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Trump's Economic, Tax & Spending Plans

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Trump Threatens 20 Percent Tariff on U.S. Car Imports from European Unions
June 22, 2018 by Reuters



Cherdchai charasri / Shutterstock




By David Shepardson WASHINGTON, June 22 (Reuters) – President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all U.S. imports of European Union-assembled cars, a month after the administration launched an investigation into whether auto imports pose a national security threat.

“If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump wrote on Twitter Friday.

Trump’s tweet on autos came after EU reprisals against his tariffs on European steel and aluminum. The EU targeted more than $3 billion in American goods exported to the 28-member European Union.

The United States currently imposes a 2.5 percent tariff on imported passenger cars from the European Union and a 25 percent tariff on imported pickup trucks. The EU imposes a 10 percent tariff on imported U.S. cars.

German automakers Volkswagen AG, Daimler AG and BMW AG build vehicles at plants in the United States. Industry data shows that German automakers build more vehicles in southern U.S. states that voted for Trump in the 2016 presidential election than they ship to the United States from Germany.

The European Autos Stocks Index fell sharply after Trump’s tweet and was last down 1.25 percent. Shares of U.S. automakers Ford Motor Co and General Motors Co shares fell immediately after Trump’s tweet but rebounded and were trading higher.

The U.S. Commerce Department is investigating whether imports of automobiles and auto parts pose a risk to national security. Two days of public comments have been scheduled in July, and Commerce Secretary Wilbur Ross said Thursday said the department aims to wrap up the probe by late July or August.

Tariffs on car imports would add to an array of trade wars Trump has started, saying he aims to create U.S. jobs and protect domestic industries.

Trump has threatened duties on up to $450 billion of imports from China. Administration officials have said China should strengthen protections for U.S. companies’ intellectual property, and reduce tariffs on U.S. products.

The move against China could raise prices for American consumers and businesses and hit global supply chains for industries like carmakers and electronics.[ nL4N1TO1AX] Chinese reprisals have hit American farmers already.

Trump’s trade policies have also escalated conflict with Canada and Mexico as he seeks to renegotiate the $1.1 trillion North American Free Trade Agreement on terms more favorable to Washington.

German automakers did not comment on Trump’s tweet.

The Alliance of Automobile Manufacturers, representing major U.S. and European automakers, said “tariffs raise vehicle prices … limit consumer choice and invite retaliatory action by our trading partners. Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade.”

German auto industry association VDA said Germany exported 657,000 cars to North America, 7 percent less than a year earlier, and 200,000 fewer cars than in 2013.

Sales to the U.S. fell 10 percent to 494,000 vehicles, while Germany automakers produced 804,000 vehicles in the United States last year.

Automotive News data shows about 7.2 percent of vehicles sold in the United States through May were assembled in Europe.

Trump has repeatedly singled out German auto imports to the United States for criticism and reportedly told French President Emmanuel Macron he wanted to halt Mercedes-Benz models from driving down Fifth Avenue in New York City. He told automakers at a White House meeting in May that he was planning tariffs on some imported vehicles.

Republican lawmakers and business groups have opposed higher auto tariffs.

A group representing major U.S. and foreign automakers has said it was “confident that vehicle imports do not pose a national security risk.”

The U.S. Chamber of Commerce noted that American auto production has doubled over the past decade, and said tariffs “would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war.”

The United States in 2017 accounted for about 15 percent of worldwide Mercedes-Benz and BMW brand sales. It accounts for 5 percent of VW brand sales and 12 percent of Audi sales.

(Reporting by David Shepardson Editing by Chizu Nomiyama and David Gregorio)

(c) Copyright Thomson Reuters 2018.

http://gcaptain.com/trump-threatens-20-percent-tariff-on-u-s-car-imports-from-europe/
 

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America's closest allies are furious about Trump's tariffs, and now an unorthodox idea to go after him is gaining steam

Bob Bryan and Allan Smith
16h


President Donald Trump's headlong push toward a trade war is prompting unprecedented responses from countries around the world and blowback from top US allies.

In the past three months, Trump has hit countries around the world with a 25% tariff on steel and a 10% tariff on aluminum exports to the US. The decision prompted a swift response from US allies, including retaliatory tariffs and a radical departure in treatment from other formerly friendly foreign leaders — from Canadian Prime Minister Justin Trudeau to French President Emmanuel Macron.

But so far these responses have done little to deter Trump from moving forward with his trade agenda, prompting the the consideration of an out-of-the-box response for an out-of-the-box president.

Op-eds in The Houston Chronicle and the Canadian news magazine Maclean's suggested the only way to quell the rising trade tensions is to strike at Trump's businesses. While some countries, such as China, have appeared to try and sway the president through treating his family's businesses more favorably, countries have not made moves to curtail the businesses' activity within their borders.

Meanwhile, the countries appear to have little immediate recourse elsewhere, other than to try and negotiate with the Trump administration. Several countries have lodged a formal complaint with the World Trade Organization regarding the tariffs, but WTO cases take years to resolve.

Could they do it?
Debbie Shon, an international trade lawyer at Quinn Emanuel and a former official in the US Trade Representative's office under President Bill Clinton, said that effectively hitting Trump's businesses using trade actions — while legal — would be difficult.

"Looking at Trump's businesses, I'm not sure what goods he sells that could be subject to tariffs or how you could use trade actions to hit his businesses unless you really tailored some sort of measure targeting key industries like real estate," Shon told Business Insider.

That would force any country trying to go after Trump to get creative with their response. Scott Gilmore, a social entrepreneur and former Canadian diplomat, suggested in Maclean's that Canada should use anti-corruption laws to pressure Trump on trade.

Trump-branded skyscrapers in Toronto and Vancouver represent the president's most prominent business ventures in the country.

"I propose that instead of taxing the import of American serviettes, we tax Trump," Gilmore said. "In the spirit of the Magnitsky Act, Canada and the western allies come together to collectively pressure the only pain point that matters to this President: his family and their assets."

Specifically, Gillmore suggested the use of Canada's Justice for Victims of Corrupt Foreign Officials Act, also known as the Magnitsky Act. The law was designed to punish foreign officials engaged in corruption by allowing the Canadian government to crack down on their businesses.

Gilmore's suggestion picked up enough steam to gain the attention of Canada's lawmakers. Canadian Foreign Minster Chrystia Freeland — the country's chief trade negotiator — was asked about the use of the Magnitsky Act by Erin Weir, a member of the Canadian parliament, during a question-and-answer session.

"We are now in a consultation period, we welcome ideas from all Canadians on what should and what should not be in our retaliation list," Freeland said.

Brett Bruen, a former US diplomat and the president of the consulting firm Global Situation Room, told Business Insider that he doesn't expect such "non-traditional responses" to Trump's trade actions "to be widespread." But he said there "may well be efforts to scrutinize or tighten the screws on President Trump's companies."

Countries could use federal and state investigations in the US as a pretext to launch their own investigations of Trump's businesses. Other countries could slow approvals for trademarks, licenses, and other business deals, he said.

"I think the most effective avenue might be an attempt to restrict or review financing banks from their countries to his companies, ostensibly because some malfeasance was found," Bruen said. "This would certainly be an unconventional path for countries to pursue. Yet, as leaders continue to search for effective deterrents to a trade war, they may end up resorting to these kind of tactics."

'A last resort'
Trade law experts warn the move could carry danger for any country that attempts to go after the Trump Organization.

Jesse Goldman, an international trade lawyer at the Canadian law firm Borden Ladner Gervais, told Business Insider that although using corruption laws to go after Trump's businesses is "within the realm of possibility," it would require a government to prove that the Trump Organization is linked to business actively engaged in corruption.

"That would be an absolute bombshell, it would rely on someone effectively blowing the whistle on some of those past business dealings," Goldman said.

Gillmore argued that the current investigations by US law enforcement provides enough justification, but Goldman was not as convinced.

"It would definitely be salacious. It would change the dialogue very quickly," Goldman said. "I would expect Canadian officials are looking at issues like that with the attitude that they'll let domestic processes in the US unfold before even considering options like that."

Amanda DeBusk, chair of the global law firm Dechert's International Trade and Government Regulation practice, told Business Insider that the use of the Magnitsky laws to hit the Trump Organization would be a huge departure from the usually course of trade disputes.

"It's something that certainly would be out of the mainstream in terms of what's been done before," DeBusk said.

But DeBusk said such a move would not be "totally unprecedented." She pointed to the Treasury Department's recent sanctions of powerful Russian oligarchs as evidence it could be legally justified.

Lee Branstetter, a Carnegie Mellon University professor who served on President Barack Obama's Council of Economic Advisers from 2011 through 2012, agreed with Goldman. He told Business Insider that the only way a country could go about such sanctions against the Trump Organization would be if they could prove the sort of shady dealing that would provide a legal basis to take such action.

The other issue: Such a move would inevitably lead to irreparable damage on the US-Canada relationship. Sanctioning Trump directly would likely scuttle any negotiations to remove the current tariffs and could provoke substantial retaliation from the US president.

"I see it as last resort," Goldman said.

Even Weir, the Canadian MP who posed the idea to Freeland, admitted it would be uncomfortable. But he said it could be necessary if economic pressure from the tariffs starts to build.

"I can see how it would be seen as a radical measure, but we are confronted with a radical reality from the Trump administration," Weir told Maclean's.

http://www.businessinsider.com/canada-france-trump-organization-tariffs-trade-response-2018-6
 

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Harley, stung by tariffs, shifts some production overseas

AP
2 hrs ago


Harley-Davidson, up against spiraling costs from tariffs, will begin to shift the production of motorcycles headed for Europe from the U.S. to factories overseas.

The European Union on Friday began rolling out tariffs on American imports like bourbon, peanut butter and orange juice. The EU tariffs on $3.4 billion worth of U.S. products are retaliation for duties the Trump administration is imposing on European steel and aluminum.

President Donald Trump has used Harley-Davidson as an example of a U.S. business that is being harmed by trade barriers. Yet Harley has warned consistently against tariffs, saying they would negatively impact sales.

Harley-Davidson Inc. sold almost 40,000 motorcycles in the Europe Union last year, generating revenue second only to the United States, according to the Milwaukee company.

The maker of the iconic American motorcycle said in a regulatory filing Monday that EU tariffs on its motorcycles exported from the U.S. jumped between 6 percent and 31 percent, which translates into an additional, incremental cost of about $2,200 per average motorcycle exported from the U.S. to the EU.

"Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally," the company said in prepared remarks. "Increasing international production to alleviate the EU tariff burden is not the company's preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson."

Harley-Davidson will not raise its prices to avert "an immediate and lasting detrimental impact" on sales in Europe, it said. It will instead absorb a significant amount of the cost in the near term. It anticipates the cost for the rest of the year to be approximately $30 million to $45 million.

Harley-Davidson said that shifting targeted production from the U.S. to international facilities could take at least nine to 18 months to be completed.

The company is already struggling with falling sales. In January, it said it would consolidate its Kansas City, Missouri, plant into its York, Pennsylvania, facility. U.S. motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.

