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Top Republicans rip Trump’s farm-aid plan as ‘welfare,’ ‘Soviet type of economy’

Market Watch  /  July 25, 2018

Republican senators from agricultural states were quick to condemn President Donald Trump’s plan to offer farmers $12 billion in emergency aid to offset the impact of the administration’s escalating trade war with China.

A number of top lawmakers said the plan does little to solve the overall problem — the Trump administration’s own trade policies — and goes against free-market principles.

“You have a terrible policy that sends farmers to the poorhouse, and then you put them on welfare, and we borrow the money from other countries. It’s hard to believe there isn’t an outright revolt right now in Congress over what is happening.” Sen. Bob Corker, R-Tenn
 

In a statement, Tennessee Republican Sen. Bob Corker called Trump’s trade policy “incoherent” and that the administration was “offering welfare to farmers to solve a problem they themselves created.”

Corker later told Bloomberg News that it was “a terrible policy” that should have Congress revolting.

Sen. Ben Sasse, R-Neb., said in a statement: “This trade war is cutting the legs out from under farmers and the White House’s ‘plan’ is to spend $12 billion on gold crutches. . . .America’s farmers don’t want to be paid to lose — they want to win by feeding the world.”

Responding to a speech Trump made Tuesday in Kansas City, Mo., in which he claimed farmers would benefit from his tariffs, Sen. Chuck Grassley, R-Iowa, said: “The president’s going to have to say more than ‘I like the farmers and I support the farmers,’” Bloomberg News reported.

Sen. Ron Johnson, R-Wisc., said Trump’s bailout plan was downright un-American.

“This is becoming more and more like a Soviet type of economy here. Commissars deciding who should be granted waivers. Commissars in the administration trying to figure out how they’re going to sprinkle around benefits,” he said.

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Johnson is right. It's a hypocritical situation. We constantly criticize the Chinese government for giving select industry financial support......and then we do the same thing.

Low soy bean prices this season is not going to break the farmers. A cyclical industry, it's not the first season that prices were low. Always been the nature of the business. When prices are high, you don't hear a peep.

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Trump Threatens to Pull US out of WTO if It Doesn’t ‘Shape Up’

Transport Topics  /  August 30, 2018

President Donald Trump said he would pull out of the World Trade Organization if it doesn’t treat the United States better, continuing his criticism of a cornerstone of the international trading system.

“If they don’t shape up, I would withdraw from the WTO,” Trump said Aug. 30 in an Oval Office interview with Bloomberg News.

A U.S. withdrawal from the WTO potentially would be far more significant for the global economy than even Trump’s growing trade war with China, undermining the post-World War II system that the United States helped build.

Trump said last month that the United States is at a big disadvantage from being treated “very badly” by WTO for many years and that the Geneva-based body needs to “change their ways.”

U.S. Trade Representative Robert Lighthizer has said allowing China into the WTO in 2001 was a mistake. He has long called for the United States to take a more aggressive approach to WTO, arguing that it was incapable of dealing with a nonmarket economy such as China.

Lighthizer has accused WTO dispute-settlement system of interfering with U.S. sovereignty, particularly on anti-dumping cases. The United States has been blocking the appointment of judges to WTO’s appeals body, raising the possibility that it could cease to function in the coming years.

Since World War II, successive U.S. presidents have led efforts to establish and strengthen global trading rules, arguing that they would bring stability to the global economy.

WTO was created in 1994 as part of a U.S.-led effort by major economies to create a forum for resolving trade disputes.

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Senator calls for investigation of tariff exemption process

Kevin Jones, Trailer-Body Builder  /  August 30, 2018

Sen. Elizabeth Warren says the Trump administration is playing politics, and handing out favors to friends, in the Commerce Department’s management of the exemption process for steel and aluminum tariffs.

On Wednesday Warren called on the department’s Inspector General (IG) to open an investigation into the implementation of the program, initially billed as a "fair and transparent" way for U.S. manufacturers to seek tariff relief in certain instances. But Warren’s own preliminary investigation has revealed the process to be “replete with mistakes” and “arbitrary, opaque and subject to political favoritism.”

"Thousands of companies are seeking exemptions worth billions of dollars that affect manufacturing and investment decisions nationwide," the Massachusetts Democrat writes to IG Peggy Gustafson. "But this process appears to be running on an ad hoc basis, with little transparency, and bending to political pressure from well-connected lobbyists and Administration officials."

