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Trump's Economic, Tax & Spending Plans

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China Trade Truce May Help Give U.S. LNG Exports a $30 Billion Boost
May 21, 2018 by Bloomberg



Photo: Evgeny Shulin / Shutterstock


By Naureen S. Malik (Bloomberg) — China’s appetite for U.S. liquefied natural gas may be about to get a lot bigger after the two nations agreed to pull back from the brink of a trade war.

If China makes a substantial commitment to buying U.S. LNG, it could bring $30 billion back into the country, according to a Height Securities LLC report on Monday. The White House said May 19 that China will “significantly increase purchases” of U.S. goods, while Beijing’s special envoy said the world’s two largest economies had agreed to a trade truce.

“China represents an enormous economic opportunity for U.S. LNG,” Katie Bays, an analyst at Height in Washington, said in a note to clients Monday. The fuel “will likely see dramatic demand growth in the coming years, during which time the U.S. is also expected to dominate global export markets.”

China represents a massive opportunity for U.S. shale gas, with the nation set to become the world’s largest LNG importer in the next decade as it switches to the cleaner-burning fuel from coal.

Already, China is the third-biggest buyer of LNG from Cheniere Energy Inc’s Sabine Pass terminal in Louisiana, and it is poised to nab more cargoes from U.S. shores as developers seek to build new export plants from the Gulf Coast to Alaska.

U.S. LNG “makes sense from a Chinese point of view as well because they are experiencing very strong demand for gas as part of their efforts to improve air quality, and there are limited options for them,” Jason Feer, the head of business intelligence at Poten & Partners in Houston, said in an email.

Long-Term Contract
In February, Cheniere — America’s first exporter of shale gas overseas — signed the country’s first long-term contract with China National Petroleum Corp. for 25 years for a terminal under construction in Texas.

Cheniere shares gained as much as 6.2 percent Monday, the biggest intraday gain in almost two years. Prices were up 0.6 percent to $63.11 at 3:31 p.m.

China may provide the contracts needed for the so-called second wave of U.S. LNG terminals, which include projects from NextDecade Corp. and Pembina Pipeline Corp, Bays said. But neither LNG nor ethanol, which also stands to benefit from a trade truce, would provide a big enough export boost reduce the deficit by $200 billion a year, according to Height.

© 2018 Bloomberg L.P

http://gcaptain.com/china-trade-truce-may-help-give-u-s-lng-a-30-billion-boost/
 

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Trump Is Pushing For 10% Cut In Aluminum, Steel Imports From EU


by Tyler Durden
Wed, 05/23/2018 - 01:00


While the US-China trade talks have dominated headlines in the financial press this week, the Wall Street Journal on Tuesday published details from the Trump administration's ongoing trade negotiations with the European Union, which increasingly look like they, too, have arrived at an impasse.

According to WSJ, Trump is pushing the EU to reduce steel and aluminum exports to the US by about 10%, according to several high-ranking EU officials who have apparently chafed at the administration's demands. Officials have gone so far as to declare the measures illegal under World Trade Organization rules.

Negotiations are unfolding rapidly as the EU seeks to extend its temporary exemption from steel and aluminum tariffs that the Trump administration has said will expire June 1.




The Trump proposal has offered two avenues for arriving at the US's desired result. One is a quota fixed at 90% of US imports from the EU in 2017. The other would impose tariffs on a certain quota of imports with the aim of achieving the same 10% reduction, according to Poland’s Entrepreneurship and Technology Minister Jadwiga Emilewicz, who added that EU governments discussed the matter on Tuesday.

However, the exact scope and details of the quotas have not yet been made clear.

"We are under the impression that somehow they want to limit steel imports to the U.S.," European Trade Commissioner Cecilia Malmstrom said of continuing negotiations with Washington before briefing EU governments.​
"Aluminum as well," she said, without providing details.​

European Trade Commissioner Cecilia Malmstrom has reportedly been in regular contact with Commerce Secretary Wilbur Ross ever since the US surprised the world by announcing its steel and aluminum tariffs back in March. Still, despite their close cooperation, Malmstrom said that deciphering Trump's wants and needs has been by far the most frustrating aspect of the negotiations.

* * *

When it comes to setting a benchmark for their discussions with Trump, European countries have interpreted South Korea's trade concessions as a cautionary tale. Seoul agreed to cap its US steel exports at 70% of their average from the past three years - a decision that created daunting problems for Korean steelmakers.

Seoul agreed to cap its U.S. steel exports at 70% of the average export total over the past three years. That created a daunting task for South Korean steelmakers, the third-largest supplier to the U.S., which filled their annual quota in nine out of 54 categories in the first four months of 2018. Quarterly limits imposed by the Trump administration pose another challenge, with any steel exports exceeding the cap facing delays, redirection or destruction.​
"The devil is in the details," an EU official said. "There is more to a quota than catches the eye, it’s about how you manage it."

European officials have asked Trump not to punish US allies for a global steel glut precipitated by Chinese overproduction. The EU has readied countermeasures, including €2.8 billion ($3.3 billion) in levies against US goods, should the US reject the trade bloc's offers to accept US import quotas and lower some EU trade barriers in exchange for receiving a permanent waiver on steel and aluminum tariffs. European officials have also scoffed at the US's justification of tariffs on national security grounds, claiming this approach violates WTO rules.

European officials have repeatedly called on Mr. Trump not to punish U.S. allies for the global steel glut driven by overproduction in China. The president’s national security justification for steel and aluminum tariffs amounts to illegal protectionism under WTO rules, according to the EU. The bloc also balks at the notion that its exports threaten the U.S.. Twenty two of the EU’s 28 members are also in North Atlantic Treaty Organization allies.​
“We are allies, but we are not vassals,” French State Secretary Jean-Baptiste LeMoyne said Tuesday at the Brussels gathering, adding the EU was prepared to counter the Trump administration if it doesn’t grant an unlimited waiver to the bloc.​
[...]​
"We want to avoid a trade war," German Economic Affairs and Energy Minister Peter Altmanier said Tuesday in Brussels. "It's important to come to an agreement that is in the interest of both sides."​

Overall, Trump's trade relationship with China has continued to deteriorate despite a "trade truce" touted by Treasury Secretary Steven Mnuchin over the weekend. And what's worse, NAFTA negotiations have apparently stalled, ratcheting up the likelihood that Congress won't be able to ratify a new agreement until next year at the earliest.

Given these problems, preserving a strong trade relationship with the European Union is looking increasingly important - particularly where markets are concerned.

https://www.zerohedge.com/news/2018-05-22/trump-pushing-10-cut-aluminum-steel-imports-eu
 

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How China Bought Trump
The Young Turks



Published on May 15, 2018
A few hundred million and all Trump's tough talk against China just melts away… Cenk Uygur, host of The Young Turks, breaks it down. To get even more TYT in your life, go to https://TYT.com/app and download our free app!

Read more here: https://www.huffingtonpost.com/entry/...

"WASHINGTON – A mere 72 hours after the Chinese government agreed to put a half-billion dollars into an Indonesian project that will personally enrich Donald Trump, the president ordered a bailout for a Chinese-government-owned cellphone maker.
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump announced on Twitter Sunday morning. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”
Trump did not mention in that tweet or its follow-ups that on Thursday, the developer of a theme park resort outside of Jakarta had signed a deal to receive as much as $500 million in Chinese government loans, as well as another $500 million from Chinese banks, according to Agence France-Presse. Trump’s family business, the Trump Organization, has a deal to license the Trump name to the resort, which includes a golf course and hotels.”*
Hosts: Cenk Uygur

Cast: Cenk Uygur
 

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Trump Backs Away From China Deal Under Pressure by Trade Hawks
May 23, 2018 by Bloomberg



REUTERS/Kevin Lamarque/File Photo

By Jenny Leonard and Saleha Mohsin (Bloomberg) — President Donald Trump is backing away from the trade agreement the U.S. just announced with China, under pressure from China hawks among his supporters and in Congress who have assailed the accord as a capitulation.

“Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion,” Trump said on Twitter on Wednesday.

After boasting of the deal’s benefits for farmers in tweets on Monday, Trump first indicated on Tuesday he was having second thoughts as some of his loyalists publicly criticized the agreement. Asked if he was pleased with the direction of his administration’s negotiations with China, Trump told reporters “no, not really.” He later added, “they’re a start.”

The president’s misgivings open the prospect that a trade war Treasury Secretary Steven Mnuchin had declared “on hold” is at risk of resuming. Tariffs Trump had proposed for $50 billion in Chinese goods are ready to be enacted at his command, after a public comment period expired on Tuesday. The Chinese have promised counter-tariffs targeting products from states politically important to Trump, particularly in the Midwest Farm Belt — the source of intense pressure on the president to resolve the dispute.

But public criticism of the China deal by fellow Republicans and Trump supporters appears to be outweighing concern about a trade war among farm-state Republicans, retailers and others. Trump has also found himself under attack for retreating from penalties his administration announced against a large Chinese telecommunications company, ZTE Corp., for violating U.S. sanctions against Iran and North Korea.