More potential pitfalls for Harley-Davidson and other U.S. manufacturers could be on the way.

Last week German automaker Daimler AG cut its 2018 earnings outlook, a change that it says is partly due to increased import tariffs for U.S. vehicles in China. Daimler produces vehicles in the U.S.

On Monday, the vice president of the European Union's governing body said that Europe and China will form a group aimed at updating global trade rules to address technology policy, government subsidies and other emerging complaints in a bid to preserve support for international commerce.

European Commission Vice President Jyrki Katainen said unilateral action by U.S. President Donald Trump in disputes over steel, China's technology policy and other issues highlighted the need to modernize the World Trade Organization to reflect developments in the world economy.

The Wall Street Journal reported that the Trump administration plans to impose curbs on Chinese investment in American technology companies and high-tech exports to China.

http://www.msn.com/en-us/money/comp...ome-production-overseas/ar-AAz8iPW?ocid=ientp
 

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'They surrendered!' Trump says iconic Harley-Davidson motorcycles should 'never be built in another country' and warns they'll be 'taxed like never before' if they shift production from Missouri to Thailand

  • Harley-Davidson is shifting some production to Thailand and it's already announced the closure of a Kansas City plant
  • President Trump criticized those decisions Tuesday in the context of new European Union tariffs on motorcycles originating in the U.S.
  • But the iconic company's Missouri plant is shuttering because of slumping U.S. sales, and the Thailand decision was related to Trump pulling out of TPP
  • Trump warned Tuesday that the company could face a 'big tax' – a new tariff – if it tried to ship foreign-made bikes back into the U.S. to sell here
  • New EU tariffs include a 31 per cent penalty on motorcycles, amounting to a 25 per cent increase in costs
  • Harley-Davidson said its bikes will cost an average of $2,200 more apiece to export under those rules
  • 'If they move, watch, it will be the beginning of the end – they surrendered, they quit! The Aura will be gone and they will be taxed like never before!' Trump said
  • The president is headed Thursday to Harley's home state of Wisconsin
http://www.dailymail.co.uk/news/art...-big-tax-outsourced-motorcycles-Thailand.html
 

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Trump says he is 'surprised' Harley-Davidson is the first to 'wave the white flag' by moving manufacturing abroad after motorcycle firm said they stood to lose $100million a year if they don't

  • Trump told the motorcycle manufacturer that it should 'be patient'
  • Insisted that 'ultimately they will not pay tariffs' on products shipped into EU
  • The company said earlier on Monday that it stands to lose as much as $100 million a year if it does not shift more of its manufacturing abroad
  • The EU said Friday that it would counter the tariffs with penalties of their own on $3.2 billion of American-made goods
http://www.dailymail.co.uk/news/art...ley-Davidson-moving-manufacturing-abroad.html
 

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Trump Tax-Cut Bonuses are a Bust for Middle Class Workers, Wages Lie in a Wasteland of Failed Promises

-- Published: Monday, 25 June 2018

By David Haggith

No, the Trump tax breaks for major corporations are not going to bonuses and wage increases. Sure we’ve seen some token $1,000 bonuses go out to laborers with hyuge orchestrated fanfare. The stint of articles you saw all over the media earlier in the year about those bonuses originated from an organized PR campaign run by a conservative tax group, and have mostly now ended. Americans for Tax Reform, headed by Grover Norquist, encouraged companies at the start of the year to announce their distribution of tax savings to the lower rungs of personnel as a way of selling the Trump tax breaks after the fact. So far as I know, they are still encourage that, but there isn’t much for them to report.

Even Republican Senator Marco Rubio, who voted for the Trump Tax Cuts as they stand now and who bills himself as a Reaganite, says there is no evidence that happy corporations are sharing the wealth with their workers:

“There is still a lot of thinking on the right that if big corporations are happy, they’re going to take the money they’re saving and reinvest it in American workers,” he says. “In fact they bought back shares, a few gave out bonuses; there’s no evidence whatsoever that the money’s been massively poured back into the American worker.” (The Economist)​

Corporations have never given anything to workers that they weren’t forced to give, whether because of collective bargaining, the need to compete in a tough labor market or government mandates … or as a public-relations necessity. Anyone who thought corporate boards or CEOs were going to let some tax savings trickle down because they have enough money now to share the wealth a little has had no experience with corporations. Labor gets nothing that it doesn’t fight and bargain hard for in full Trumpian style.

You might have asked as I did why Republicans were talking at the beginning of this year about the “need to sell the tax cuts.” Why do you need to sell something after you’ve already passed it? Especially something that people naturally like? The only answers I could come up with were to stem the public outcry over the disproportional benefits to the top 1%, to silence labor a little bit, and mostly to keep people believing in trickle-down economics so Republicans can give another big cut to the top 1% again sometime.

Stock buyback bonanzas all over the board
Exactly, as I predicted last year, we now KNOW that the main flow of tax-break money has been into stock buybacks that make CEOs and their board members rich:

The Trump tax cuts are taking full effect. Corporations will pay $60 billion less in taxes this year. It appears they are taking all $60 billion in savings, borrowing another $80 billion from Wall Street, and buying back their own stock at near all-time high prices. If you thought the narrative about corporations using their tax savings to invest in new facilities and hiring thousands of new employees was going to happen, you haven’t been paying attention to how things work in the real world. [Instead, they are] pumping up the salaries and bonuses of top corporate executives. These sociopaths don’t give a crap about their shareholders, employees, or customers. Look at the amount of stock they bought back in 2007, just before the greatest financial collapse in modern history. (The Burning Platform)​




And what are these corporate execs doing with their own money? They’re selling their own stocks into these buybacks.

Insider selling of their company stock is at record levels. The “smart money” is corporate insiders who know what is really happening inside their companies. As you can see, they knew what was happening in 2000 and 2007 as they bailed out before the stock market tanked. Observe what they are doing now.​

You might recall me pointing that out early this year, too.

Bloomberg found that 60% of tax-cut savings will go to corporate share buybacks and 15% to workers. Morgan Stanley found that percentage for the workers was too high and projected that 13% will go to workers. Just Capital found Morgan Stanley’s number too high, too, and said that 6% will make it way to workers in the form of pay raises, bonuses or benefits. With 80% of stocks being owned by the top 10% in society, it’s not hard to see that all the money is pooling at the top. It’s a darn small trickle down from that congealed pool … as has always been the case.

You may recall my writing here that, if the Trump administration truly wanted to make corporate tax savings go to capital investment and to workers, it would have placed a limit against doing any stock buybacks for two years if a corporation opts for the lower tax rate. (Buybacks used to be illegal, and should still be, as they are regularly used to milk corporations of all their energy in order to make current stock owners rich while making the cooperation poorer, less adapted for the future, and less creative.)

General Electric dies from blood-sucking buybacks
General Electric makes a good current newsworthy example. Having engaged in $24 billion in buybacks in 2016 and 2017, this oldest stock on the Dow Jones Industrial Average was unceremoniously removed last week for being a failing dinosaur. It’s bones have been picked clean in $24 billion bites that were largely out of the company’s cash belly (with the rest achieved by adding to the corporation’s debt burden). That money would have served the company better if spent on creative development, rather than on making blood-sucking board members richer:

The root problem at GE — and why the stock is where it is — is poor capital allocation,” said RBC Capital Markets analyst Deane Dray. Shareholders normally love buybacks because they make shares scarcer and inflate a key measure of corporate profitability. “What did they get for it? Look where the stock is today,” said Dray. (Money)​

Today, GE’s stock is worth less than before the buybacks! In fact, it’s almost just worthless. The buybacks happened at $30 a share. GE’s closing last week, after being stripped of its Dow honors, was at an emaciated $13 a share. The world’s longest-standing titan of heavy industry is on its way to becoming a penny stock, thanks to short-cycle thinking, self-centered, uncreative, unimaginative, morons that care only about pumping up short-term stock values.

According to GE’s CEO, however, decisions were “always made with the long-term interests of the company in mind.” Can you swallow that and not gag? Maybe they were just made by stockholders on the board sucking the last drops of blood out of old brontosaurus in order to buy back their own shares before the behemoth lays down in the fossilizing muds of time and dies. (Not saying I know that, but it’s a reasonable question.) Ask yourself why board members deserve any increase of wealth from stock buybacks when they are presiding over the demise of the company over which they are supposed to be stewards!

Ironically, GE is now turning out the lights by selling off its iconic lightbulb business and is laying off 12,000 workers.

Some analysts have even suggested GE could have to reverse itself completely by selling shares to the public to raise cash. GE has said it’s not considering that.

Of course not. It doesn’t fit the self-saving, parasitic, instant interests of board members who perch on the old beast like pterodactyls, eating the meat of their own company — a practice made legal when buybacks were made legal.

Cowen analyst Gautam Khanna summed it up this way: “Poor capital allocation, bad acquisitions, poor share repurchases at higher prices and unsustainably high dividends.”

That certainly sounds like a scenario where stock holders might be buying back their own personal shares while prices were good (making sure prices are good by driving them temporarily higher via buybacks that use the company’s own cash), knowing they’re going to let the company sink into the Wall Street tar pits once they’ve depleted that money and loaded up all the debt they can. Why should these people who are supposed to be stewards of the corporation be allowed to feast on the beast when they are making such bad decisions. (Decisions that are not bad for their personal short-term interest, but bad for everyone else.) Doesn’t sound to me like they were looking for ways to save those 15,000 workers they fired by investing the money in new and creative fields.

Jonathan Macey, a corporate law and finance professor at Yale Law School, defended GE’s buybacks, albeit in a backhanded way. “That’s a poster child of a company that should be returning cash to shareholders — because they obviously don’t know what to do with it,” he said.​

That’s another way of looking at it: they’re returning the shareholders money because they don’t know how to make the manufacturer of jet engines fly any longer, so they don’t deserve to keep the shareholder’s money. (Speaking of which, GE did, at least, ground the private plane they used to fly former CEO Immelt all around the world.) Let’s hope someone investigates whether some inside investors got more money back than others.

John Flannery, who became CEO last year, said in January that the company will “maintain a disciplined financial policy” by raising cash and lowering debt. In his annual shareholder letter, Flannery said GE has added new measures to better evaluate the “risk and return” of decisions like dividends and share buybacks.​

Here’s an idea for him. Make buybacks illegal again. Force shareholders (especially those on the board) to make money by actually running a company, rather than ruining it for their own benefit.

Corporate America is on track for a record-breaking year for stock buybacks thanks to the cash windfall from President Trump’s tax law.

Indeed.

Christmas bonuses bazaar (and a bit bizarre)
The misleading thing about bonuses is that they are a one off, not nearly as valuable as a raise in wages. Raises are hard to take back later on.
It seems to me that a $1,000 bonus at Christmastime is not that uncommon of a deal. So, some of the reported bonuses, coming as they did in December, could have been coming anyway; but crediting them to the Trump Tax Cuts served a purpose of smoothing over the tax cuts to the rich. I’ve worked blue-collar jobs in the past that included Christmas bonuses ranging between $500 and $1,000. So, the amount is even in keeping with company Christmas bonuses in a decent year.