Specifically, to date Commerce has received 30,035 exemption requests for tariffs on steel (25%) and aluminum (10%) imports, and has made decisions on 3,559 of those, approving 2,101 and denying 1,458, according to department data. But, as tens of thousands of requests are left hanging, special friends of the administration have received special treatment, Warren contends.

On August 7 she sent a 10-page letter to Secretary of Commerce Wilbur Ross after she found that Rusal America Corporation had received an exemption for aluminum, good for 6.6 million pounds’ worth, tariff free. The kicker: Rusal is a subsidiary of a sanctioned Russian company controlled by Oleg Deripaska, a sanctioned Russian oligarch and a "close Putin confidant,'' the letter states.

And the day after Warren sent the letter, the Commerce Department reversed the exemption—but still has not explained how a sanctioned Russian company got an exemption for millions of dollars of aluminum imports just days after President Trump met privately with President Putin in Helsinki.

More details of how the Rusal exemption was approved are “equally alarming,” the senator writes: The July exemption was approved after Commerce Department officials appeared to privately inform Rusal that the company needed to provide more  information in a new submission; this even though Rusal appeared to have made no effort to find alternative U.S. producers; and over the objection of a domestic producer of the material sought by Rusal.

Additional media reports have raised questions about political interference in the exemption process, Warren continues. United States Steel and Nucor—two of America's biggest steel manufacturers with deep ties to the Administration—have successfully objected to hundreds of exemption requests.

And, earlier this month, reports revealed that Office of Management and Budget Director Mick Mulvaney was "trying to use his influence" to urge the Trump administration for an exemption for a company whose president contributed $5,400 to Mulvaney's 2016 congressional campaign, the senator says.

Warren asked the Commerce IG to conduct a thorough investigation of the department's process for evaluating tariff exemption requests, including an analysis of the processes and procedures in place to make these decisions, whether Commerce officials are following these policies and procedures, and any credible evidence that tariff exemptions granted by the department have strengthened the national security of the United States.

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I'm absolutely shocked.....shocked I tell you, to hear that the tariff exemption process could be replete with mistakes, arbitrary, opaque and subject to political favoritism. Say it isn't so.

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Trump threatens tariffs on additional $267 billion in China imports

Steve Holland, Reuters  /  September 7, 2018

WASHINGTON -- U.S. President Donald Trump said on Friday that he has tariffs ready to go on a further $267 billion worth of Chinese imports, as the world awaits his decision on imposing levies on $200 billion worth of the Asian nation's goods.

“The $200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent its going to be up to China, Trump said. "And I hate to say this, but behind that is another $267 billion ready to go on short notice if I want. That changes the equation.”

Hours after a public comment period closed on his $200 billion China tariff list, Trump told reporters aboard Air Force One that he was "being strong on China because I have to be."

Trump also said on Friday the United States and Japan have begun discussion over trade, saying that Tokyo "knows it's a big problem" if an agreement cannot be reached.

"We're starting that," Trump told reporters aboard Air Force One. "In fact Japan has called us ... they came last week."

"If we don't make a deal with Japan, Japan knows it's a big problem," he added.

Trump, who is already challenging China, Mexico, Canada and the European Union on trade issues, has expressed displeasure about his country's large trade deficit with Japan, but had not asked Tokyo to take specific steps to address the imbalance.

On Thursday, though, CNBC reported he had told a Wall Street Journal columnist he might take on trade issues with Japan, causing the dollar to slip against the yen.

More on China

Trump has already imposed 25 percent tariffs on $50 billion worth of Chinese goods, mostly industrial machinery and intermediate electronics parts, including semiconductors.

The $200 billion list, which includes some consumer products such as cameras and recording devices, luggage, handbags, tires and vacuum cleaners, would be subject to tariffs of 10 percent to 25 percent.

Cell phones, the biggest U.S. import from China, have so far been spared, but would be engulfed if Trump activates the $267 billion tariff list.

Trump's threatened tariffs, now totaling $517 billion in Chinese goods, would exceed the $505 billion in goods imported from China last year. But 2018 Chinese imports through July were up nearly 9 percent over the same period of 2017, according to U.S. Census Bureau data. 

Earlier on Friday, White House economic adviser Larry Kudlow told Bloomberg Television the administration would evaluate public comments before making decisions on the $200 billion tariff list.

The U.S. Trade Representative's office received nearly 6,000 comments and held seven days of public hearings on the proposed levies.

Most comments were from companies seeking to remove products from the tariff list, arguing there were few, if any alternative sources and the duties would cause financial hardship. Comparatively few applauded the tariffs.