#NotWinning
“Sadly #China is out-negotiating the administration & winning the trade talks right now,” Republican Senator Marco Rubio of Florida tweeted on Tuesday. “They have avoided tariffs & got a #ZTE deal without giving up anything meaningful.” He added, “This is #NotWinning.”

Another critic of the deal, Senator Steve Daines of Montana, lectured Mnuchin during a hearing at the Capitol on Tuesday.

“It’s very important as we engage in these negotiations, we can’t just see this as a standard trade dispute with China,” Daines told the Treasury secretary. “We must keep in mind China’s long-term strategic approach and their long-term goal of becoming the world’s superpower, militarily and economically.”

Trump supporters outside the government have joined in the chorus of complaints, and some have blamed Mnuchin.

“Doesn’t make sense to have the Treasury secretary negotiating trade policy — that’s the USTR’s job,” former Nucor Corp. Chief Executive Officer Dan DiMicco said in a phone interview on Tuesday. DiMicco was an adviser to Trump’s campaign and presidential transition who now sits on an advisory committee for U.S. Trade Representative Robert Lighthizer.

“We supported Trump in the elections, support a lot of the things he stands for, and we need him to come through on trade like he promised,” DiMicco said.

Negotiation “Framework”
Mnuchin announced Sunday the U.S. and China had agreed on a “framework” for trade talks, but neither nation provided any details of the agreement. While Trump said on Twitter that China had agreed to purchase “MASSIVE” amounts of American farm goods to reduce its yawning trade surplus with the U.S., the two sides didn’t agree on a specific dollar figure.

Critics of the deal have also complained that it is silent on broader economic issues important to the U.S., including Chinese acquisition of American technology; the country’s plans to subsidize growth of advanced domestic industries such as artificial intelligence and clean energy; and U.S. companies’ access to China’s markets.

Trump’s about-face on ZTE adds to his allies’ concerns. The Commerce Department announced April 16 that the company would be cut off from its U.S. suppliers, crippling its business, for what Commerce Secretary Wilbur Ross called “egregious” violations of U.S. sanctions. But Trump said on Tuesday that he had agreed to re-examine the matter as a personal favor to Chinese President Xi Jinping.

Trump said the U.S. may instead require that ZTE appoint a new board of directors and pay a “very large fine” of perhaps $1.3 billion.

Fourteen Republican senators including the party’s second-ranking leader, John Cornyn of Texas, joined 13 Democratic and independent senators in sending Trump a public letter Tuesday urging him not to soften ZTE’s punishment. They called ZTE’s sanction violations “serial and pre-meditated.”

Administration Discord
Ross plans to visit Beijing in early June to hammer out the details of the trade deal with China and how it would increase its purchases of American goods — particularly of energy and farming products, his office said on Tuesday. A scheduled Ross appearance early Wednesday at a Heritage Foundation trade event in Washington was canceled, organizers said.

Some White House officials blamed poor coordination among the opposing factions on Trump’s team for his initial agreement with China, according to several people briefed on the matter. Concern about harming negotiations over North Korea’s nuclear program, in which China plays a pivotal role as the isolated nation’s closest ally, has also factored in Trump’s decision to hold off on tariffs.

Trump expressed doubt on Tuesday that his planned June 12 summit with North Korean leader Kim Jong Un would happen, telling reporters there’s a “very substantial chance” it won’t.

Mnuchin and White House economic adviser Larry Kudlow are free-trade supporters regarded as more conciliatory toward Beijing than Lighthizer and White House trade adviser Peter Navarro, the administration’s fiercest China hawk. Mnuchin said in an interview on CNBC Monday that he speaks with Lighthizer ten times a day and that he and the trade representative and Ross are “unified” on trade strategy.

He pointedly did not mention Navarro, with whom he quarreled during a trade mission to Beijing earlier this month.

© 2018 Bloomberg L.P

http://gcaptain.com/trump-backs-away-from-china-deal-under-pressure-by-trade-hawks/
 

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Trump's position on trade is like the weather in FL, if you don't like it, just wait 5 minutes.
 

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China Signals to State Giants: ‘Buy American’ Oil and Grains
May 23, 2018 by Reuters



By R Rusak / Shutterstock



By Florence Tan, Hallie Gu and Dominique Patton SINGAPORE/BEIJING, May 23 (Reuters) – China will import record volumes of U.S. oil and is likely to ship more U.S. soy after Beijing signaled to state-run refiners and grains purchasers they should buy more to help ease tensions between the two top economies, trade sources said on Wednesday.

China pledged at the weekend to increase imports from its top trading partner to avert a trade war that could damage the global economy. Energy and commodities were high on Washington’s list of products for sale.

As the two sides stepped back from a full-blown trade war, Washington neared a deal on Tuesday to lift its ban on U.S. firms supplying Chinese telecoms gear maker ZTE Corp, and Beijing announced tariff cuts on car imports.

But U.S. President Donald Trump indicated on Wednesday that negotiations were still short of his objectives when he said any deal would need a “different structure.”

China is the world’s top importer of both oil and soy, and more U.S. shipments will help it meet rising domestic consumption. The imports would also contribute to cutting China’s trade surplus with the United States, as demanded by Trump.

Asia’s largest oil refiner, China’s Sinopec will boost crude imports from the U.S. to an all-time high in June as part of Chinese efforts to cut the surplus, two sources with knowledge of the matter said on Wednesday.

Sinopec’s trading arm Unipec has bought 16 million barrels, or about 533,000 barrels per day, of U.S. crude to load in June, they said, the largest volume ever to be lifted in a month by the company and worth about $1.1 billion.

“The government has encouraged us to lift more U.S. crude,” one of the sources said.

U.S. crude exports have risen rapidly as output from shale fields hits record highs and driven down the cost of U.S. oil relative to similar grades worldwide. Exports are straining U.S. pipeline and port infrastructure, and may be reaching the limit, one of the sources said.

“We want to buy more but they might not be able to export more,” the source said.

Other Chinese refiners are looking to reconfigure their plants so they could buy and process U.S. oil, one trade source said.


SOYBEAN INTEREST
In agriculture, China’s state grain stockpiler Sinograin returned this week to the U.S. soybean market for the first time since early April, two sources said. Sinograin made enquiries about prices for U.S. soybeans, traders said, interpreted as a sign that government curbs on buying American goods had been lifted

“Sinograin is in the market today asking U.S. suppliers to make offers for shipment of old crop as well as new crop beans for shipment August onwards,” said a source who works at a private soybean crushing company in China.

“It is a clear message to even private companies that it is okay now to import U.S. beans.”

Soybeans are America’s top agricultural export to China, worth $12 billion last year.

Two other sources briefed on the matter said Chinese state grain trader Cofco would be permitted to buy U.S. soybeans again, ending restrictions imposed by Beijing as trade tensions rose. The sources declined to be named as they are not authorized to speak to the media.

Sinograin, Cofco and the Ministry of Agriculture and Rural Affairs did not respond to requests for comment.

The Ministry of Commerce had not told state companies to increase purchases of U.S. soybeans, a ministry spokeswoman said.

U.S. Gulf export prices for the new soybean crop rose on Tuesday, which a U.S.-based trader said may indicate a revival in demand from China.

Exporters were lining up supplies for October to December shipment, the trader said.

Improving trade relations appeared to be rekindling interest from China for other grains, traders said. That will come as a big relief to U.S. farmers, who saw orders canceled and business dry up as Washington and Beijing lobbed trade-tariff threats at one another.

(Reporting by Dominique Patton and Hallie Gu in Bejing and Florence Tan and Naveen Thukral in Singapore; Additional reporting by Karl Plume in Chicago Writing by Josephine Mason and Simon Webb Editing by Alistair Bell)

(c) Copyright Thomson Reuters 2018.

http://gcaptain.com/china-signals-to-state-giants-buy-american-oil-and-grains/
 

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Farm Bill Impact Unknown, says Union President
RT America


Published on May 24, 2018
Trade negotiations continue between the United States and China in order to avoid a trade war. US Commerce Secretary Wilbur Ross is expected to go to China next week to negotiate a new framework for a deal, but any long term agreement could still be months away. RT America’s Ed Schultz is joined by Roger Johnson, President of the National Farmers Union
 

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Trump administration cuts deal to save Chinese phone giant ZTE - but senators from BOTH sides say they will stop any deal in its tracks

  • Trump administration tells Congress it has a deal which would keep Chinese cell phone firm ZTE in business if it fires managers, pays a fine and is monitored
  • Trump had tweeted about working on a deal with Chinese president Xi Jinping
  • China and U.S. are also in a stand-off over trade and tariffs with more talks in Beijing next month
  • But Republican Marco Rubio and Democrat Chuck Schumer both say it is unacceptable


Read more: http://www.dailymail.co.uk/news/article-5772851/Source-Trump-administration-cut-deal-Chinas-ZTE.html#ixzz5GbYnkQ6G
Follow us: @MailOnline on Twitter | DailyMail on Facebook
 

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Trump "Victories" on Trade are Anything But
By: Peter Schiff

-- Published: Friday, 25 May 2018

Earlier this year when President Trump began beating the drums loudly, causing fear of a trade war (and assuring us that such a conflict could be easily won), I cautioned that he had no idea the trouble he was courting . Based on his spectacular misunderstanding of the power dynamic built in to international trade, he was also in danger of bringing a knife to a gunfight.