Many of the bonuses were payoffs for layoffs. They were PR to create some positive spin at a time when the same companies promising bonuses announced layoffs the very next day. In such cases, the bonus is nothing more of a minuscule severance package. Obviously, a little public goodwill from announcing charitable bonuses from the tax cuts can help soften the reputational dent from the layoffs at Christmastime or to start of the new year.

One of those companies that were quick to boast about bonuses to the rank and file (AT&T) announced the very next day it was firing many of the people who would be receiving the $1,000 bonuses. Clearly they wanted to get a little positive PR out there ahead of the pink-slip news.

AT&T chose to downsize at Christmastime — the time of year when a layoff carries the most sting. Their heartless timing could have been because of a merger they were working on that the Trump administration was opposed to. The Donald loves praise and PR, so an act that made the Trump Tax Cuts look immediately successful couldn’t hurt AT&T’s cause. Not saying that was the reason for a fact, but “here’s your bonus, and here’s your pink slip” is an odd kind of bonus to get all boasty about.

I would consider AT&T’s $1,000, not even a Christmas bonus, much less a sharing of anticipated tax savings. It was simply a bite-size severance package made with perhaps a little wistful hope that it would create better feelings in the Trump Admin. toward AT&T’s merger hopes.

Of course, job-destroying mergers are the other type of business activity that I said in an earlier article would actually prove to be a much bigger effect from the Trump tax cuts than wage increases. Given large piles of tax savings, companies that slaver over the chance to look bigger would much prefer to use the money to conglomerate and cut jobs through hoped-for efficiency gains than use it to create new products in search of new customers.

In similar style to AT&T, Lowe’s announced $1,000 bonuses at the start of the year, and then surprised employees with unannounced store closures and layoffs:

(Video at link)

There is certainly no concern for humanity in such surprise layoffs, but it also does not appear that tax savings are being used to reposition human resources for expansion elsewhere.

A spokesperson for Lowe’s explained in an email, “We believe employees impacted by decisions personally affecting them and their families should learn news directly from the company. To help support employees, company leadership at all levels, including the CEO, communicated directly with employees.​

Uh, apparently those in the video didn’t get the memo.

Lowe’s CEO, Robert Niblock (a.ka. Nip Block, Knob Lick, or Nipple Lock), said he would be flying economy class from now on and cutting executive benefits in order to spend more money hiring customer service staff on the floor. Why didn’t he just keep on those guys in the video by using some of those tax savings to move those he fired to whatever stores are going to get the additional staffing. Even in thriving housing markets like Seattle in one of Seattle’s wealthiest suburbs, Lowe’s has laid off hundreds of employees.

Last year Lowe’s laid off 2,400 assistant store managers. This could all be smart restructuring, as Lowe’s claims, or it could be acts of desperation. Regardless, it does not appear the tax cuts are creating jobs at Lowe’s as more employees seem to be leaving out the back door than coming in new at the front.

Walmart, too, announced pay raises for its employees, and then the very same day announced the closure of 63 Sam’s Club stores. It has also announced thousands of layoffs for 2018.

I’m not saying unprofitable stores should remain open just so people can keep their jobs; but I am saying the timing of some of these bonus announcements, which Walmart’s CEO also tagged to the tax cuts, looks like they have a lot more to do with creating some positive news in the same cycle when the thousands of terminations are announced.

Wage increases were coming regardless of the Trump Tax Cuts
When you look at Walmart’s statement that, as a result of the tax cuts, it is raising wages for bottom-tier employees to $11 per hour, you have to recognize that much of that was already being mandated by the labor market as well as by governmental changes to minimum wage laws at the municipal level that make $11 an illegal low wage in many urban areas.

As a person who has done some corporate hiring, I know that $11 per hour usually does not get you a good selection of employees. Most of what you get applying at that level and even a little higher than that are the people no one else will hire. That’s just the facts. Even in a rural area, most of what I saw at that rate were people who hadn’t held any job for longer than a year or who had a criminal record or appeared for interviews with blatantly obvious drug or acolhol problems, reeking of booze when they entered my office. (That’s not to disparage anyone who works at that level; there are some good ones of course, but not enough to staff a Walmart store. And I didn’t hire at that level by choice. I just had a tightfisted board that I had to wrestle my way up to being able to offering better pay.) Walmart’s boasted $11 per hour is about what I’d pay a high-school kid to mow my lawn in the summer!

Wells Fargo announced right after the tax cuts that it would raise its minimum wage to $15/hour as a result of the Trump Tax Cuts. However … JPMorgan had already raised its minimum wage to that same level prior to passage of the tax cuts. So, Wells may have been crediting the tax cuts for a change that was really forced by the competition. After all, does Wells want lower-grade employees than JP?

By now you’ve heard many times that the labor market, already tight by the end of the Obama era, is getting so tight that employers claim to be having a hard time getting workers. If this is true, why haven’t wages gone up? Are employers so incredibly tightfisted about sharing the tax savings that they won’t even raise wages when they are griping that same day about how hard it is to find good help? Wages have seen precious little increase for the sake of attracting “difficult to find” employees or for the sake of holding on to the ones companies already have. Yeah, it’s hard to find good help when you’re not even willing to pay what it takes to get bad help.

So, why aren’t companies putting the Trump Tax Cuts to such good use if the labor market is so tight? Even without the tax cuts, one would have expected such a tight labor market to create more wage increases than the number that have been attributed to the tax cuts. Yet, real wages (adjusted for inflation) this May went up only 0.1% (month on month) according to Trump’s own Department of Lying Statistics. In May of 2017, they went up 0.3%. In April of this year, they didn’t go up at all. In March they went up 0.3%, but that was coming off a January when they dropped 0.3% followed by a February when they dropped 0.1%. Year on year from May to May, real wages held completely flat. In fact, when narrowed down to just non-supervisory employees, real wages dropped a tick from last May to this May. Real wages didn’t even look this flat in years six and seven of the Obama epoch.

You can see it for yourself:



Even though wages have held flat, stock buybacks due to the Trump Tax Cuts burst into full flame months ago; so, where are these much vaunted wage increases that we were promised?

Normally, when the unemployment rate stands as low as it does currently, wages rise somewhere between 3.5% and 4.5% a year. That is due to labor tightness and inflation. Now, with the supposed extra kick of the multifaceted Trump corporate tax cuts, wage growth has stalled. Even the most optimistic reports of total compensation (wages plus benefits) before factoring inflation show compensation growth at only 2.8% annually. Apparently, the tax cuts are hardly an accelerant for the wage burn.

In fact, an unusually high 14% of all workers have still not received any pay raise since the official end of the Great Recession nine years ago! Those people would have to get a 15% pay raise just to catch back up with inflation over those lost years.

Small bonuses are a smokescreen for burlier bonuses at the top
Note that the NGO that has been publicizing the bonuses through info distributed to the media — Americans for Tax Reform — has been completely silent about the size of bonuses companies are giving to their executives. (You can read a little about Norquists’ grand PR effort here.) I think the bonuses at the bottom are also a smoke screen for obscene bonuses at the top. Big bonuses to CEOs and other top execs tend to happen every year, however; while the ones down at the bottom … not so much.

In some ways, it is almost funny to read the publicity rush that went out right after the tax cuts. Michael Goodwin wrote such a puff piece in the more conservative New York Post,

Not that they needed one, but progressive wing nuts and their fellow travelers are getting another reason to hate President Trump. He’s proving that capitalism works. The president’s policies of cutting high taxes and excessive regulations are sparking a stock market surge and soaring economic confidence.​

Really? Goodwin published his effluent of praise about the effectiveness of Trump’s tax policy on January 27th when stocks had been soaring throughout the month. We all know what happened the very next trading day after this was published. Stocks started to drop and then fell off a cliff for more than a month, and the stock market hasn’t recovered since. Goodwin criticized the wing nuts who don’t believe Trump’s plans would work as promised just one day too soon, making himself look like a wing nut.

You could have read (or did read) about how these pipe dreams for the Trump Tax Cuts would not materialize for 99% of America on my own blog or in many articles at Zero Hedge, or you could have even read it predicted by pro-Wall street information sources like Moody’s:

The U.S. tax bill signed into law in December will have a limited effect on the U.S. economy, as companies are unlikely to spend their tax savings on growth initiatives while the tax cut for the wealthy will not trickle down…. “We do not expect a meaningful boost to business investment because U.S. nonfinancial companies will likely prioritize share buybacks, M&A and paying down existing debt.”

That outcome is exactly what I had been predicting. These supply-side tax cuts never trickle down. It’s been a thirty-year lie that they ever will; and if you keep believing the lie (if you ever have), you either live in among the upper strata that the lie serves, or you deserve to remain poor all of your life for being tricked by it three times now. I’ve merely waited until enough information was in this year and a reasonable amount of time had passed from when I made my predictions last year to state my case that they are proven true. That’s my story, and I’ve been sticking to it ever since. The worst, according to Moody’s in the article quoted above, is certainly yet to come.

While several companies rushed in similar style to brag about what they were going to give to middle-class Joe and Josephine at year’s end, not a single one of them were as excited about announcing the size of executive bonuses this year. They wanted to keep all talk about the tax-break bonuses centered on the middle class. I’m pretty sure that for every one-thousand average souls who got a thousand bucks, there is a top-tier exec in the company who is getting a million-dollar bonus.

Jamie Dimon of JPMorgan Chase, for example, got a tidy little 4% increase on the $27.2 million he received for his services a year earlier. The Wall Street Journal listed 29 CEOs of the financial world with a total pay package of $10,000,000 or more. Median pay for bankster CEOs matched the median pay of all CEOs in the S&P 500. This year, it’s harder to find information about CEO pay increases.

Dimon’s raise last year was nothing. Citigroup’s CEO got a nice 48% raise. I guess they had to give him a big boost to get him up near Demon’s league. Citi’s Corbat got the big boost for overseeing a 25% jump in share value last year. A large part of that was due to stock buybacks. The rest came from Trump’s corporate tax cuts.

Citi has been buying back as much as 74 million shares a quarter. The company returned more than 100% of net income to shareholders through buybacks and dividends, and it has many more planned to come. No wonder Corbat is popular. It won’t be long, and we’ll be reading about Citi’s spectacular collapse because the best banksters know that to be worthy of the really big bucks they have to break their banks in order to qualify for free government money.

Citi’s stock is rising, but so are its operating costs and net credit losses. The credit losses will mount much faster now that emerging markets are crumbling because Citi has a very high exposure in high-risk emerging markets. Citigroup maintains the highest earnings per share of any American bank but only because it keeps cutting the number of shares in that denominator with massive buybacks. It’s essentially putting its money into buying itself out.

Goldman’s executives got their sachs of gold early (at the end of 2017) thanks to the tax changes — almost a $100 million worth. That number, of course, includes Goldman CEO, Lloyd Blankenstein. Netflix execs were happy, too, as the new tax laws caused Netflix to change executive compensation from performance bonuses to increases in guaranteed salary. While corporations wrote about these changes as something they were pressed to do to by the incoming law, I’m sure all their executives loved the earlier payments and the changes in how they get paid.