Retailers had successfully kept high-profile consumer electronics such as cell phones and television sets off of previous tariff lists. But David French, top lobbyist for the National Retail Federation, whose members include Amazon.com, BJ’s Wholesale Club and Macy’s, said nearly every consumer good could be affected if Trump follows through on all threatened tariffs.

"The Chinese aren't paying these tariffs, American families are going to pay these tariffs. These are taxes and they're going to find their way into the pocket book of folks around the country," French said.

Still talking to China

Kudlow, who heads the National Economic Council, told CNBC the administration was still talking with China about trade issues but so far China had not met U.S. requests. 

The United States has demanded that China better protect American intellectual property, cut its U.S. trade surplus, allow U.S. companies greater access to its markets and roll back its high-technology industrial subsidy programs.

"We are still talking with China on a number of issues ... Those talks will continue to go on. We want lower (trade) barriers across the board," Kudlow said.

Specifically, Kudlow said, the United States was seeking "zero tariffs, zero non-tariff barriers, zero subsidies, stop the IP theft, stop the technology transfer, allow Americans to own their own companies."

"Those have been our asks for many months and so far those asks have not been satisfied," he said. "However, hope springs eternal."

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Reuters  /  October 11, 2018

U.S. President Donald Trump warned on Thursday there was much more he could do that would hurt China’s economy further, showing no signs of backing off an escalating trade war with Beijing.

“It’s had a big impact,” Trump said. “Their economy has gone down very substantially and I have a lot more to do if I want to do it.

“I don’t want to do it, but they have to come to the table.”

However, Trump said the Chinese want to negotiate but he does not believe they are ready and he told them so. He blamed previous U.S. presidents for allowing China to pursue unfair trade practices and said he had to tell Beijing, “It’s over.”

“They lived too well for too long and, frankly, I guess they think the Americans are stupid people. Americans are not stupid people. We were led badly when it came to trade.”

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WASHINGTON (Reuters / 1-15-2019) - United States Trade Representative Robert Lighthizer did not see ANY progress made on structural issues during trade talks with China last week, Republican U.S. Senator Chuck Grassley said on Tuesday.

“He (Lighthizer) said that there hasn’t been ANY progress made on structural changes that need to be made,” Grassley said, adding that those issues would include intellectual property, stealing trade secrets and putting pressure on corporations to share information.

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WASHINGTON (Reuters / 1-17-2019) - U.S. Treasury Secretary Steven Mnuchin discussed lifting some or ALL tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30.

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Nothing like sending a consistent message......................

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I have a bad feeling that Trump is not going to act on his March 1 deadline. I would have played this differently, but we're here with this. If he doesn't raise tariffs from 10% to 25% on March 1, we're obviously going to lose face.

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US Gives China a Month for Trade Deal as Talks Stay Deadlocked

Bloomberg News  /  May 10, 2019

President Donald Trump’s administration told China it has a month to seal a trade deal or face tariffs on all its exports to the Unites States, even as both sides sought to avoid a public breakdown in negotiations despite a developing stalemate.

The threat was made during talks in Washington on May 10, hours after Trump upped the ante by imposing a second round of punitive duties on $200 billion in Chinese goods. The talks are under close scrutiny across global financial markets, and U.S. stocks turned positive after negotiators on both sides said the session had gone fairly well.

In a series of tweets that cheered markets further, Trump on May 10 declared that the talks with China had been “candid and constructive.” “The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue,” he said. Further talks are possible, but there’s no immediate plan for the next round.

Earlier, in a meeting with Chinese Vice Premier Liu He, U.S. officials laid out their bottom line, telling him that Beijing had three or four weeks to agree to a deal or face additional 25% tariffs on a further $325 billion in exports to the United States. The threat came in response to the lack of any meaningful concessions by China during two days of meetings.

The lack of progress left major question marks hanging over the search for a deal on trade — just one source of tensions in a growing geopolitical rivalry that’s already shifting supply chains and testing established economic and security alliances.

In a series of morning tweets, Trump sought to justify his decision to hike tariffs as well as to convince businesses and financial markets that he wasn’t walking away from a deal.

“There is absolutely no need to rush,” the U.S. president said.

In another tweet, Trump proposed a vast new plan to use income from tariffs to buy up the crops of American farmers who’ve watched their exports to China collapse, and send them to poor countries as aid.

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China Armed With Powerful Market Weapons in Duel With Trump

Katherine Greifeld, Bloomberg  /  May 10, 2019

China has a powerful financial-market arsenal for its trade tussle with America, including a hoard of Treasuries and its currency. But using those weapons is not without cost.