As the year has progressed, the underbrush has gotten thornier, Trump's progress on trade has slowed, and now it has likely stopped altogether. Despite that, in true Trumpian fashion, the President has declared resounding victory. But a quick look back reveals the opposite to be true.

The first shot in Trump's trade offensive was his decision, shortly after he was sworn in as President, to withdraw the U.S. from the 20-nation Trans-Pacific Partnership (TPP). (1/2017 press release, Office of U.S. Trade Representative) As that agreement, which had sought to create a free trade zone uniting the Americas and Asia, was still being negotiated, the move was relatively easy and painless; a quick headline to suggest that Trump intended to keep campaign promises. Since that time, analysts agree that China has taken advantage of America's absence by picking up the stalled negotiations and recasting them in a China-centric framework.

But the first real move against a living target came with the President's bid to rewrite, or even fully scrap, the North American Free Trade Agreement (NAFTA), the Bill Clinton-era deal with Canada and Mexico that has greatly transformed business on this Continent. On the campaign trail, and in the White House, Trump repeatedly labeled NAFTA as one of the worst deals in history, a catastrophe for the American economy, and perhaps the single greatest cause of our current economic malaise. As a result, Trump's trade negotiators began knocking on doors north and south of the border very early in his Presidency. But those negotiations never went anywhere.

Trump representatives quickly ran into the stone wall of economic reality and came to understand that although Mexico and Canada are much smaller than the U.S., they can push back strongly on commercial and political fronts. After threats and counter threats (including Trump's attempt to have Mexico "pay" for the border wall through NAFTA concessions), it now appears that the current round of talks will expire with no substantive changes in the NAFTA framework.

But the main event in Trump's trade war was supposed to emerge with China, the number two economy in the world and America's chief economic rival in all things commercial. China's gargantuan $375 billion annual trade surplus with the U.S., according to U.S. Census Bureau figures for 2017, is responsible for nearly half of America's total trade deficit and is by far the largest such bi-lateral figure in the world. Clearly, any successful campaign to improve America's trade position had to go through Beijing.

But Trump's first salvo missed that mark widely. In March, he announced his plan to slap hefty tariffs on imported steel and aluminum. In making these announcements he specifically singled out China as the reason that such measures were needed. The problem is that China is a very small player in those markets, accounting for just 3.35% of our metals imports based on 2017 U.S. Commerce Department data. The tariffs had much more impact on our closest geo-political allies, including Canada, Mexico and the European Union. Uncertainty and confusion over these tariffs caused global stock markets to fall and opposition on both sides of the Atlantic intensified. Negotiations that followed resulted in significant delays, carve-outs, and reductions to the proposed tariffs. Even now, no one can be sure what will eventually occur.

But with the metals gambit appearing to be a spectacular misfire, the Trump administration got down to more serious business of direct confrontation with China. Earlier this month, they proposed duties of up to $150 billion on Chinese goods if China did not cooperate to reduce our bilateral trade deficit. Trump even offered a target number of $200 billion in bilateral reductions. In addition, the U.S. followed through with threats to lock out Chinese phone company ZTE from purchasing U.S. technological components as the company had been caught repeatedly selling such technology to North Korea and Iran.

But then the hard part started. The Chinese struck back with threats to target U.S. agricultural imports, specifically those that would impact districts in the Midwest and plains states that are vital to Republican electoral fortunes. The pushback from Congress was immediate. A U.S. delegation flew to China to extract concessions from China. They didn't get any. In fact, the only real concessions came from us, not them. In a fortuitous coincidence for China, the trade talks are occurring at the same time that Trump is preparing for his nuclear summit with North Korea. It is clear that Kim Jong Un will not agree to anything without consent from the Chinese. Given Trump's seeming hunger for a Nobel Peace Prize moment, Beijing was handed an enormous amount of leverage, which it clearly used. This pressure may have played a major part in Trump's sudden concern for the loss of jobs in China. Despite ZTE's clear violations of U.S. law, for which it had been previously sanctioned, Trump is determined to make China Great Again. But with the Korea negotiations now officially dead, it appears as if Trump got nothing for his efforts.

After another round of negotiations in Washington this week, it was finally announced that the U.S. and China had come to an agreement, which was regarded as a nothing burger. In it, China has agreed to buy "significantly more" goods and services from the U.S. But no specific quantities were announced (certainly nothing approaching the $200 billion Trump was seeking) and no new policies were mandated that could bring about such a change. If anything, China may simply buy more stuff that it had intended to buy anyway. And even if they do buy more oil from us (one of our principal exports to China), this may simply mean we sell less elsewhere. In other words, it changes nothing. Apparently, the art of the deal is to pretend one exists when it doesn't. But the President's frustration with the lack of progress may have prompted him to open even another front in the trade war this week when the Administration announced that it would seek to use obscure national security provisions in existing trade law to slap tariffs of up to 25% on imported cars, trucks, and auto parts. Given the amount of cars currently manufactured in the U.S. by foreign owned companies, and the degree to which U.S. cars use foreign-made parts, Trump could not have chosen a more perilous battlefield.

In truth, Trump dodged a bullet that he didn't even know existed. To actually reduce America's trade deficit would require that we import less and export more. This would mean that there would be fewer cheap things to buy at Walmart, and that more of our agricultural and resource production would be sold overseas. A reduction in the supply of goods would translate into higher prices for average Americans. If tariffs were added into the mix, then prices would rise even further. Given that interest rates and oil prices are currently both at multi-year highs, and likely going higher, a surge in consumer prices is precisely the wrong development for Americans already struggling with a rising cost of living.

The silver bullet for reducing the trade deficit is thought to be currency valuations. People like to point at China for making its currency too weak, thereby giving them a trade advantage. But China runs a trade deficit with Germany, based on 2017 data from OECD. Apparently, the advantages of a weak currency only matter for America. But the real problem is that the U.S. dollar is too strong based on our persistently enormous trade and budget deficits, political dysfunction, and our low economic growth relative to the fast-growing Asian economies. But the dollar continues to benefit from its status as the world's reserve currency. Until that peg is removed, we will continue to run trade deficits no matter how loudly Trump shouts from the bully pulpit.

But the trade deficit is not the only deficit that the Administration is ill-prepared and unwilling to confront. America's other deficit, the one resulting from the government's inability to spend only what it raises in taxes, is also increasing unchecked. This year that deficit is expected to approach $1 Trillion. In 2020, it's supposed to surpass that level, according to the Congressional Budget Office, and that's if the economy doesn't slow despite the current spike in interest rates and rise of oil prices. If the economy does slow, the deficits may be much higher than currently predicted. If we experience a recession, (remember those) deficits could increase into the multi-trillion dollar range. As retiring Republican Senator Bob Corker recently expressed, there is precisely zero enthusiasm in Washington to address this impending fiscal catastrophe.

Ironically, it will be America's surging budget deficits that hold the key to solving the trade deficit problem. If the Fed is finally forced to return to quantitative easing in order to monetize exploding budget deficits, prop up sagging asset markets, and "stimulate" a weakening economy, the dollar could fall sharply. While the initial decline can exacerbate the trade imbalance by raising the cost of imports, as it gives way to collapse, the trade deficit may then collapse as well, as foreign-made products become far too expensive for Americans to afford. But few will herald the elimination of the trade deficit as a victory, as the high price of dollar depreciation will be a significant reduction in living standards.

But yet, optimism in Washington and on Wall Street has never been higher. That adds up about as well as our trade figures.

Read the original article at Euro Pacific Capital

Best Selling author Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital. His podcasts are available on The Peter Schiff Channel on Youtube.

http://news.goldseek.com/EuroCapital/1527265040.php
 

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Trump Plows Ahead on China Tariffs Threats
May 29, 2018 by Bloomberg


Photo: By tcly / Shutterstock

By Jenny Leonard and Andrew Mayeda (Bloomberg) — President Donald Trump said he’s moving ahead with plans to impose tariffs on $50 billion of Chinese imports and curb investment in sensitive technology, ratcheting up pressure on Beijing days before the next round of trade negotiations.

In a statement Tuesday, the White House said a final list of targeted imports will be released by June 15 and the tariffs will be imposed “shortly thereafter.” It’s the most specific the administration has been about the timing for the duties to take effect.

The administration also said new restrictions on Chinese investment and enhanced export controls will be announced by June 30 and then implemented shortly after.