Apparently, executives do recognize that people would rather have a pay increase than a bonus … at least, when it comes to themselves. A pay increase is a lot more solid.

What a fine and beautiful world … if you’re a big bankster.

CEOs earn on average 140 times more than the typical worker. Thank God they keep too many crumbs from feeding the worthless souls who keep the company running at the bottom while they tap it off the top. Thank Trump these guys are being deregulated because they are not getting fat enough fast enough. They need more cheeseburgers and Kochs.

News of bonuses was bellicose but brief
By the end of January, only eighteen (18%) of the Fortune 100 companies were listed by ATR as having given some benefit to their employees from the Trump Tax Cuts. Thirteen of those eighteen companies gave one-time bonuses. Six gave wage increases. That’s paltry when you consider these companies are cream off the top.

Among the larger set of Fortune 500 companies, the percentages were only half that already meager number, and that 9% also comprised companies who gave some of their tax benefits to customers or non-profit organizations, instead of employees. Only 5.8% were listed for giving a tax-cut-related benefit in the form of one-time bonuses, and just 3.4% were on the list for wage increases. Not much trickling down there.

Bear in mind that the corporate tax cuts repeat every year, but the bonuses in almost all cases do not. Of course, the income repatriation at a lower rate this year is a one-time tax break, but even there, consider the disparity. Apple, for example, received a $40-billion reprieve on its offshore profits because of which it announced one-time bonuses of $300 million, less than 1% of their repatriation savings. (And that’s in a purportedly extremely tight labor market, so they must be incredibly reluctant to let any of that money trickle down needlessly to the slobs at the bottom.) On the other hand, they are, at least, spending a vast amount on capital that will create a lot of jobs. That is more than most companies reported, but remember Apple is the company that has long had by far the largest overseas cache of cash.

Oh, and eight of those companies listed as having given bonuses laid off a total of 27,000 employees in 2018! The layoffs alone more than paid for the bonuses.

But that is incidental.

Reuters reported back in February that only 2% of American adults had received a raise or bonus as a result of the tax cuts, and that number includes the 1% who profited greatly!

Middle-class death syndrome
Is it any wonder, then, that the once great American middle Ccass that built this country is withering away? In 2015 the middle class comprised less than 50% of the population for the first time since those statistics have been kept.

The 1950s were the prime years of the middle class. Back then America built 75% of the cars and planes in the world, most of the world’s steel and most of the world’s skyscrapers, and the US stock market held most of the world’s stock (by capitalization). Trump may be trying to get some of that greatness back, but his plans are not working yet for workers, though they have been making bank for everyone at the top since the start of the year. You can argue that the trickle is about to start … any day now; but I’ll argue back that my ship is about to come in, too. (I’ve been waiting by the dock many years; though I’m not doing poorly, there is no big ship on the horizon yet.)

Back then the average person’s annual wage/salary equaled half the value of his home. Wages have not kept up with home prices since the seventies. The average annual wage/salary today is about 20% the average cost of a home. A similar thing has happened with respect to Americans’ second-largest purchase — cars. The average salary equaled the price of two and half cars in 1959. The average car costs $36,000 now, while median income is $59,000, enough to buy a little better than one and a half cars. We have made up this difference to retain our standard of living by living off of credit.

Elephants are fat
You may recall that the Donald boasted to proletariate Republicans that his rich friends would not like him after these tax cuts nor would his own accountant. If you believed him, you must have been surprised to hear that he boasted to his wealthy friends at Mar-a-Lago right after the cuts passed that they are now much richer because of him. Of course they are.

Wondering whatever happened to the GOP and fiscal responsibility? I think this explains it: (It all began with the Republican clown car and ended when the biggest clown ran away from the whole DC circus to find a herd of his own and took the Grand Ol’ Party with him.)


http://thegreatrecession.info/blog/trump-tax-cut-bonuses-are-a-bust/

http://news.goldseek.com/GoldSeek/1529956836.php
 

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The Trade War and the Next Global Recession
Silver Fortune


Published on Jun 26, 2018
The implications of the global trade war extends far beyond the trade deficit and jobs.

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Any content within this video or any other video by the Silver Fortune channel is merely one man's opinion, commentary, and analysis, or actual information obtained from elsewhere, and should not be constituted as legal, investment, or financial advice. Make your own financial decisions, or consult a professional if you'd prefer to go that route. The Silver Fortune channel disclaims any liability for legal, financial, or investment decisions made.
 

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In Louisiana, Trump’s Trade War Makes Biggest U.S. Port Tremble
June 27, 2018 by Bloomberg


Photo: Chuck Wagner / Shutterstock

By Katia Dmitrieva(Bloomberg) — To understand what a trade war means for America, go to the Mississippi. Follow the mud-brown river past Louisiana’s chemical plants, oil refineries, granaries, ports, and the rail networks and highways that spring from its fingers.

Over centuries, trade on the winding waterway hailed as the great spine of the U.S. built hundreds of communities. Most U.S. grain, nearly a quarter of its coal, and much of its petrochemicals pass through here. But the river carries not only goods—it also carries consequences.

Although Donald Trump garnered more votes from Louisianans in 2016 than any other presidential candidate in history, his promise to put America first targets the heart of its commerce. The U.S. imposed steel and aluminum tariffs on Canada, Mexico and the European Union among others; Trump has threatened to add charges on up to $450 billion in Chinese goods, with the first round targeting $34 billion commencing July 6; and the erstwhile partners are retaliating. Louisiana’s reliance on trade makes it a unique microcosm of how the tariff battle will affect America.

“Everything came from the Mississippi. It was the entryway to the heartland of the United States—that’s been the case since the city’s founding,” said Marc Morial, a former New Orleans mayor whose father was the city’s first black mayor; he grew up hearing stories of life on the sea from his uncle, who worked on a freighter. “All of the elements of the ecosystem are affected when you have a slowdown in trade. And that nerve system is what people don’t always necessarily see.”

A trade war would weigh on Louisiana, slowing total economic output by a minimum of 7 percent over five years, the most of any state, according to the Federal Reserve Bank of Dallas. One in six jobs in the state of 4.7 million is tied to international commerce and would be at risk, threatening an unemployment rate the U.S. Labor Department pegs near an all-time low.

U.S. Shale Producers Warn Chinese Tariffs Would Hit Energy Exports

Follow the river downstream to see the fears and consequences lapping at the feet of Americans.

The Port of South Louisiana is a trade juggernaut, handling the most tonnage of any U.S. port.

In the trade complex that snakes 54 miles from Baton Rouge to New Orleans, interdependence is made manifest. Barges filled with Japanese steel could offload at factories along the river and then head, as empty containers, to the South Louisiana port, where they’re cleaned, serviced and filled with soybeans destined for China.

Farmers rely on the port: About 60 percent of their exported soybeans, corn, wheat and rice pass through. Refiners import 56.6 million short tons of crude oil, and it’s a conduit for petroleum, which composes a quarter of the value of state exports.

“People have no idea what’s going on on the other side of that levee,” said port Executive Director Paul Aucoin, nodding toward the grassy ridge beyond which 800 vessels can ply his portion of the Mississippi at any time. Tariffs, he said, “could cause a drop in tonnage, a drop in crops, a drop in everything.”

Big Oil Turns on Trump as Trade Threats Weigh On Business

Consequences can already be seen. Aluminum shipments through New Orleans are half what they were at this time last year, according to Harbor Intelligence, an analysis firm. In the first quarter, the amount of traded goods slowed along the Port of South Louisiana: Animal-feed exports declined 31 percent from the same period last year, soybean exports are down 20 percent, and imports of chemicals and fertilizers have been halved.

The slowdown doesn’t bode well for the half-million Louisianans whose jobs rely on that flow of goods.

A 30-minute drive from Baton Rouge is Pipe & Steel Industrial Fabricators Inc. in Denham Springs. The company’s founder and president, Kylie Sparks, is a Trump supporter who’s proud to use only American metal; he’s also paying as much as 40 percent more since January as traders bid up the prices betting on a crunch. In fact, U.S. manufacturers report that input prices are rising at the fastest pace in seven years, according to the Institute for Supply Management.

Tariff threats have “changed our business model overnight,” said Sparks, standing in a shed several stories tall as a dozen men cut and welded steel. He spends more time negotiating: When bidding for refinery contracts, for example, he can guarantee the price only for three days. It used to be 30.

China Accuses U.S. of Initiating Trade War as Trump Issues New $200 Billion Threat

About half the company’s business relies on foreign enterprises, including Taiwan’s Formosa Plastics Corp., whose sister company Formosa Petrochemical Corp. is starting a $9.4 billion complex in nearby St. James Parish. Indeed, Louisiana is the nation’s highest recipient per capita of foreign investment. More than 500 companies from 50 countries have spent $60 billion in the past decade in the state.

Those ties have helped Sparks prosper. He started the company two decades ago and lived on a trailer on the gravel lot. Now, it’s expanded so much that he uses a golf cart to get around the grounds. He still has the white truck from his days welding pipes post-military service, but added a Jaguar F-type convertible in the same color.

Sparks still supports Trump. He’s likely not alone: Livingston Parish had the state’s third-highest share voting for the Republican candidate in 2016.

“I agree with Trump making a better deal with people and not selling us down the road,” Sparks said. “But the fallout is going to be inflation, and I don’t know if he has a plan for that.”

From Denham Springs, head south to Lutcher. The 3,000-odd residents of the former sawmill-and -sugar-plantation town are so familiar with one another that their dogs run free on its streets. Here, in a United Steelworkers meeting hall, it’s clear that unencumbered free trade has put some Americans in a lose-lose position.

A group of union workers sits around a fold-out table, preparing for contract negotiations with Rain CII Carbon LLC. The plant in nearby Gramercy produces calcined petroleum coke, used in aluminum that ends up in products, including the beer cans that some workers hold as colleagues set up a crawfish boil.

BIMCO: A Trade War is Harmful to All and Clearly Bad for International Shipping

“Factories shut down and move overseas to get cheap labor and don’t have to play by the same rules—that’s what hurts people,” said David Habisreitinger, a father of three who’s a control-room operator at Rain CII Carbon. The fear that his job may be moved elsewhere is constant but hits hard during every negotiation; if he and union members push too hard, it becomes a real risk.

Sure, free trade agreements meant increased investment from abroad and more customers—44 percent of Louisiana’s exports in 2016 were made to countries with which the U.S. has free trade agreements—but it also meant global competition for the cheapest prices.

China and other countries increased shipments of goods to the U.S., often undercutting local companies that closed or moved production abroad. About 4.5 million manufacturing jobs have been lost in the country since the North American Free Trade Agreement came into force in 1994, for example.

There’s been little change felt here since Trump was elected in 2016. Tariffs could help a small sliver of industries, maybe even theirs, but hurt nearly everyone else. Any Nafta renegotiation, which could assuage some of these unionists’ concerns, feels farther away than before.

Trump “said we’re gonna win so much, we’ll be tired of winning,” Habisreitinger said. “Well, I’m not there. Far from it.”

