US Steel cites Donald Trump in resuming Fairfield Works construction project
U.S. Steel Corp. will restart construction on an idled manufacturing facility in Alabama, and it gave some of the credit to President Donald Trump’s trade policies in an announcement Monday. Trump’s “strong trade actions” are partly responsible for the resumption of work on an advanced plant near Birmingham, the Pittsburgh-based company said in a statement. The administration’s tariffs have raised prices on imported steel and aluminum. The manufacturer also cited improving market conditions, union support and government incentives for the decision. Work will resume immediately, the company said, and the facility will have an annual capacity of 1.6 million tons (1.5 million metric tons). U.S. Steel said it also will update other equipment and plans to spend about $215 million, adding about 150 full-time workers. The furnace is expected to begin producing steel in late 2020. The 16,000-member United Steelworkers praised the decision to resume work, which followed an agreement with the union reached last fall. “This decision paves the way for a solid future in continuing to make steel in Alabama and the Birmingham region,” Leo W. Gerard, the president of the international union, said in a statement. U.S. Steel shut down its decades-old blast furnace at Fairfield Works in 2015, idling about 1,100 employees, and said it would replace the operation with an electric furnace. The company then blamed conditions in the steel, oil and gas industries as it suspended work in December 2015 on an electric arc furnace at its mill in Fairfield, located just west of Birmingham. The project stalled until the announcement Monday. Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum on June 1, 2018. The move was to protect U.S. national security interests, he said, but other countries said the taxes break global trade rules, and some have imposed tariffs of their own. Republished with permission from the Associated Press
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 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-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.