It’s the latest twist in a trade dispute between the U.S. and China that has roiled financial markets for months and prompted the International Monetary Fund to warn of a trade war that could undermine the broadest global upswing in years. The announcement raises the stakes for the third round of talks between the two economies. Commerce Secretary Wilbur Ross is scheduled to meet with officials in Beijing on June 2-4 to continue negotiations.

Trump has vacillated in recent weeks on how hard to push Beijing over issues such as tariffs and intellectual property. The dispute began in March, when his administration threatened to slap tariffs on as much as $50 billion in Chinese shipments to punish Beijing for violating American I.P. rights.

After Beijing promised to retaliate in kind to any duties, the president raised the ante to slap tariffs on an additional $100 billion in Chinese goods. However, the U.S. has yet to publish a list of target products for the $100 billion, and the White House statement on Tuesday made no reference to the second potential tranche of duties.

The U.S. tariffs threat has been widely opposed by industry leaders and some members of Congress who warn the duties could end up raising costs for American consumers, devastating farmers and hurting other exporters if China proceeds with retaliatory duties.

“Conflicting messages coming from the administration is causing whiplash for American companies that are focused on growing the economy and creating jobs here at home,” the Virginia-based Retail Industry Leaders Association said in an emailed statement. “We support the administration’s decision to hold China accountable for their bad behavior. But retailers strongly believe igniting a global trade war will cause casualties.”

U.S. Chamber of Commerce President Thomas Donohue, in an emailed statement, said: “We continue to believe that the use of tariffs puts all the burden on American companies and consumers.”

Trump is also under pressure from Congress to stay tough on China, especially Chinese telecoms-equipment maker ZTE Corp. Last week, the president said he would allow ZTE to stay in business after it pays a $1.3 billion fine, shakes up its management, and provides “high-level security guarantees.”

ZTE Criticism
China pressed the U.S. to give ZTE a break after the Commerce Department cut off the company from U.S. suppliers to punish it for allegedly lying to American officials in a sanctions case. Republican Senator Marco Rubio and other lawmakers from both parties have criticized Trump’s leniency toward ZTE, arguing that doing business with the company presents a risk to national security.

Top Senate Democrat Chuck Schumer, who has previously praised Trump’s tariffs plan, urged the president to be “strong, tough and consistent” in addressing China’s trade policies.

The White House outline for imposing the tariffs announced on Tuesday “represents the kind of actions we have needed to take for a long time,” Schumer said in an emailed statement. “But the president must stick with it and not bargain it away.”

Investment Curbs
When Trump announced the initial plan to impose tariffs, he also instructed the Treasury Department to draw up new curbs on investments in the U.S. by Chinese companies. The Treasury has presented its findings to the president, but its conclusions haven’t been made public.

The latest signal from the White House sounds like the more hawkish wing of Trump’s trade team is trying to amplify its hard line, after Treasury Secretary Steven Mnuchin said this month that any talk of a trade war was suspended for now.

“Mnuchin’s ‘trade war on hold’ comments look to have been repudiated this morning, and possibly his investment stance, too,” said Derek Scissors, a China analyst at the American Enterprise Institute in Washington. “It may be the administration has shifted somewhat to appease the Congress on the lifting of the ZTE sanctions.”

WTO Case
The White House also said on Tuesday the U.S. plans to continue litigation at the World Trade Organization for China’s intellectual-property practices.

In a further indication of the Trump administration striking a tougher tone before the negotiations later this week, the White House issued a separate statement running through its major grievances over China’s trade practices from forced technology transfers to automobile import tariffs.

“President Trump has taken long overdue action to finally address the source of the problem, China’s unfair trade practices that hurt America’s workers and our innovative industries,” according to the statement.

© 2018 Bloomberg L.P

http://gcaptain.com/trump-plows-ahead-on-china-tariffs-threats/
 

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China Trade Deal On The Verge After Beijing Slams Trump's Latest Surprise "Flip-Flop"


by Tyler Durden
Wed, 05/30/2018 - 07:35


One day after Trump surprised trade watchers by announcing he would impose 25% tariffs on up to $50 billion in Chinese tech imports as well as other sanctions, a confused Beijing hit back at the US president, saying that if the U.S. insists on unilateral measures, China will respond accordingly, according to foreign ministry spokeswoman Hua Chunying told reporters in Beijing on Wednesday.

“Every flip-flop in international relations simply depletes a country’s credibility,” Hua added following the White House's statement on Tuesday that a final list of imported goods to be targeted will be released by June 15, and levies imposed “shortly thereafter.”

Trump’s latest u-turn was greeted with dismay in the Chinese state media, though pledges to retaliate were muted: "The world faces an extremely mercurial White House administration,” an editorial in China’s Global Times tabloid read. “The Chinese government has the ability and wisdom to handle such situations."

As Bloomberg notes, the announcement by Trump, which seemed to tear up an agreement reached only 10 days ago in Washington, is the latest twist in a trade dispute between the U.S. and China that has rattled financial markets for months and could threaten the broadest global upswing in years, according to the International Monetary Fund.

Earlier on Wednesday, the Wall Street Journal reported that the trade talks between the two countries scheduled for June 2 in Beijing may be derailed by the fresh threat from Washington. Specifically, the WSJ reported that in order to test the waters after Trump's surprising announcement, a U.S. advance team was scheduled to arrive in Beijing Wednesday afternoon ahead of Commerce Secretary Wilbur Ross’s planned arrival on Saturday.

Members of the U.S. team, consisting of staffers from the Commerce, Treasury, Agriculture and Energy departments and the office of the U.S. Trade Representative, are set to meet with their Chinese counterparts to hammer out broad outlines of the talks.​

If the two sides fail to reach accord about issues to be discussed, Ross’s trip could be canceled, the people said. “If the working-level teams from both sides can’t agree on anything, there would be no point for Ross to take the trip,” one of the WSJ sources said. Should those discussions go well, "the people said the high-level talks would proceed as planned."

While the ongoing trade dispute poses a risk to China’s economic outlook, the two countries will likely find common ground, said Robin Xing, chief China economist at Morgan Stanley; he expects China will buy an additional $60 billion to $90 billion of American goods over several years as it seeks to address Trump’s criticisms over the trade surplus.

“The two parties can reach a deal by China increasing imports,” Xing said Wednesday in a Bloomberg Television interview from Beijing. “De-escalation over time through negotiation remains our base case because we see areas where China and the U.S. can find some middle ground to make some mutually beneficial progress, for example to meet China’s own demand for upgrading consumption.”​

Trump has vacillated in recent weeks on how hard to push Beijing over issues such as tariffs and intellectual property. The dispute began in March, when his administration first threatened to slap tariffs on as much as $50 billion in Chinese shipments to punish Beijing for violating American I.P. rights.

It is unclear if the latest flip-flop jeopardizes what until last weekened was seen as an all but done deal on ZTE, and, reciprocally, NXP-Qualcomm. As a reminder, China pressed the U.S. to give ZTE a break after the Commerce Department cut off the company from U.S. suppliers to punish it for allegedly lying to American officials in a sanctions case. Republican Senator Marco Rubio and other lawmakers from both parties have criticized Trump’s leniency toward ZTE, arguing that doing business with the company presents a risk to national security.

When Trump announced the initial plan to impose tariffs on Chinese goods, he also instructed the Treasury Department to draw up new curbs on investment in the U.S. by Chinese companies. The Treasury has presented its​

As Bloomberg accurately highlights, the latest move by Trump signals the more hawkish wing of Trump’s trade team is trying to amplify its hard line, after Treasury Secretary Steven Mnuchin said this month that any talk of a trade war was suspended for now.

“Mnuchin’s ‘trade war on hold’ comments look to have been repudiated,” said Derek Scissors, a China analyst at the American Enterprise Institute in Washington. “It may be the administration has shifted somewhat to appease the Congress on the lifting of the ZTE sanctions.”​

Which begs the question: is China trade hawk dragon Peter Navarro back in Trump's good graces, and if so, is the countdown to Mnuchin's resignation officially on?

https://www.zerohedge.com/news/2018...eijing-slams-trumps-latest-surprise-flip-flop
 

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U.S. Trade Official Rebukes Mnuchin on China Trade Truce
May 30, 2018 by Bloomberg



Oakland, California. Photo: Sheila Fitzgerald / Shutterstock

By Jenny Leonard and Rich Miller (Bloomberg) — White House trade adviser Peter Navarro criticized Treasury Secretary Steven Mnuchin for declaring the U.S.-China trade war was on hold, calling the remarks an “unfortunate sound bite” and acknowledging there’s a dispute that needs to be resolved.

“What we’re having with China is a trade dispute, plain and simple,” Navarro said in an interview broadcast Wednesday with National Public Radio. “We lost the trade war long ago” with deals such as Nafta and China’s entry into the World Trade Organization, he said.