As Trump Talks of Trade Losses, China is a Win for U.S. East Coast Ports

The Mississippi curves unexpectedly and often; adjust your course or crash. That’s what Jay Lapeyre, president of Harahan’s Laitram LLC, is trying to do.

Each of his products is made of dozens of components from around the world, and tariffs would change the structure of every one of his long-term contracts with clients and suppliers. He’d either eat the cost or source goods elsewhere—but what happens if the new parts are a slightly different size or shape?

For now, future investments are on hold.

“At every stage, this is just a bad idea,” said Lapeyre, 65. “The lack of certainty puts a tremendous chilling effect on all decisions. That uncertainty is what causes everyone to just delay and hold. Well, when you delay and hold, you get a compound effect. What our delay and hold means: revenue for someone else.”

Laitram started in the 1940s in New Orleans with Lapeyre’s uncle and father, who patented a shrimp-peeling machine. Today, the company employs 2,500 people across 30 countries with annual revenue of about $650 million. It makes such things as conveyor belts and pasteurizing equipment used by companies that include Amazon.com Inc., Kraft Heinz Co. and Kellogg Co.

Trump’s ‘Trade War’ Threat Could Damage Transpacific Shipping

Among its locations is a plant with more than 150 employees near Shanghai. A few years ago, Lapeyre noticed knockoffs of his machines being used by former customers. But he’s willing to keep taking risks abroad because that’s where the growth is, and free trade is what he believes in.
Tariffs, he said, just mean that he’ll consider moving some production elsewhere.

Some companies can’t. Jacob Landry opened Urban South Brewery just before Trump’s election, in a former warehouse down the street from the Port of New Orleans.

Landry sublets a quarter of his space to a company that imports brewing equipment, including the Chinese-made steel tanks he uses, opting for a foreign supplier because it’s about half the price. Every dollar counts at his small business, where the added expense on aluminum cans this year alone is set to devour the equivalent of a local worker’s salary for six months.

“These are real jobs in the community,” he said, sitting at one of about a dozen indoor picnic tables as a Sunday afternoon line forms at the taps. “At the end of the day, it’s just a lot of uncertainty.”

At the Port of New Orleans, the last major stop before the river empties into the Gulf of Mexico, boat traffic has been unpredictable lately.

World’s Biggest Shipping Company Voices Alarm at Trump Trade War

“Somebody’s playing a game here, and I just don’t know what it is,” said the port’s chief commercial officer, Robert Landry, as city-block-sized barges glided by. “If you really want to kill business, you don’t have to enact any measures. All you have to do is create an air of uncertainty, and that’s what’s happened here.”

On that humid late-May day, thunder and lightning broke over New Orleans, a gale lashing hard enough that workers put in overtime to send out ships before they could damage the wharves. The state had issued a tropical storm warning, which locals meet with a shrug—it could cause widespread destruction or it could be just a lot of wind. A state governed by the ebb and flow of ever-changing water is used to unknowns.

© 2018 Bloomberg L.P

http://gcaptain.com/in-louisiana-trumps-trade-war-makes-biggest-u-s-port-tremble/
 

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'We always get f****d by them!'Trump tells aides he wants to withdraw from the World Trade Organization as it's revealed he urged Macron to pull France out of the EU and embrace better U.S. trade

  • Trump has threatened to pull the United States out of the World Trade Organization so often aides are starting to take him seriously
  • Sources who had discussed the topic with Trump say he's threatened to withdraw '100 times' and doesn't understand why the U.S. is part of the body
  • Treasury Secretary Steve Mnuchin said Friday that the report claiming the president wants to withdraw from the WTO 'is an exaggeration'
  • The WTO for its part says it has not heard any rumblings in the U.S. government about a withdraw from the body
http://www.dailymail.co.uk/news/art...-wants-withdraw-World-Trade-Organization.html
 

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Canada hits back at Trump's tariffs with levies on Florida orange juice, Heinz ketchup pickles, Wisconsin toilet paper and Kentucky bourbon

  • America's biggest trading partner hits key imports from the U.S. with tariffs after similar move on its steel and aluminum experts south of the border
  • Justin Trudeau's government targets swing states by putting tariffs on Florida orange and tomato products and Wisconsin toilet roll
  • And it hits Kentucky bourbon - home state of Senate Majority Leader Mitch McConnell
  • The list of more than 250 US goods subject to Canadian duties aim to pressure Trump supporters in key states in November's US midterm elections
  • Scroll down for a list of the affected items
http://www.dailymail.co.uk/news/art...s-US-tariffs-metals-bourbon-orange-juice.html
 

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Auf Wiedersehen troops? Trump weighs up options for a potential large scale withdrawal of military from Germany amid growing tensions with Chancellor Angela Merkel

  • Trump is said to be weighing options to pull US troops from Germany amid tensions with Chancellor Angela Merkel
  • He also expressed frustrations at NATO allies for insufficient defense spending
  • Some European officials are concerned over possible US troop movements
http://www.dailymail.co.uk/news/art...-large-scale-withdrawal-military-Germany.html
 

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Four Trade War Scenarios: From 'One-&-Done' To 'All Hell Breaks Loose'


by Tyler Durden
Tue, 07/03/2018 - 04:15



On July 6th, President Donald Trump’s tariffs on $34 billion worth of Chinese goods are set to take effect. And, as Bloomberg's Chief Asia Economist, Tom Orlik, notes, with an additional $16 billion coming close behind, and China threatening retaliation, it looks like the opening shots of a trade war are about to be fired.




We map out four scenarios:

Scenario One: $50 billion and done. The U.S. imposes tariffs, China retaliates. Financial markets shudder. Fearing panic, both sides send reassuring messages and hold fire on further measures. In this scenario there would be a negligible impact on the U.S. economy and a maximum drag on China’s growth of just 0.2 ppt next year. A broadening of tariffs to affect $250 billion of Chinese exports could drag on China’s economic growth by up to 0.5 ppt, we estimate.​
Scenario Two: $50 billion, plus a slump in financial markets. The U.S. imposes tariffs, China retaliates, equity prices fall sharply, creating a second-round effect from falling wealth and tighter financing conditions. Fearing worse, both sides hold fire. In this scenario, growth in the U.S. weakens by 0.4 ppt next year, China is mostly unscathed by the decline in equities, thanks to insulation from global markets, but the 0.2 ppt drag from tariffs remains. And the world economy experiences a roughly 0.2 ppt drag to growth as well.​
Scenario Three: The U.S. imposes 10% tariffs on all imports and the rest of world retaliates. In other words -- we find ourselves in a global trade war. It would take time for the biggest impacts to be felt, but in 2020 the drag on annual GDP growth might be 0.4 ppt for the U.S., 0.2 ppt for China and 0.2 ppt for the world.​
Scenario Four: The U.S. imposes 10% tariffs on all imports, the rest of the world retaliates, and financial markets slump. Layering on a tightening of financial conditions might raise the peak GDP growth impact to 0.8 ppt in the U.S. and 0.4 ppt for the world. China, being insulated from world equity shocks, might escape the additional burden of tighter financial conditions.​

A global trade war combined with the interconnectedness of global financial markets means a shock to U.S. equities would be felt in most corners of the world.


Source: Bloomberg

To be sure, a trade war could unfold in myriad ways not captured in these scenarios. Tariffs could be set at different levels, on different products, and in different countries. The reaction of financial markets is also impossible to predict. U.S. investors could continue to focus on benefits from tax cuts rather than costs from tariffs. China’s “national team” could put a floor under the Shanghai Composite Index. Other policy instruments might provide an offsetting influence. China may opt to restart infrastructure spending to offset a drag from weaker exports, for example.

And, as Orlik notes, there is, of course, also a possibility the U.S, and China pull back from the brink. Trump threatened to wipe North Korea off the map but ended up sitting down for a summit with its leader. The wall along the Mexican border has not been built, let alone paid for by Mexico. If we see U.S. markets sliding ahead of the July 6 deadline, or more businesses lining up to criticize the impending tariffs, the chances of the White House seeking some kind of face-saving compromise would go up.

At this point though, that’s not the base case.

At least one round of tariffs looks highly likely. If China retaliates - and it surely will - and financial markets don’t provide a clear ‘stop’ signal, a second could follow.

In other words, the only way this stops is if markets crash... and if markets don't crash - anticipating Trump folding - then he will double-down on his trade tariff attacks until it does.

https://www.zerohedge.com/news/2018-07-02/four-trade-war-scenarios-one-done-all-hell-breaks-loose
 

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Trump says his administration is helping Harley-Davidson's competitors now that the motorcycle is moving production overseas and blaming his tariffs

  • Harley-Davidson is shifting some production to Thailand and has already announced the closure of a Kansas City plant
  • President Trump: 'Those are my voters. They don't want Harley Davidson getting cute to make $2 more'
  • Trump has criticized the decision to move, made in part to evade new European Union tariffs on motorcycles originating in the U.S.
  • Trump warned last week that the company could face a 'big tax' – a new tariff – if it tried to ship foreign-made bikes back into the U.S. to sell here
  • New EU tariffs include a 31 per cent penalty on motorcycles, amounting to a 25 per cent increase in costs
  • Harley-Davidson said its bikes will cost an average of $2,200 more apiece to export under those rules
http://www.dailymail.co.uk/news/art...y-Davidsons-competitors-amid-tariff-spat.html
 

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What if NATO members ignore Trump's call on spending? | Inside Story
Al Jazeera English


Published on Jul 3, 2018
Leaked letters are said to show the U.S. President's increasing frustration with the North Atlantic Treaty Organisation.
Donald Trump accuses allies in the military alliance of failing to adequately pay for their protection.
The New York Times says Trump wrote to NATO members, including the leaders of Belgium, Canada and Germany.
In his letter to Chancellor Angela Merkel, he warned that what he called Germany's continued underspending on defence undermines the security of the alliance.
Will NATO members heed Trump's call?
And is the North Atlantic alliance still relevant?

Presenter: Elizabeth Puranam

Guests:
Peter Galbraith - Former U.S. Ambassador to Croatia & former UN envoy to Afghanistan
Marko Nihkelson - Estonian Member of Parliament & head of the Estonian delegation to the NATO Parliamentary Assembly
Fabrice Pothier - Former Director of Policy Planning at NATO


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Report: GOP May Turn On President Donald Trump Over Tariffs | The Last Word | MSNBC
MSNBC



Published on Jul 3, 2018
Politico reports that Republican senators are getting frustrated with Trump's tariffs, arguing that Trump doesn't understand how his tariffs are hurting the U.S. economy. Lawrence discusses the fallout with Jared Bernstein, Neera Tanden, and John Harwood.
 

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This Is How Much U.S. Households Lose As Gas Prices Rise


by Tyler Durden
Wed, 07/04/2018 - 14:20


Authored by Tsvetana Paraskova via OilPrice.com,

U.S. gasoline prices are at a four-year-high this year as a result of the higher price of oil which has reached a three-and-a-half-year high in recent weeks.



