies. Government subsidies and cheap loans encouraged Chinese factories to overproduce steel, aluminum and other products, driving down global prices and putting U.S. and other firms out of business. But Washington hasn’t ignored violations. The Obama administration, for instance, filed 16 WTO cases against China. The U.S. has almost completely blocked steel imports from China. The Peterson Institute for International Economics found in a report this year that more than 9 percent of Chinese imports face trade barriers in the United States, versus less than 4 percent of overall imports. And China stopped manipulating its currency a few years ago. Bannon’s comments suggest potentially harsher measures. During the presidential campaign, Trump threatened 45 percent tariffs on Chinese imports, even if that would likely prompt Chinese retaliation. “The notion that we slap some tariffs on them, and they’re going to cave – that, I’m sure, is wrong,” said David Dollar, a former U.S. Treasury and World Bank official now at the Brookings Institution. Republished with permission of The Associated Press.
Donald Trump seeks probe by his trade office of China’s practices
Even as he seeks Beijing’s help on North Korea, President Donald Trump asked his trade office on Monday to consider investigating China for the alleged theft of American technology and intellectual property. Trump, in the midst of a 17-day vacation, left his New Jersey golf club to return to the White House to sign an executive action on the probe. He suggested that more steps would be taken against China on trade issues. “This is just the beginning – I want to tell you that,” Trump said. “This is just the beginning.” There is no deadline for deciding if any investigation is necessary. Such an investigation easily could last a year. In a phone call Friday, Trump praised Chinese President Xi Jinping for backing the recent U.N. vote to impose tougher sanctions on North Korea, and the leaders reaffirmed their commitment to a nuclear-free Korean Peninsula. But Trump also told Xi about the move toward a possible inquiry into China’s trade practices, according to two U.S. officials familiar with that conversation. They were not authorized to publicly discuss the private call and spoke on condition of anonymity. China announced Monday it will cut off imports of North Korean coal, iron and lead ore and other goods in three weeks under U.N. sanctions imposed against Pyongyang. In an editorial Monday, the China Daily, a mouthpiece of the ruling Communist Party, linked Trump’s trade announcement against China to his disappointment over China’s purported failure to rein in North Korea. The newspaper said a trade probe, which could lead to punitive tariffs on Chinese exports, would “poison” U.S.-China relations. Trump wants government officials to look at Chinese practices that force American companies to share their intellectual property in order to gain access to the world’s second-largest economy. Many U.S. businesses must create joint ventures with Chinese companies and turn over valuable technology assets, a practice that Washington says stifles U.S. economic growth. Trump’s action amounts to a request that his trade representative determine whether an investigation is needed under the Trade Act of 1974. If an investigation begins, the U.S. government could seek remedies either through or outside of the World Trade Organization. While Beijing has promised to open more industries to foreign companies, it also has issued new rules on electric car manufacturing, data security, internet censorship and other fields. An administration official contended that the possible investigation was unrelated to the showdown with North Korea. The official spoke on condition of anonymity to discuss the order before Trump’s formal announcement. As the crisis involving North Korea has unfolded, Trump has alternated praising China for its help and chiding it for not ratcheting up pressure on its Asian neighbor. “I think China can do a lot more,” Trump told reporters Thursday. “And I think China will do a lot more.” China, the isolated North’s main trading partner, has been reluctant to push leader Kim Jong Un’s regime too hard for fear it might collapse. But Beijing is increasingly frustrated with Pyongyang and supported a U.N. Security Council ban on Aug. 5 on coal and other key goods. The Chinese customs agency said Monday that it will stop processing imports of North Korean coal, iron and lead ores and fish at midnight on Sept. 5. “After that, entry of these goods will be prohibited,” said an agency statement. Trump has escalated his harsh criticism of North Korea for days, tweeting Friday that the U.S. had military options “locked and loaded.” Xi, in his phone conversation with Trump, urged calm, the officials said. Trump, in the past, has tied trade policy to national security, leading to speculation that raising the possibility of a probe – without committing to one – could be a negotiating tactic to get China to step up its assistance with North Korea. The forced sharing of intellectual property with Chinese firms has been a long-standing concern of the U.S. business community, with reports suggesting that losses stemming from it could total hundreds of billions of dollars annually that cost the U.S. economy millions of jobs. Trump has requested similar inquiries on trade, but the reports haven’t been delivered on deadline. Trump made addressing the U.S. trade deficit with China a centerpiece of his campaign last year and has suggested raising tariffs on goods from China. Republished with permission of The Associated Press.