The remarks from Navarro, a hard-liner on President Donald Trump’s trade team, come just days before U.S. Commerce Secretary Wilbur Ross is scheduled to meet with his counterparts in Beijing to discuss ways to reduce the U.S. trade deficit with China. The White House on Tuesday said the U.S. is moving ahead with plans to impose tariffs on $50 billion of Chinese imports and curb investment in sensitive technology.

Just over a week ago, Mnuchin said in a televised interview that the prospect of a trade war with China was “on hold.” The White House downplayed the Treasury secretary’s comments on Wednesday when asked about Navarro’s remarks.

Mnuchin “didn’t say it was on hold indefinitely,” White House Press Secretary Sarah Huckabee Sanders said in the daily press briefing in Washington. “The president ultimately makes the decisions on trade, and when he does we announce them. And that’s exactly what’s taking place in this process.”

The renewed threat of tariffs could stop the planned talks between Ross and his Chinese counterparts, the Wall Street Journal reported Wednesday, citing sources in both countries. A team of U.S. officials was in the Chinese capital on Wednesday to prepare for the talks.

Asked about potential Chinese retaliation, especially on American farm goods, Navarro said “we’re ready for anything.”

Persistent rifts over trade policy in the White House have created confusion about the U.S.’s future relations with partners from China to the European Union. Mnuchin and White House economic adviser Larry Kudlow are free-trade supporters regarded as more conciliatory toward Beijing than U.S. Trade Representative Robert Lighthizer and Navarro, the administration’s fiercest China hawk.

Trade Battles
The U.S. is confronting China as it picks battles on other trade fronts with some of its closest allies. Temporary reprieve from steel and aluminum tariffs for the EU, Canada and Mexico expire on June 1. The U.S. allies have demanded a permanent and unconditional waiver from the levies, which are being imposed on the grounds of national security.

The U.S. is also racing to agree on a revised North American Free Trade Agreement to give the current Republican-controlled Congress a chance to approve the deal this year. Canadian Prime Minister Justin Trudeau said in an interview on Tuesday that a “win-win-win” agreement is still possible but that he’d rather reach no deal than accept a bad one.

Tariff Surprise
The White House’s unexpected announcement that it would proceed with Chinese tariffs revived worries about a trade war that would upend supply changes and hurt business.

“Conflicting messages coming from the administration is causing whiplash for American companies,” the Virginia-based Retail Industry Leaders Association, whose members include Walmart Inc., Target Corp. and Best Buy Co., said on Tuesday.

The next round of negotiations could provide more clarity. Ross is due to hold talks in Beijing from June 2-4 to work out the details for China to buy more American agriculture and energy exports and narrow the U.S.’s $375 billion trade gap with China.

The advance team for the visit includes senior officials from the departments of agriculture, energy, commerce and treasury, including the U.S. Trade Representative’s Chief Agricultural Negotiator Gregg Doud, according to an emailed statement.

Ross on Wednesday defended Trump’s unilateral tariff measures as necessary to fix a broken global trade system.

“Every country’s primary obligation is to protect its own citizens and their livelihood,” he said. “Maybe that’s a populist saying, but it’s one we feel very strongly about.”

© 2018 Bloomberg L.P

http://gcaptain.com/u-s-trade-official-rebukes-mnuchin-on-china-trade-truce/
 

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U.S. announces it will slap steel tariffs on Europe, Canada, and Mexico after France's finance minister warns: 'Global trade is not a gunfight at the OK Corral'

  • President Trump announced a 25 per cent tariff on steel and a 10 per cent tariff on aluminum
  • He gave Europe, Canada, and Mexico a reprieve that expires Friday
  • The European Union has threatened to impose retaliatory tariffs on U.S. orange juice, peanut butter and other goods in return
  • The U.S. had a $150 billion trade deficit with the EU last year


Read more: http://www.dailymail.co.uk/news/article-5789731/Trump-plans-ahead-steel-aluminum-tariffs-EU.html#ixzz5H5jg1ABm
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Bye-Bye Benz: Trump Planning Ban On Luxury German Autos


by Tyler Durden
Thu, 05/31/2018 - 09:43


Having cornered his European allies over the Iran sanctions, and tightened his grip on the EU economy over metals tariffs, an exclusive report by German magazine WirtschaftsWoche claims that President Trump is taking direct aim at Merkel and is preparing to impose a total ban on German luxury carmakers from the U.S. market.



Citing several unnamed U.S. and European diplomats, the weekly business magazine reported that Trump told French President Emmanuel Macronlast month he would maintain his trade policy with the aim of stopping Mercedes-Benz models from driving down Fifth Avenue in New York.

WiWo reports that Trump's grudge against the German automaker - and especially against Mercedes models in New York - is not new.​
In January 2017, prior to his inauguration, he said in an interview, "When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house." But that's not reciprocity. "How many Chevrolets do you see in Germany? Not too many, maybe none at all, you do not see anything over there, it's a one-way street," said the real estate billionaire.​
Although he is for free trade, but not at any price: "I love free trade, but it must be a smart trade, so I call him fair."


The report comes less than two weeks after the U.S. Department of Commerce launched an investigation into automobile imports to determine whether they "threaten to impair the national security" of the U.S. That could lead to tariffs of up to 25 percent on the same "national security" grounds used to impose metal imports charges in March.

WiWo also points out that an import duty of 25 percent would also have a significant economic impact - the Ifo Institute comes in own calculations alone in the German carmakers at the cost of about five billion euros. That would depress German GDP by 0.16 percent.

"No country would fear higher absolute losses through such an inch than Germany," says Gabriel Felbermayr, director of the Ifo Center for Foreign Trade.​
Is it any wonder Der Spiegel did this?



As European Council President and former Prime Minister of Poland, Donald Tusk, raged:

" Looking at latest decisions of @realDonaldTrump someone could even think: with friends like that who needs enemies....
But frankly, EU should be grateful. Thanks to him we got rid of all illusions. We realise that if you need a helping hand, you will find one at the end of your arm. "



 

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France and Germany lead EU anger at Trump's decision to put tariffs on steel as markets fall amid fears of a trade war

  • The White House will impose tariffs on steel and aluminium imports from Europe
  • France said it would seek a 'firm and united response' with Germany and the EU
  • Jean-Claude Juncker said it was 'protectionism' and said Europe would respond


Read more: http://www.dailymail.co.uk/news/article-5790989/Trump-set-slap-tariffs-EU-steel-aluminium-TODAY-amid-fears-trade-war.html#ixzz5H5wDJbTA
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NYC billionaire Trump proposes cuts for rich and increases for the middle class... why am I not surprised?

Let's wait for the resident apologists to remind us how Trump Almighty is working hard for middle class peasants and would never cater to the wealthy elites.
 

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Ministers scramble to protect British steel industry from Trump's tariffs as Tory grandee warns against joining 'counterproductive' trade war with US

  • Trump's decision to hit the EU with tariffs on steel and aluminium sparked fury
  • Brussels warned it would not back down under 'threat' from the US President
  • International Trade Secretary Liam Fox said UK won't rule out counter-measures


Read more: http://www.dailymail.co.uk/news/article-5794369/Fears-trade-war-Trumps-punishing-steel-tariffs-come-force.html#ixzz5HAMFeuHO
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Furious Trudeau calls Trump's tariffs 'an affront' to Canadians who fought and died with Americans after president slaps levies on key allies and sends stocks plunging

  • President Trump announced a 25 per cent tariff on steel and a 10 per cent tariff on aluminum
  • The EU, Mexico, and Canada immediately hit back
  • The European Union last a list of retaliatory tariffs including U.S. orange juice, peanut butter and other goods in return
  • The U.S. had a $150 billion trade deficit with the EU last year
  • Mexico it back with tariffs on pork bellies, apples, grapes, lamps, flat steel
  • The EU said it would pursue 'rebalancing measures' at the World Trade Organization
  • Canada slapping tariffs on U.S. made steel and aluminum
  • Northern neighbor pledged to respond with 'dollar for dollar' tariffs
  • The Dow Jones Industrial Average plunged more than 200 points after the news
  • Canadian PM Trudeau said it is 'inconceivable' Canada could be considered a security threat to the U.S.


Read more: http://www.dailymail.co.uk/news/article-5789731/Trump-plans-ahead-steel-aluminum-tariffs-EU.html#ixzz5HAMlLFhv
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Trump's tariffs explained: What are they, how has the world reacted and what are the implications for Britain and global trade?

  • Trump has announced big taxes on US imports of metals from the EU, Canada and Mexico
  • Move draws criticism from the US's trading partners and allies
  • Here we explain what has happened and set out the reactions and implications


Read more: http://www.thisismoney.co.uk/money/markets/article-5794575/Trumps-tariffs-world-reacted.html#ixzz5HAyXGEcY
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Canada is slapping tariffs on $12.8 billion of US goods — here are the states that stand to lose the most

Business Insider
Bob Bryan
5 hrs ago

Canada isn't taking President Donald Trump's decision to hit the country with steel and aluminum tariffs lying down.
Prime Minister Justin Trudeau announced that Canada will impose retaliatory tariffs on $12.8 billion worth of US goods in response to Trump's metals tariffs.