The increased pump prices are now eating into the disposable income of the average American household that will have a total of $440 less to spend this year on other goods and services because this money is expected to go for buying higher-priced gasoline.



The higher spending on gas could offset one-third of the gains from the tax cuts, with low- and middle-income families feeling the pinch much more than higher-income earners, according to S&P Global economists Beth Bovino and Satyam Panday.

“This would be tantamount to a tax increase for American households,” the economists wrote in a recent report, quoted by Bloomberg. “This is especially true for middle- to low-income Americans.”


The higher-income families, on the other hand, will be less affected by the increase in pump prices because spending on gasoline accounts for a smaller share of their total disposable income.

“The income tax cut is virtually compensating those who were hurt least from the oil-price change, which may result in even larger inequality,” according to Bovino and Panday.​


Despite the higher spending on gasoline, however, the overall U.S. economy is now less oil-dependent than in the past, so oil prices in the $70s will have a more mitigated impact on economic growth than it would have in previous years, the S&P Global economists and Fed economists say.



For this year’s April–September driving season, the EIA expects U.S. regular gasoline retail prices to average $2.87/gallon (gal), up from an average of $2.41/gal last summer, mostly due to expectations of higher crude oil prices. According to the Short-Term Energy Outlook (STEO) from June, monthly average gasoline prices may have peaked in June at $2.92/gal and are expected to drop gradually to $2.84/gal in September.

For this year’s July 4 holiday, U.S. drivers will be paying the highest Independence Day average gas prices since 2014 - at $2.90/gal, compared to $3.66/gal for July 4 in 2014, when oil prices were $100 a barrel, according to GasBuddy.

Although current national average gas prices are below the May peak of $2.98/gal, a price jump may be looming, due to OPEC’s announcement of a smaller-than-expected oil production increase, the U.S. push to have Iran oil exports down to “zero”, and significant U.S. crude oil stockpiles draws, GasBuddy says.

According to AAA, last week the United States saw the largest one-week reduction—9.9 million barrels—in crude inventories for the first summer driving season in five years. “If the decline in inventories continues and oil prices remain high, motorists could see a spike in gas prices later this summer despite the anticipated increase in production from OPEC and its partners,” AAA said last week.

Still, the higher oil prices now have a more muted impact on the U.S. economy than before, Dallas Fed President Robert S. Kaplan wrote in an essay last month.

Several factors have mitigated that impact over time. One is U.S. shale production—higher domestic oil production means that a larger share of the economy is helped by higher oil prices. Then, reduced crude oil imports benefit the U.S. trade balance. Finally, the U.S. economy is less oil-intensive now than in the past, because of higher fuel efficiency, other forms of energy substituting part of the oil dependence, and higher share of less-energy-intensive services sector as a share of the overall economy, Kaplan argues.

For example, in 1970, the U.S. consumed 1.1 barrels of oil for every $1,000 of gross domestic product (GDP). By 2017, only 0.4 barrels of oil were consumed for every $1,000 of GDP, the Dallas Fed president says.

“Based on these various factors, it is the view of Dallas Fed economists that the negative impact of higher oil prices on GDP growth is likely to be more muted than in the past.​

It is our view that a 10 percent increase in the oil price should have a relatively modest negative impact on U.S. GDP growth. This negative impact should further diminish as the U.S. continues to grow its domestic oil production,” Kaplan writes.​



 

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How Trump’s Policy Decisions Undermine the Industries He Pledged to Help

NYT
By CORAL DAVENPORT and ANA SWANSON
9 hrs ago

WASHINGTON — “The assault on the American auto industry is over,” President Trump declared last spring in Detroit, promising auto executives that he would throttle back Obama-era regulations on vehicle pollution.

The moment embodied one of Mr. Trump’s main political promises — to promote pro-business policies that unshackle industry and the economy. He has pledged to create an oil and gas boom that will spawn “massive new wealth” and to renegotiate the North American Free Trade Agreement to eliminate “big trade barriers” for American products. His new taxes on metal imports “have already had major, positive effects” on classic Rust Belt industries like steel and aluminum, the White House has said.

Even as the president’s pro-business stance is broadly embraced by the corporate community, in some significant cases the very industries that Mr. Trump has vowed to help say that his proposals will actually hurt them. They also warn that policies designed to aid one group will eat into someone else’s business in ways that policymakers should have anticipated.

“I would like to tell the president, ‘Man, you are messing up our market,’” said Kevin Scott, a soybean farmer in South Dakota and the secretary of the American Soybean Association. The idea of changing Nafta, he said, “gives us a lot of heartburn in farm country.”

At the same time, Mr. Scott said, China’s threat to impose tariffs this week on United States soybeans — in direct response to Mr. Trump’s tariffs on other Chinese-made products — is already having a negative affect on the prices farmers see. In recent days, Canada imposed its own retaliatory tariffs against the United States. And on Friday, General Motors warned that Mr. Trump’s threat of tariffs on imported cars could backfire, killing American jobs and leading to “a smaller G.M.”

Mr. Scott voted for Mr. Trump, and he approves of administration efforts to roll back environmental regulations, “But if we lose those Chinese and Mexican markets, it will be hard to get them back,” he said. China and Mexico are the two biggest markets for American soybean exports.

Richard Newell, president of Resources for the Future, a nonpartisan research organization in Washington, described the administration’s overall approach as “whack-a-mole policy” that suggests a lack of appreciation of the complexity of global commerce. “The law of unintended consequences abounds,” Mr. Newell added.

If nothing else, experts say, the unpredictability of many of Mr. Trump’s proposals — the lack of clarity on when or how Nafta might be renegotiated; the risk of potential litigation over his rollback of auto-pollution rules; the ways in which other countries might retaliate against Mr. Trump’s tariffs — seeds confusion across the American economy, making it tough for businesses to plan effectively for the future.

“That just wreaks havoc with American farmers and businesses with the investments they have to make,” said Matthew Slaughter, a professor of international business at Dartmouth College. “It creates massive uncertainty for these industries.”

Automakers, for instance, had sought looser emissions rules. However, Mr. Trump’s proposed rollback goes further than expected, and now automakers say it could ultimately spawn years of legal battles and perhaps even subject the industry to more regulations, not fewer, if individual states start enforcing their own, separate rules. They also fear that Mr. Trump’s recent threats to impose tariffs on imports of European autos could trigger a trade war, raising prices for all vehicles.

In one recent meeting with Mr. Trump, the chief executive of General Motors, Mary Barra, told the president she would be happy with a deal keeping much of the current Obama-level pollution standards in place, while adding sweeteners for automakers such as financial credits for companies that invent more fuel-efficient technologies, according to two people familiar with the meeting.

Oil and gas companies say a Trump administration proposal to bail out the coal industry will cut into their market share, while steel tariffs make their production equipment costlier. Aluminum makers fear not only a tariff tit-for-tat, but also the looser vehicle-pollution rules, because one way to make more efficient cars is to make more car parts from lightweight aluminum.

A spokesman for the White House, Raj Shah, acknowledged that while some policies might not always be to the liking of specific industries, “A lot of these groups benefit from broader policies — all these groups benefit from the tax cut and regulatory relief.”

“The only constituency the president is looking out for is the American people,” Mr. Shah said.

Mr. Trump’s policies have their strong supporters.

“The steel tariffs, the aluminum tariffs, the auto tariffs, have the potential to put people to work in industries like steel production,” said Jeff Ferry, the research director for the Coalition for a Prosperous America, a nonprofit group that advocates closing the United States trade deficit. “The electorate is no longer buying the theories economists are peddling about free trade lifting all boats,” Mr. Ferry said.

‘Disappointed’ in the Rust Belt

The president has repeatedly promised to protect metal producers, iconic Rust Belt industries that the administration says are hurt by low-priced imports from countries like China.

American steelworkers have cheered his moves. “The steel tariffs are important to the growth and the survival of the domestic industry because of the massive challenge that global overcapacity presents,” said Scott Paul, president of the Alliance for American Manufacturing. “There is some evidence that the strategy may be working. You’re seeing a number of steel mills come back online.”

But not all metal producers agree with the administration’s strategy.

“We are disappointed by the broad tariffs on aluminum imports into the United States,” said Marco Palmieri, president of Novelis North America, an aluminum maker. “This action does not provide relief from our industry’s most significant trade issue, which is subsidized Chinese aluminum overcapacity. Instead, the tariffs bring the unfortunate potential to increase cost for the consumer.”

In late March, the Trump administration began imposing a 25 percent tariff on steel and a 10 percent tariff on aluminum from countries including Russia, China, Turkey and Brazil. On June 1, it expanded the levies to include Canada, Mexico and the European Union.

While the steel industry supports the tariffs, the aluminum industry is mostly opposed. The tariffs raise prices for aluminum, which helps smelters, the companies that make raw aluminum here. However, only a handful of smelters still operate in the United States.

The Aluminum Association, which represents the bulk of the American industry, says that 97 percent of American jobs in aluminum are at what are called “downstream” businesses that shape the metal into things like auto parts or other goods. Those companies are hurt by Mr. Trump’s tariffs, because they must now pay higher prices for their raw materials.

By contrast, demand for aluminum increased under the stringent Obama-era fuel economy standards, which created a market for more lightweight cars that use aluminum rather than steel. The proposed rollback of the fuel standards will likely hurt aluminum makers, the association said, as will the prospect of a legal fight between the federal government and California, which has promised to continue to enforce the stricter, Obama-era rules.

If California enforces the stricter pollution rules, that would in effect create two separate auto markets. Several other states have pledged to follow California’s lead.

“It’s quite disruptive to the companies bringing a car to market, and it’s disruptive to all of the suppliers of the car companies,” said Doug Richman, a technical expert with the Aluminum Association.

Coal vs. Natural Gas

Mr. Trump has sought to follow through on campaign promises to help the coal industry, but those efforts are angering oil and natural gas producers.

Mr. Trump has ordered Energy Secretary Rick Perry to “prepare immediate steps” to stop the closing of unprofitable coal and nuclear power plants nationwide. One proposal would order grid operators to buy electricity from struggling coal and nuclear plants for two years, using emergency authority that is normally reserved for crises like natural disasters.

Such a move would cut deeply into the market share for natural gas producers, many of which are also among the nation’s largest oil companies — a group Mr. Trump has also sought to support. Mr. Trump’s proposal “seems counter to what he campaigned on,” said Dan Eberhart, a Trump donor and the owner of Canary LLC, a Phoenix oil field services company. “He campaigned on unleashing America’s energy, but this tortured coal policy penalizes natural gas.”

Mr. Eberhart added that his business will also likely be hurt by the steel and aluminum tariffs, which “will raise the prices for materials for drilling rigs, pipes.” Rival producers in other oil-exporting nations “will not face that,” he added.

Cars and Uncertainty

In coming weeks, the Environmental Protection Agency and the Transportation Department are expected to jointly propose a new rule to dramatically roll back the Obama-era standard on tailpipe emissions. And Detroit is watching closely.

The Obama rule would have required automakers to roughly double the fuel economy of new cars, S.U.V.s and light trucks by 2025, achieving an average of more than 50 miles per gallon. Since Mr. Trump’s inauguration, automakers have complained to him that the Obama standard was too stringent.