Beijing said it will be forced to retaliate — but didn’t specify how — after U.S. President Donald Trump followed through with his threat to raise tariffs May 10 on $200 billion of Chinese imports to 25% from 10%. But simply responding with its own tit-for-tat tariffs isn’t China’s most likely move, said Brad Setser, a former Treasury official who’s now a senior fellow for international economics at the Council on Foreign Relations.

“Matching the U.S. dollar-for-dollar on the U.S. tariffs would imply raising a 25% tariff on all U.S. imports, including those that go into China’s exports,” Setser said. “China certainly could do that, but it would in many cases damage China directly.”

Trump pays attention to financial markets. He has often tweeted about stocks as they’ve zoomed to record highs. After Trump announced the tariff hike on May 5, the S&P 500 dropped four straight days.

China, the world’s second-largest economy, has market levers it can pull to escalate the battle. Here are some of them:

Chinese policy makers could devalue the yuan to offset the impact of U.S. duties on China’s economy. The offshore yuan weakened 5.5% against the dollar in 2018, drawing Trump’s ire and fueling speculation that the country was deliberately weakening its currency. While it has fallen 1.8% this week, the currency rose May 10 after the People’s Bank of China set its daily fixing at a stronger-than-expected level.

However, China’s painful experience with devaluing the yuan in 2015, which prompted capital to flee the nation, is likely to dissuade a similar move, according to Tao Wang, UBS Group AG’s chief China economist and head of Asia economic research. “China doesn’t like the self-fulfilling outflows that come as a result of depreciation, which tend to diminish domestic confidence,” she said. “In addition, yuan depreciation last year angered the Trump administration and led to higher U.S. tariffs.”

Currency has been a focal point in the trade talks. The U.S. has sought a yuan stability pact as part of an eventual deal.

China owns $1.1 trillion of U.S. government debt, more than any other foreign nation. If it pared back its holdings in that $15.9 trillion asset class, that could be a potent weapon. Bond markets were jolted last year by a report that Chinese officials recommend slowing or halting Treasury purchases.

However, China doesn’t really have other good options for where to park its $3.1 trillion in foreign-currency reserves — the world’s largest stockpile — making this an unlikely path, according to Ed Al-Hussainy of Columbia Threadneedle Investments. In addition, if China dumps Treasuries, that could cause prices to plummet, driving yields higher and devaluing whatever U.S. debt the country is still holding. So far, bonds have rallied, not fallen.

“Any sharp moves higher in U.S. yields both adversely impact the valuation of their existing Treasuries stock and could spark a dollar rally,” the strategist said. “The financial and FX stability risks of this policy could outweigh the benefits.”

China, the biggest buyer of U.S. soybeans, has already slapped a 25% duty on them. Much of the crop is grown in Midwestern states that make up Trump’s electoral base, making its fate even more important to the president.

Before the trade negotiations soured, China made what U.S. Agriculture Secretary Sonny Perdue described in February as some “good faith” purchases. Now, future buying might be up in the air. While devaluing the yuan or dumping Treasuries would be harder to pull off, balking at soybeans would be a relatively easy move, Setser said.

“There are some easy things for China to do,” including withdrawing from soybeans, he said.

Futures on the crop have dropped 11% since April 10.

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U.S. to lift steel, aluminum duties on Canada and Mexico

Bloomberg  /  May 17, 2019

The U.S. will lift steel and aluminum tariffs on Canada and Mexico in favor of stronger enforcement actions, in a move that will help clear the way for ratification of the new NAFTA.

In a joint statement on Friday, the U.S. said it removed metals tariffs on Canadian steel and aluminum imports in exchange for Canada scrapping retaliatory tariffs on U.S. goods. The deal will take effect within two days.

The move would lift the 25% steel and 10% aluminum tariffs the U.S. placed on the two trading neighbors almost a year ago in the name of national security. The decision sparked retaliatory duties from Canada and Mexico on U.S. farming goods and other products, and became an obstacle for lawmakers in all three nations to ratifying the deal.

As part of the agreement to scrap the levies, the U.S. will be able to re-impose the tariffs on metals imports if not enough is done to prevent a surge of imports beyond historical levels.

The nations have also agreed to ramp up efforts to trace where the metals have come from originally, to stop the diversion of shipments from other nations to dodge tariffs.

The enforcement system will aim to advantage primary steel and aluminum producers in the three-nation trading bloc to ensure that the metal is melted, poured or smelted regionally.

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