The list of goods set to get hit by the Canadian tariffs varies from industrial steel to sleeping bags. Trudeau said the tariffs were not designed to hurt the American people, but rather defend Canada's interests and send a message to the Trump administration.

Using US Census Bureau data on exports and the list of goods subject to the tariffs, Business Insider determined exactly which states will get hit hardest by the Canadian crackdown.

The biggest losers from the US-Canada trade fight are industrial states in the Midwest:

  • Ohio would be the hardest hit. The state sent $1.75 billion worth of goods to Canada in 2017 that could fall under the tariffs.
  • Michigan would be close behind, with $1.17 billion in goods that could be subject to tariffs.
  • They are followed by New York ($1.17 billion), Pennsylvania ($1.14 billion), and Illinois ($1.02 billion).
The tariffs will go into place on July 1, Canada's government said, and will stay in place until the US removes the steel and aluminum restrictions.


© Provided by Business Insider canada retaliatory tariffs map in millions

http://www.msn.com/en-us/money/markets/canada-is-slapping-tariffs-on-dollar128-billion-of-us-goods-—-here-are-the-states-that-stand-to-lose-the-most/ar-AAy7gKv?ocid=ientp
 

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'Trump WILL back down': Defiant Canadian finance boss insists US will backtrack on steel tariffs after Trudeau responded with $12.8billion penalty and G7 nations and industry groups blasted the duties

  • Fears of a trade war overtook the G7 finance summit in Canada on Friday
  • The steel tariff exemption for Canada, EU and Mexico expired on Friday
  • Canada responded with $12.8B in retaliatory tariffs they hope will faze Trump
  • UK Chancellor of the Exchequer Philip Hammond says he is 'very disappointed'
  • German finance minister calls US tariffs 'unacceptable' and 'against the law'
  • French finance minister declares 'We have been attacked by those tariffs'
  • Canada and EU both filed complaints with the World Trade Organization
  • EU is also expected to counter-strike with retaliatory tariffs on US exports


Read more: http://www.dailymail.co.uk/news/article-5797675/Defiant-Canadian-finance-boss-insists-Trump-backtrack-steel-tariffs.html#ixzz5HGFTxYCZ
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Trump orders 'immediate steps' to boost coal nuclear plants as a matter of 'national and economic security'

  • Trump, who has frequently promised to bring back coal jobs, believes that keeping America's energy grid secure protects US national security
  • Environmental groups decried the support for coal over cleaner energy sources, while energy industry groups warned that it could raise prices
  • The plan would exempt power plants from obeying a host of environmental laws and spend billions to keep coal-fired plants open
  • The plan calls for Energy Sec. to use the Federal Power Act and the Defense Production Act to temporarily delay retirements of coal and nuclear plants


Read more: http://www.dailymail.co.uk/news/article-5796129/Trump-admin-considers-plan-bail-coal-nuclear-plants.html#ixzz5HGGyK8Il
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Trump's tariff tirade: President says the US has been 'ripped off for years' on trade and slams the Wall Street Journal for ignoring the 'billions' that will go into America's 'coffers'

  • Trump showed no sign of backing down from a trade war in tweets on Saturday
  • He allowed steel tariff exemptions for Canada, Mexico and EU to expire Friday
  • Allies and neighbors threatened retaliatory tariffs if Trump does not back down
  • Canada put duties on $12.8B in US goods including metal, mayo, and toilet paper
  • Trump says that with a nearly $800B trade deficit 'you can’t lose a Trade War!'
  • Comes five days before Trump makes his first visit to Canada for G7 summit


Read more: http://www.dailymail.co.uk/news/article-5799707/President-says-ripped-years-trade.html#ixzz5HM5OmhR2
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Trump Auto Tariffs Would Be "Net Negative" - Destroy 157,000 American Jobs

by Tyler Durden
Sat, 06/02/2018 - 19:20


New tariffs on imported automobiles and parts under consideration by President Trump could threaten more than 157,000 American jobs, according to a recent policy briefing published by the Trade Partnership WorldWide, an international trade and economic consulting firm.


President Donald Trump talks with auto industry leaders, including General Motors CEO Mary Barra (4th L) and United Auto Workers (UAW) President Dennis Williams (4th R) at the American Center for Mobility in Michigan in March 2017. (Source: Reuters)

The six-page policy report said automobile tariffs introduced by President Trump would ultimately be detrimental to American workers. The organization analyzed the potential net impacts on American jobs and the economy from a 25 percent tariffs imposed on U.S. imports from all trading partners of automobiles, lightweight trucks, other vehicles, and parts.

“We find that the tariffs would have a very small positive impact on high-skilled workers in the motor vehicle and parts sectors, but very large negative impacts on workers – both high- and lower-skilled – in other sectors of the economy. Overall, U.S. economic output would decline,” the report warned.​


The organization’s models indicate that Trump’s auto tariffs would boost employment in the auto sector by about 92,000, however, then eliminate 250,000 jobs across many industries throughout the broad economy. On top of that, American consumers will dish out about $6,400 more for an imported automobile that would cost around $30,000, which accounts for nearly a 21 percent increase in overall price. All in all, the report stated the economy would lose about .01 percent of its value if the auto tariffs were enacted. The study found:

  • The tariffs would result in a net loss of 157,000 U.S. jobs. A net loss of 250,000 jobs in the rest of the economy would more than offset an increase in U.S. motor vehicle and parts sector employment of 92,000 jobs.
  • About three jobs would be lost for every job gained in the motor vehicle and parts sector.
  • GDP would decline by 0.1 percent as higher costs, net job losses, and declines in producer and consumer spending power work their ways through the economy
  • Tariffs would add about $6,400 to the price of an imported $30,000 car.


The briefing notes that its trade analysts did not take into account any potential retaliation measures by American trade partners for the tariffs.


Table 1. U.S. Macroeconomic Effects of 25% Tariffs on Motor Vehicles and Parts

“Table 1 shows that the tariffs are estimated to cause a net decline in the output of the U.S. economy of 0.1 percent in the time frame considered here. The decline results from higher costs that ripple through the economy, making U.S. exports less competitive, and new car purchases more expensive, for example.”​

(Source: Trade Partnership WorldWide)

“Tariffs would reduce GDP by $18 billion and overall U.S. exports by nearly 2 percent annually,” the report stated.

Tariffs will increase prices for both imported vehicles and the U.S.- made cars with foreign components.


(Source: Trade Partnership WorldWide)


Table 2. Net Number of U.S. Jobs Impacted by 25% Tariffs on Motor Vehicles and Parts (Number).

“Table 2 summarizes the estimated net job impacts. Overall, 157,291 net jobs would be lost, including 45,450 jobs in nonmotor vehicle manufacturing sectors. Most job losses would come from services sectors that feel the impacts of the tariffs as the U.S. economy slows. Many of those services jobs are tied to production in manufacturing sectors that are negatively impacted by higher costs for motor vehicles and parts – trade and distribution, construction, and high-skilled business and professional services. Within the motor vehicle and parts increase, just 17,676 of them – or 19 percent – are the higher-skilled jobs the Administration cited in launching the review.”​


The report concludes that President Trump’s automobile tariffs would be an overall “net negative” for American jobs and the economy.

“Motor vehicle and parts tariffs of 25 percent would have serious net negative impacts on the U.S. economy overall. They would adversely impact many workers in manufacturing sectors, and hundreds of thousands of workers in services sectors that depend on the health of manufacturing. The tariffs would boost automobile prices, both domestic and imported. If supporting jobs and strengthening the economy are the motivations for invoking national security reasons for imposing protection, such tariffs would have the opposite impact from that intended.”​

President Trump’s threat of stoking a trade war between its trading partners is unsettling. The administration has threatened 25 percent tariffs on Chinese products, steel and aluminum tariffs on Europe, and has attempted to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Trade organization and politicians who back free trade have been radically opposed to the administration’s trade tariff proposals.

“Extending the reach of these tariffs and quotas to additional countries is certain to provoke widespread retaliation from abroad and would put at risk the economic momentum achieved through the administration’s tax and regulatory reforms. We urge the administration to take this risk seriously,” U.S. Chamber of Commerce Executive Vice President Myron Brilliant said Wednesday.​

The cautionary tale of the Smoot–Hawley Tariff Act of 1930 exacerbated the Great Depression as retaliatory tariffs by America’s trading partners reduced global growth. In a Central Bank induced economic expansion that is now entering the second longest cycle — and nearing the latter innings of the credit cycle. President Trump’s proposed trade war with trading partners might not be the best solution this late in the game if history means anything.

https://www.zerohedge.com/news/2018...-be-net-negative-destroy-157000-american-jobs
 

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"This Is A Red Line": Beijing Warns Trump Trade Deal Is Off If US Imposes Tariffs


by Tyler Durden
Sun, 06/03/2018 - 10:12


In a scathing editorial warning Trump to back off on his latest tariff threat, on Sunday China said that any trade deals between the US and China, and any progress and commitments made so far in bilateral negotiations would be withdrawn if President Donald Trump follows through with this threat.