But the administration’s current proposal would go so far in the opposite direction that, rather than simply loosening the Obama standard, it would likely set off years of litigation, creating regulatory uncertainty for automakers, say people familiar with the draft plan. The proposal, according to people who have seen it, would both cut back the Obama standard to 35 or 40 miles per gallon, and would pre-empt states from setting their own standards.

That amounts to a direct challenge to California, which has a waiver under the Clean Air Act to impose its own, stricter, air pollution regulations on cars and trucks. California’s governor, Jerry Brown, has made clear that he will fight in court.

If California were to prevail, that could lead to the creation of two different sets of auto pollution regulations in the United States — one for California and the dozen or so states that follow it, another for the rest of the country. Automakers describe that as a worst-case scenario they want to avoid.

“We are supporting some level of increased fuel economy year over year,” said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, which represents many of the world’s largest automakers. “Our customers don’t want to pay the unnecessary costs of separate regulatory proposals.”

Regarding the Trump idea to place tariffs on auto imports, she said: “While we understand that the administration is working to achieve a level playing field, tariffs are not the right approach.” They raise prices for car buyers, she said, “and invite retaliatory action by our trading partners.”

Executives and lobbyists from the nation’s Big Three auto companies have held a flurry of meetings at the White House and E.P.A., asking Mr. Trump and his officials not to move forward with the aggressive rollback of the pollution rules and instead to hammer out a deal with California, according to four people familiar with the meetings.

“The auto industry has always wanted one, rather than two or more standards across the country,” said Robert N. Stavins, a professor of environmental economics at Harvard. “This is very troubling to the auto industry.”

Still, Mr. Trump’s allies and advisers maintain that his moves will benefit the economy overall, even if they hurt some of the industries he said he wanted to help.

“On net, President Trump’s efforts to roll back regulations and create a better regulatory climate for all is better for these industries,” said Thomas J. Pyle, an adviser to the Trump campaign and president of the Institute for Energy Research, an organization that promotes fossil fuel use.

http://www.msn.com/en-us/news/us/ho...ries-he-pledged-to-help/ar-AAzAypQ?ocid=ientp
 

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Trump’s trade war with China is finally here — and it won’t be pretty

Washington Post
Danielle Paquette, Emily Rauhala
5 hrs ago

BEIJING —Some said the day would never come, that it was all a bluff. But as the Independence Day fireworks cool in Washington, the eve of the trade war has arrived in China’s capital, where government leaders keep reminding people: We did not start this, but we will fight back.

President Trump’s first tariffs are scheduled to hit $34 billion of Chinese imports on Friday, and Beijing plans to swiftly respond with levies on an equal amount of goods. Border officers here could receive the order as early as midnight to slap new taxes on hundreds of American products, including pork, poultry, soybeans and corn.

And so would begin an unprecedented commerce battle between the world’s two largest economies — a conflict analysts fear could rattle markets, cripple trade and undermine ties between the United States and China at a time when the administration seeks Beijing’s cooperation on North Korea.

As the global business community watches the clock, China is moving to pin the fallout on Trump, framing the United States as a bully the Asian nation is forced to confront. A state media editorial this week called America’s “dictatorial bent” a global threat, while officials said China will “absolutely not” take the first swing.

“As long as the U.S. side rolls out its tariffs list, China will respond with all necessary measures to firmly safeguard our legitimate rights and interests,” Foreign Ministry spokesman Lu Kang told reporters Wednesday.

Those measures appear to be aimed at America’s heartland, which helped lift Trump into the White House. Farmers in the overwhelmingly red Midwest fear they’ll lose access to China’s lucrative market and be left with the bill for excess produce and livestock.

What happens next is anyone’s guess, analysts say, since both sides have pledged not to back down.

“It’s a dark day tomorrow for global trade,” predicted Joerg Wuttke, former president of the European Union Chamber of Commerce in China.

Uncertainty hangs over companies, supply chains and investment plans, he said. American firms in China are already reporting spikes in random inspections at ports.

One U.S. manufacturer said Chinese authorities on average used to inspect 2 percent of the vehicles it sent abroad. Since June, agents have taken a closer look at every product.

“Don’t expect the ‘war’ to be out in the open in some imaginary tit-for-tat tariff battlefield,” said James Zimmerman, a partner in the Beijing office of international law firm Perkins Coie LLP. “The real battle will be on the flanks”— in the form of unnecessary inspections, product quarantines and heightened regulatory scrutiny.

Supply chains will also suffer a blow, said Cliff Tan, East Asian head of Global Markets Research at Japan’s MUFG Bank in Hong Kong. The initial set of American tariffs could rock companies in the technology sector and hike the price of “Walmart-type” products.

“It’s like a war where everybody points the guns at themselves,” Tan said.

The conflict over U.S.-China trade has been brewing for years, but has intensified rapidly in 2018. On April 3, the U.S. released a list of targets for proposed tariffs on $50 billion worth of Chinese imports, taking aim at high-tech and industrial goods. On April 4, China fired back.

In the months since, the tit-for-tat has escalated, with the U.S. threatening successive rounds of tariffs on goods valued at hundreds of billions of dollars. China vowed to match U.S. moves, using both quantitative and qualitative measures.

Kenneth Jarrett, president of the American Chamber of Commerce in Shanghai, said that a sense of anxiety has settled over business in the port city.

“My hope is that with this start, people will feel that the cost is too great and we will not move on to the second wave,” he said.

Thus far, the U.S. president has showed no interest in a last-minute truce. Though he has called Chinese President Xi Jinping a “good friend,” he has expressed no apprehension over what could happen in either country when the first tariffs land.

“Trade wars are good,” Trump recently tweeted, “and easy to win.”

danielle.paquette@washpost.com

emily.rauhala@washpost.com

Yang Liu contributed from Beijing.

http://www.msn.com/en-us/money/mark...-and-it-won’t-be-pretty/ar-AAzBNOb?ocid=ientp
 

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President Trump’s first tariffs are scheduled to hit $34 billion of Chinese imports on Friday, and Beijing plans to swiftly respond with levies on an equal amount of goods. Border officers here could receive the order as early as midnight to slap new taxes on hundreds of American products, including pork, poultry, soybeans and corn.
Using soybeans as an example, it seems to me that if ones grown in America become more expensive due to China placing a tariff on them, China could just buy soybeans from some other country. Like maybe Brazil.
...and American soybeans could then be sold to whoever is currently buying them from Brazil. In that manner, no tariffs would be collected.
 
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Changing UK for France? Mattis threatens to replace America's main military ally
RT


Published on Jul 4, 2018
The Pentagon chief is apparently threatening to drop the UK as America's main military ally. James Mattis has written to British Defence Secretary Gavin Williamson, saying Britain would be dropped for France.
 

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Trade Tensions Loom Over World’s Fastest-Growing Fossil Fuel
July 5, 2018 by Bloomberg



Photo: By Igor Grochev / Shutterstock

By Rachel Adams-Heard, Dan Murtaugh and Anna Shiryaevskaya (Bloomberg) — The world’s fastest growing fossil fuel is bracing for a direct hit from increasing global trade tensions.

U.S. President Donald Trump’s tough talk on trade with China is looming over his country’s efforts to become the world’s largest exporter of liquefied natural gas. In Europe, a potential pipeline project from Russia has been imperiled by possible U.S. sanctions, while the sales practices of Qatar, the world’s biggest LNG seller, are under investigation as being anti-competitive.

The friction risks disrupting global trade of gas worth almost $300 billion last year, threatening to distort flows of the commodity just as demand for the cleaner-burning fuel explodes. It’s also casting a shadow over multi-billion dollar export projects in the U.S. while creating opportunities for countries untouched by the wave of protectionism.

“Populism has come back and with it a form of economic nationalism, and that’s occurred at the same time as the emergence of global gas,” said Trevor Sikorski, head of natural gas and carbon research at Energy Aspects Ltd. in London. “The former is leading to trade wars, and as soon as that happens everything is on the table.”

The complications arising from trade disputes and geopolitical tensions could distort the global gas market, although it’s unlikely to derail its growth, Sikorski said. For instance, if China levies tariffs against U.S. LNG, traders could re-route cargoes to Japan and South Korea while selling Australian gas to China. Or a drop in Qatari shipments to Europe could be replaced by fuel from Nigeria or Angola.

The end result will be extra fees for traders and slightly higher costs for end consumers, said Nicholas Browne, an analyst with Wood Mackenzie Ltd. in Tokyo. He pointed to the example of Russia’s gas pipeline to Europe, which just celebrated its 50th anniversary, as how trade can endure despite disputes.

True Trade Wins?
“Even at the height of Soviet tensions or the worst days of the Ukraine crisis, they continued to export gas to the West,” Browne said. “When it’s in the economic interest of both parties, trade will continue.”

That’s being tested anew by Russian efforts to boost European sales. President Vladimir Putin recently claimed U.S. trade interests are at the heart of Trump’s threats of sanctions against the Nord Stream 2 pipeline between Russia and Germany because its success could reduce Europe’s demand for U.S. gas.

Meanwhile, Europe is also trying to give its utilities greater flexibility and weaken Qatar’s grip on the market. The European Commission last month said it would check “problematic territorial restriction clauses” in LNG contracts with the Middle East nation that may prevent importers reselling the gas. That probe comes a month after the regulator for the 28-nation bloc settled a 7-year investigation into how Russia’s Gazprom PJSC’s set prices for its pipeline gas supply to Europe.

“It’s been a European policy goal for quite a long time to increase market liberalization,” Wood Mackenzie’s Browne said. “They want open access to European gas markets, and that doesn’t work if you have a lot of supplier concentration.”

Despite being at the center of trade tensions, the U.S. and China are a natural fit in the global gas market. China’s booming demand pushed it past Japan this year as the world’s biggest importer. Meanwhile, the U.S. is vying with Qatar and Australia to become the largest exporter of LNG, the super-chilled form of the fuel that’s shipped around the world on special tankers.

That explains why LNG has been conspicuously absent as a target of China’s retaliatory levies after Trump announced duties on $34 billion worth of Chinese exports, which are scheduled to go into effect Friday. The country’s blazing gas demand growth– part of an effort by President Xi Jinping to cut coal use and smog — means it can’t be picky about where it gets its supply, Browne said.

“Security of supply is still paramount for China at the moment,” Browne said. “It’s in the best interest for both countries to continue to trade.”

Even though LNG has so far eluded direct tariffs, trade tensions are still having an effect on the market. Greg Vesey, head of the Australian company developing the $4.35 billion Magnolia LNG project in Louisiana, said a number of parties he’s talking to have indicated they want to see how the trade tiff shakes out before signing on the dotted line.

Projects to export America’s ample shale gas are vying with developments from Qatar and Russia to East Africa and Papua New Guinea to sign up long-term buyers that underpin billions of dollars in financing. It would be naive to think that competitors weren’t trying to find a way to take advantage of concerns about trading with the U.S., according to Charlie Riedl, head of the Washington-based Center for Liquefied Natural Gas.