"If the U.S. rolls out trade measures including tariffs, all the agreements reached in the negotiations won’t take effect," the state-run Xinhua News Agency reported this morning, citing a statement from the Chinese team that met with a U.S. delegation led by Commerce Secretary Wilbur Ross, which arrived in China overnight.



US trade delegation led by Commerce Secretary Wilbur Ross is in China to discuss bilateral trade relations, June 2-3


Separately, China has continued to express growing frustration with the tactics deployed by the White House, and an editorial in the nationalist, state-run tabloid Global Times said that "the U.S. can’t have its cake and eat it too," adding that the U.S. "needs to choose between tariffs and exporting more to China."

China's anger is the result of Trump’s revival of the simmering trade war between the two superpowers after Trump last week unveiled a plan to slap tariffs on $50 billion of Chinese imports, casting into doubt ongoing trade discussion about how to reduce China’s $375 billion goods-trade surplus with the U.S.

As Bloomberg clarifies, the Xinhua report came out on Sunday after Ross met with Chinese Vice Premier Liu He for talks that Ross called “friendly and frank, and covered some useful topics about specific export items.” At the same time as negotiators focus on technical steps to reduce the U.S. deficit, Trump’s aggressive reversals have rattled Beijing as it raises concerns about the possibility that any agreement made could be simply torn up by the president.

“China is concerned over the U.S.’s unpredictability, especially after Trump turned an about-face on tariffs,” said Gai Xinzhe, an analyst at Bank of China’s finance institute in Beijing. “Trump needs to give out more goodwill in exchange for really productive negotiations. Bluff, threat, and willful moves might work in business bargaining, but they could backfire in talks among nations.”

Meanwhile, suggesting that all the progress achieved over the past two months in trade negotiations would be lost if Trump follows though with tariffs, a commentary by state-run China Radio International said that the government’s stance on canceling any agreements reached in the talks if Trump’s tariffs go into effect was a "red line."

Meanwhile, the negotiations continue. According to Bloomberg, the Ross-led U.S. delegation, which was in Beijing for two days, included energy and agriculture experts, reflecting the U.S. desire to increase exports of natural gas and food.

On the Chinese side, officials including Commerce Minister Zhong Shan, Central Bank Governor Yi Gang, Vice Agricultural Minister Han Jun, and Li Fanrong, vice minister of national energy administration, accompanied Liu in the talks, according to a media pool report.​

During his visit, Ross has been looking to build on a vague joint statement released May 19, after negotiations in Washington. China pledged then to take steps to “substantially” reduce the U.S. trade deficit, including by buying more American farm goods and energy, though it didn’t commit to a dollar amount. However it now appears there was again no formal conclusion or announcement of "success" following this latest 2-day blitz.

Ross, meanwhile, finds himself torn, and under pressure from U.S. lawmakers to stay tough on Chinese telecom-equipment maker ZTE Corp even as Trump has said he is willing to forego sanctions against the company in exchange for a large fine and management changes, as well as China's greenlighting the NXP-Qualcomm deal. Republican Senator Marco Rubio and other lawmakers from both parties have questioned Trump’s leniency toward ZTE, arguing the company represents a security risk.

As Bloomberg adds, the stakes remain high for the global economy, and any collapse in trade talks could lead to a sharp slowdown in the global economy which is "cruising at its fastest pace of growth in seven years." But the International Monetary Fund has warned that a trade war could threaten the recovery, and policy makers are contending with a growing list of geopolitical risks, from a political crisis in Italy to the rocky progress of peace talks with North Korea.

The best summary of recent negotiations, however, comes from Goldman's chief economist Jan Hatzius who overnight writes that "less than two weeks after Trump Administration officials declared that the “trade war is on hold,” policy has shifted substantially. Following trade announcements over the last few days, the trade war does not appear to be “on hold” but simply "on."

https://www.zerohedge.com/news/2018...-warns-trump-trade-deal-if-us-imposes-tariffs
 

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US, China End Latest Trade Talks Without Settlement
VOA News



Published on Jun 4, 2018
China says its trade and business agreements with the United States will be void if U.S. President Donald Trump decides to impose tariff hikes and other restrictions on Chinese imports. The warning was spelled out in a statement Beijing issued after the latest round of bilateral trade talks Sunday. VOA's Zlatica Hoke reports.
Originally published at - https://www.voanews.com/a/4422176.html
 

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Free Trade Puts Republican Megadonors on Collision Course with Trump
June 4, 2018 by Reuters


A shipping container is loaded onto a truck at a port in Lianyungang, Jiangsu province, China April 6, 2018. REUTERS/Stringer

The Koch-backed groups also said that Congress should repeal the Jones Act, which requires goods shipped between U.S. ports to be transported on vessels that are domestically built, crewed, and owned.



By Doina Chiacu and Caren Bohan WASHINGTON, June 4 (Reuters) – Groups backed by powerful Republican donors Charles and David Koch said on Monday they will champion free trade and oppose tariffs with a multimillion-dollar campaign that puts them on a collision course with President Donald Trump.

The embrace of free trade principles by major Republican donors comes as Trump pursues aggressive measures against trading partners from China to Canada and U.S. allies in Europe, in line with his campaign pledge to pursue better trade deals.

An infusion of money into media, grassroots mobilization, lobbying and policy analysis into the domestic debate on free trade could embolden Republican candidates in the November congressional elections to part ways with the president on the issue.

Republican lawmakers, already grumbling about some of Trump’s trade initiatives, outright condemned the Commerce Department announcement last week on impending tariffs on steel imports and aluminum to be imposed on the European Union, Canada and Mexico.

In a statement, the Koch-backed groups said they would push Trump to lift those steel and aluminum tariffs, the recent tariffs on solar panels and washing machines as well the proposed tariffs for imports from China.

“The Trump administration has taken some incredibly positive steps for the American economy, but tariffs will undercut that progress and needlessly hamstring our full economic potential,” said Tim Phillips, president of Americans for Prosperity, a Koch advocacy group.

The groups said they would advocate that Trump reduce or eliminate trade barriers by modernizing the North American Free Trade Agreement (NAFTA) and returning to the negotiating table on the Trans Pacific Partnership (TPP).

Congress should abolish farm subsidies on crops, commodities and crop insurance and end subsidies for green energy as well as repeal the “buy America” requirement and the Jones Act, which requires goods shipped between U.S. ports to be carried on ships that are domestically owned.

The Koch-funded Freedom Partners Chamber of Commerce and the LIBRE Initiative are also involved in the initiative.

The billionaire Koch brothers have been a force in American politics since the 1980s. Their influence has largely been powered by a fortune centered on Koch Industries, the second-largest privately held company in the United States with annual revenues of more than $115 billion from interests in energy, chemicals and other sectors.

During the 2016 presidential campaign, the Kochs kept their distance from Trump. Charles Koch spoke out against Trump’s proposed Muslim registry, invoking a comparison to Nazi Germany.

The Koch network did not actively campaign against Trump in the 2016 Republican presidential primary or pour money into his campaign against Democrat Hillary Clinton. By contrast, the Koch network spent more than $120 million in the unsuccessful 2012 effort to defeat President Barack Obama.

After the 2016 election, however, the Kochs found common ground with the new Republican president on issues including rolling back federal regulations and pulling out of the Paris global climate accord.

“This campaign makes a clear statement: Trade is a major priority for our network. We will work aggressively to educate policymakers and others about the facts,” said James Davis, executive vice president of Freedom Partners.

(Reporting by Doina Chiacu and Caren Bohan; editing by Jonathan Oatis)

(c) Copyright Thomson Reuters 2018.

http://gcaptain.com/free-trade-puts-republican-megadonors-on-collision-course-with-trump/
 

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Senate majority leader cancels August break and tells lawmakers to stay in Washington and work on Trump's judges and government spending

  • Senate Majority Leader Mitch McConnell announced that instead of taking the entire month of August off ahead of November's mid-term elections
  • 'I think we have enough work to do for the American people that we should be here during these weeks,' McConnell told reporters
  • As originally planned, senators will be in their home states for the first week of the month, then return to Washington
http://www.dailymail.co.uk/news/art...n-leaders-scrap-US-Senates-August-recess.html
 

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Blame Canada! Trump fumed at Trudeau for burning down the White House during the War of 1812 – but it was the BRITISH and Canada didn't exist for another 50 years!

  • Trump asked Trudeau: 'Didn't you guys burn down the White House?'
  • British troops torched the White House in War of 1812
  • Canada didn't exist for another 55 years - until 1867
  • Trump and Trudeau were on a contentious phone call on tariffs
  • Trudeau and Trump have been engaged in a war of words since the new tariffs were announced last week, sparking fears of an international trade war
http://www.dailymail.co.uk/news/art...eau-burning-White-House-War-1812-BRITISH.html
 

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Is There Method To Donald Trump's Supposed Madness On Trade?

by Tyler Durden
Wed, 06/06/2018 - 23:20


Authored by Jim Jatras, op-ed via RT.com,

It would be an understatement to suggest that Trump’s decision to slap higher tariffs on practically everybody – has outraged almost everyone: most of the business community, foreign governments, media and experts from all fields.



President Donald Trump, it is said, is unleashing a global trade war, which is already beginning with promised retaliatory measures from our closest trading partners. Trump justified his action by claiming that steel and aluminum are strategic materials essential for national defense. In all likelihood national defense had little to do with his action. Rather, it is a ploy to put a “national security” halo around a measure being taken for economic reasons.

That doesn’t mean it’s the wrong move, however. It’s important to put these measures into the context of long-term US trade policy. US trade policy since World War II could almost have been designed to undermine the economic interests of American workers and American producers. Starting with Germany and Japan, our defeated enemies, we offered them the proverbial deal they can’t refuse: they get virtually tariff-free, nonreciprocal access to our huge domestic market to assist with their economies’ recovery from wartime destruction; in return, we would take their sovereignty: control of their foreign and security policies, as well as their military and intelligence establishments, plus permanent bases on their territory.

In effect, Germany and Japan ceded geostrategic control of their own countries and were rewarded at the expense of domestic US economic interests. This may have seemed a good deal for both sides at the time, in light of the mounting Cold War with the Soviet Union. Germany and Japan were flat on their back, we were the only major world economy not devastated by the war – in fact, our economy was booming. We could afford to be generous, especially as the arrangement strengthened our geopolitical position vis-à-vis the USSR and Soviet bloc.

Unfortunately, not only was the Germany-Japan arrangement not ended when those nations recovered by the end of the 1950s, it became the standard for our trade relation with other countries in non-communist Europe, as well as some in the Far East, notably South Korea.

Though reduced politically to the status of satellites, these countries also benefited from having to spend only token amounts on their own militaries. (In fact, Japan accepted an arbitrarily low military spending cap of one percent of GDP, now beginning to erode.) This meant they could focus all of their resources on their economies, even while protecting them from outside competition, including from the US.

This is not to say no one in the US benefited economically. American corporations – or more accurately, companies that originated in the US but had gone global – jumped at the opportunity to dump their pricey American workers (along with bothersome labor and environmental regulations), move their manufacturing operations abroad, and then import their products back into the US virtually tariff-free.

While this didn’t benefit US workers, it has made life cushy for the corporate boardrooms and for shareholders (with corporate buybacks of stock, sometimes there is substantial overlap in these two categories).

So not surprisingly, for years the troubadours of the corporate class and their favored media and think tanks sing hosannas to the wonders of so-called Free Trade. With the predictability of Charlie Brown kicking the football, each new trade deal rushed through with fast track authority is touted as opening new markets for American goods and creating millions of good-paying jobs – and each with clockwork regularity leads to bigger deficits and lost jobs.

Before Trump’s election, Republicans (also deservedly known as the “Stupid Party”) barely paused for breath from their ritual denunciations of Barack Obama’s dictatorial abuse of his Executive Authority to steamrollblank-check autocratic presidential trade powers through Congress.

But while our political class exulted in America’s one-way commitment to Free Trade, our trading partner practice barely concealed mercantilism, both against each other and us. Consider, for example, the European Union’s Value Added Tax (VAT), which applies internally to domestic and imported goods but not to exports – in effect an export subsidy. But when the US considered leveling the playing field with a Border Adjustment Tax (BAT), the EU and other trading partners screamed bloody murder. As Alan Tonelson points out, “The BAT would have functioned like a value-added tax (a levy imposed by virtually every other country) — imposing a tax on imports heading for the U.S. market, and providing a subsidy for U.S. exports.” But for reasons that are not clear, the BAT was dropped.

To be sure, the American consumer benefitted in the US dollar’s status as the world’s reserve currency which has allowed purchases of imported items at artificially low prices, even as domestic producers are forced out of business and their workers laid off. Then, rather than exporting goods, the United States exports financial assets in the form of U.S. Treasuries, which have been purchased by central banks around the world to bolster their foreign currency reserves and to keep the value of their respective currencies low relative to the dollar.” The irony is that even with foreign goods’ attractive low, low, low prices, there are fewer working class Americans with good-paying manufacturing jobs able to support a Middle Class lifestyle.

The plight of these Americans is what largely propelled Trump into the White House as an improbable historical accident. Let’s recall that in 2016 there were anti-establishment rebellions in both parties, directed against Republicans and Democrats alike in light of flat economic growth, a shrinking Middle Class, flat or falling income levels (reflecting in large part loss of high-paying manufacturing jobs), crippling debt levels (nearly half of Americans would have trouble finding $400 to pay for an emergency), a rising mortality rate (notably among the white working class, dubbed the White Deathfrom suicide), substance abuse (with about five percent of the world's population, the US consumes 80 percent of the world's opioid prescriptions), and a diet of processed foods and GMOs (in a pattern reminiscent of collapsing life expectancy of Russian males as the USSR imploded), and a record low labor participation rate.

A widespread sense of foreboding suggests that the future will be even worse, with most Americans’ expectation of a lower standard of living for their children and grandchildren. Somebody is making a lot of money out of the more than two decades’ quest for “benevolent global hegemony,” but it sure isn’t the ordinary folks in, what the elite of both parties concentrated on the coasts disdain as, “Flyover Country.”

Trump pledged to do something about this. Especially in the Rust Belt states of Pennsylvania, Ohio, Michigan, and Wisconsin, those who voted for him want something radically different from business as usual. They voted for Trump because they wanted a bull in a china shop, a wrecking ball, a human hand grenade, a big “FU” to the system.

So far, though, on many issues they have gotten instead something closer to a conventional Republican of the Mitt Romney or Jeb Bush variety. This is especially true on foreign policy, where Trump’s team and his actions seem to have been formulated by the same globalist, neoconservative-dominated establishment he denounced during the campaign. But with his tariffs Trump has boldly departed from recent Republican orthodoxy – and in fact, rejoined the nationalist tradition of the GOP from Lincoln to Eisenhower, when the US became and remained the industrial and economic envy of the world.

It remains to be seen whether anything like a trade war will materialize. Key to that will be what Europe will do, not just with respect to tariffs but to US sanctions against European companies doing business with Iran in the aftermath of American withdrawal from the Iran nuclear agreement. It is one thing for the Europeans to meet Trump for some serious horse-trading that begins to rectify the lopsided commercial disadvantage they have enjoyed for half a century. But it is another thing to succumb to political diktat in the form of Iran sanctions. One would hope the European leaders see the connection between the new Iran-related threats emanating from Washington and the decades-old cession of independence to which they have meekly submitted under a long-outdated American “security umbrella.”

In assessing the readiness of Europe (not just of the EU leadership but national governments) to resist threats from Washington, it’s always the smart bet to expect them to wimp out. This is perhaps partly a function of their institutional weakness (especially of the unelected nobodies in Brussels), but the main fault seems to be the low human quality of leadership in the likes of Theresa May, Emmanuel Macron, and Angela Merkel, who wouldn’t know a principled stand for national sovereignty if it walked up and bit them.

Exhibit A is the European establishments’ inability to cope with – indeed, active encouragement of – migratory invasion, currently the only real external threat to Europeans’ safety and security. Exhibit B is the way European governments rushed to accommodate the US on the abominable global financial regulation known as FATCA (the “Foreign Account Tax Compliance Act”), where these supposedly independent states abrogated their domestic personal privacy laws in the face of naked sanctions threats from Washington. (To be fair, Russia, which has even more reason to resist placing its financial sector under the authority of the US Treasury Department, has done no better.)

At this juncture, it matters less what the specific steps European governments decide to take but that they resolve to achieve their political independence from Washington, even though that must entail some short-term pain from loss of a privileged trade arrangement. That in turn will require them to make a sober assessment of their relationship with Russia and the so-called threat that is justification for continued – indeed, perpetual – American domination. That linkage was made recently by Austria’s populist Vice-Chancellor Heinz-Christian Strache, who called both for a reaction to US pressures and normalized EU-Russia ties in anticipation of President Vladimir Putin’s upcoming visit to Vienna.

Perhaps there’s something in the air when even the likes of European Commission President Jean-Claude Juncker can say that Russia-bashing has to be brought to an end.” An even more hopeful sign may be the accession to power of the Five Star Movement – Lega parties in Italy, which has been called the “most radical challenge yet to the order that has dominated Europe since World War II.”

To be sure, Trump is hardly the sole cause of what the Council on Foreign Relations laments as the impending death of the “liberal world order,” but he certainly has been a catalyst. One can’t help but wonder to what extent that is deliberate.

* * *

And if data is your thing, the last two month's trade deficit prints suggest Trump's efforts are working, for now...


https://www.zerohedge.com/news/2018-06-04/there-method-donald-trumps-supposed-madness-trade