“They are absolutely, 100 percent trying to figure out how to capitalize on this,” Riedl said.

© 2018 Bloomberg L.P

http://gcaptain.com/trade-tensions-loom-over-worlds-fastest-growing-fossil-fuel/
 

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China's Tariff Response Takes Effect as Trump Ignites Trade War


Bloomberg News
1 hr ago



U.S. President Donald Trump fired the biggest shot yet in the global trade war by imposing tariffs on $34 billion of Chinese imports. China said its retaliatory tariffs are now in effect, and argued it had been forced to act.

Duties on Chinese goods started at 12:01 a.m. Friday in Washington, just after midday in China. Another $16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of U.S. goods imports from China in 2017.

U.S. customs officials will begin collecting an additional 25 percent tariff on imports from China of goods ranging from farming plows to semiconductors and airplane parts. China’s officials have previously said they would respond by imposing higher levies on goods ranging from American soybeans to pork, which may in turn prompt Trump to raise trade barriers even higher.

China’s tariff actions in response are in effect, Foreign Ministry spokesman Lu Kang said at a regular press conference this afternoon in Beijing. The American action is unfair and in violation of World Trade Organization rules, he said.

“The United States has violated WTO rules and ignited the largest trade war in economic history,” China’s Commerce Ministry said in a earlier statement. “Such tariffs are typical trade bullying, and this action threatens global supply chains and value chains, stalls the global economic recovery, triggers global market turmoil, and will hurt more innocent multinational companies, enterprises and consumers.”

The Commerce Ministry statement didn’t provide details on exactly how China would respond.

Stocks climbed in Asia and the yen slipped with gold, while Chinese shares reversed losses though remained strongly down for the week. Treasuries declined, as did the yuan.


© Bloomberg U.S. Appetite

The riskiest economic gamble of Trump’s presidency could spread as it enters a new and dangerous phase by imposing direct costs on companies and consumers globally. It’s the first time the U.S. has imposed tariffs aimed just at Chinese goods and follows months of accusations that Beijing stole American intellectual property and unfairly swelled America’s trade deficit.

"Clearly the first salvos have been exchanged and in that sense, the trade war has started. There is no obvious end to this," said Louis Kuijs, chief Asia economist at Oxford Economics.

As the world’s most developed nation and the rule-maker of the current global governing system, there is "astounding absurdity" in the U.S. complaining that it’s been bullied in trade, the People’s Daily, the flagship newspaper of the Communist Party of China, said in a Chinese language commentary on Friday.

How China could hurt U.S. businesses in China


Stocks Down
Chinese stocks have taken a beating in recent weeks, and are down more than 16 percent this year, as concerns about the trade war have mingled with worries about China’s ability to control its debt and maintain growth. They were 1.1 percent higher at 1:46 p.m. in Shanghai, after earlier falling as much as 1.6 percent. U.S. stocks are up slightly more than 2 percent this year as investors have weighed the threat of trade frictions against the strong performance of the U.S. economy.

Trump is doubling down on his promise to put “America First” in the nation’s foreign and economic policies. He blames China for a bilateral trade deficit of $336 billion and for costing U.S. manufacturing jobs.

What Our Economists Say

As a candidate in 2016, Donald Trump won support with a promise to redress an unbalanced trade relationship with the rest of the world. In the White House in 2018, he has started to make good on that pledge. Bloomberg Economics’ base case remains more trade skirmish than trade war, but the risks are increasing.
-- Jamie Murray, Bloomberg Economics

The tariffs could jeopardize a U.S. economic upswing that has extended to nine years and pushed the jobless rate to the lowest in nearly half a century. U.S. and Chinese companies will now find it costlier to trade with each other, meaning less demand and higher prices. The International Monetary Fund warns an extended spat could undermine the strongest global expansion since 2011.


Risk to Growth
The extent of the economic damage will depend on how far both sides go. If the U.S. and China cool off after a first round of tariffs, the impact on their economies will be modest, according to Bloomberg Economics. Under a full-blown trade war in which the U.S. slaps 10 percent tariffs on all other countries and they respond, the economists reckon U.S. growth would slow by 0.8 percentage point by 2020.

The impact of the first round of tariffs on $34 billion in Chinese goods will be “quite small,” said Ethan Harris, head of global economic research at Bank of America Merrill Lynch. But he doesn’t “see the war ending until there are casualties.”

“This plays out over the next few months, until both sides start to feel a little pain and realize this isn’t a bloodless march to victory,” said Harris.
JPMorgan Chase & Co. economists warn the biggest risk may come from the indirect impact of tightening credit conditions and business confidence, reducing scope for investment and hiring while undermining financial markets.

Beijing has shown little interest in making fundamental changes to its economic model. Xi has balked at U.S. demands to stop subsidizing Chinese firms under his plan to make the nation a leader in key technologies by 2025. Negotiations between the two countries petered out with the Chinese accusing the U.S. of blackmail.

The U.S. imports much more from China than the reverse, giving the U.S. an advantage in a tariff dispute. That means that if the dispute deteriorates, Beijing will run out of products to impose tariffs on much faster than the U.S., and so might retaliate against American companies operating in China. It could even take the drastic steps of devaluing the yuan or reducing its $1.2 trillion holdings of U.S. Treasuries, measures that would hurt it as well as the U.S.

In the past, the U.S. used its economic clout to win trade skirmishes with developing countries, said James Boughton, a senior fellow at the Centre for International Governance Innovation in Waterloo, Ontario. China, whose economy has grown tenfold since it joined the World Trade Organization in 2001, poses a much more formidable adversary.

“The dynamic is different from anything we’ve seen,” said Boughton. “China has an ability to ride out this kind of pressure, to weather the storm, that a lot of countries didn’t have in the past.”

--With assistance from Jennifer Jacobs.

To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net; Yinan Zhao in Beijing at yzhao300@bloomberg.net; Miao Han in Beijing at mhan22@bloomberg.net; Andrew Mayeda in Washington at amayeda@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger

©2018 Bloomberg L.P.

http://www.msn.com/en-us/money/mark...king-vow-of-retaliation/ar-AAzDxQ8?ocid=ientp
 

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Trump calls U.S. 'schmucks' for paying to safeguard Germany and says of Merkel: 'I don't know how much protection we get by protecting you'

  • The president hammered nations that are not paying their fair share in remarks at NATO's headquarters last year in Brussels
  • U.S. Ambassador to NATO Kay Bailey Hutchison said Thursday that the U.S. had improved an improvement since then, but it's still not enough
  • NATO nations to aim to contribute the equivalent of 2 percent of their GDP tot the security organization's defense fund in 2014
  • Hutchinson told reporters in advance of the trip that it's 'not just a number that was pulled out of the air'
  • 'We all have to remember that we are now facing major threats by Russia...most certainly we have a rising China, and we have counter terrorism,' she stated
  • The U.S. at the same time slapped down a report that said Trump was considering a troop draw down in Germany over contribution concerns
http://www.dailymail.co.uk/news/art...ys-U-S-schmucks-paying-safeguard-Germany.html
 

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Chinese Ports Begin Delaying Clearing Of US Goods


by Tyler Durden
Fri, 07/06/2018 - 08:14


Rumors that US companies have been experiencing unspecified "difficulties and delays" while trying to get their goods through customs in China have been circulating for weeks - ever since reports surfaced alleging that Chinese officials had warned US executives that China would come down hard on US firms in retaliation for Trump's trade war. And now that the Trump administration has finally imposed the first round of tariffs, Reuters is reporting that several major Chinese ports are delaying the clearing of goods from the US as officials await further instructions from the central government. These delays could seriously disrupt imports - especially of agricultural products like pork and soybeans which were targeted by Beijing for tariffs.



An official at the port of Shanghai told Reuters that the clearing of some US imports through customs had been halted.

There did not appear to be any direct instructions to hold up cargoes, but some customs departments were waiting until they had received official guidance from the central government on imposing hefty import tariffs on hundreds of products, the sources said.
A wine merchant in Shanghai, one of the country’s busiest trading hubs, said customs brokers were also slowing the clearance process because of confusion about how and when to implement duties.
"They’re holding everything ... because there’s uncertainty," he said.
[...]
"But overall, this weekend they should be able to identify what the taxes are and how they should be implemented, and they should be processed as normal."​


Meanwhile, a commodities trader in Shandong province said he was told by customs officials that the clearance of goods from the US that are on Beijing's "list" will be delayed. Among the goods being targeted by tariffs, transportation equipment, electronics and agricultural products, among others, were high on the list. American fruit, pork, nuts, wine and - of course - soybeans, with a 25% tariff. The chart below from JP Morgan is a rough breakdown of expected tariffs by industry (however, some of the announced tariffs have yet to be implemented).



And here's a list of US goods that China has threatened with tariffs.



According to Reuters, the delays started at midnight local time on Thursday. China said that it would wait for the US to impose tariffs on Chinese goods before responding with its own tariffs. China has implied that customs delays and other actions to discourage or punish US firms operating in China would be an integral part of its trade-war response thanks to the US's gaping trade deficit.

https://www.zerohedge.com/news/2018-07-06/chinese-ports-begin-delaying-clearing-us-goods
 

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As Tariff Deadline Looms, China Accuses U.S. of Firing First Shot in Trade War
July 5, 2018 by Reuters


FILE PHOTO: Crane department supervisor Chad Swan, stands on the upper catwalk of a ship-to-shore crane at Wando Welch Terminal operated by the South Carolina Ports Authority in Mount Pleasant, South Carolina, U.S. May 10, 2018. Picture taken May 10, 2018. REUTERS/Randall Hill/File Photo




By Elias Glenn and David Lawder BEIJING/WASHINGTON, July 5 (Reuters) – China accused the United States on Thursday of “opening fire” on the world with tariffs set to take effect on Friday, warning that it will respond the moment that duties on $34 billion in Chinese goods kick in.

U.S. President Donald Trump has threatened to further escalate the trade conflict between the world’s two largest economies with tariffs on as much as $450 billion worth of Chinese goods if China retaliates, as the initial round of tariffs take effect at 12:01 a.m. EDT (0401 GMT) on Friday.

There was no evidence of any last-minute negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.

The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks. U.S. stocks edged higher on Thursday, lifted by technology shares, amid hopes that American trade tensions with Europe may ease after German Chancellor Angela Merkel said she would back a reduction of European car tariffs if Washington abandons its threatened higher car levies.

China has said it will not “fire the first shot” in a trade war with the United States, but its customs agency made clear on Thursday that Chinese tariffs on American goods would take effect immediately after U.S. duties on Chinese goods are put in place.

Chinese Commerce Ministry spokesman Gao Feng said that the proposed U.S. tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work.

“U.S. measures are essentially attacking global supply and value chains. To put it simply, the U.S. is opening fire on the entire world, including itself,” Gao said.

“China will not bow down in the face of threats and blackmail and will not falter from its determination to defend free trade and the multilateral system,” Gao added.

A spokeswoman for the U.S. Trade Representative’s office said the agency had no immediate comment on the activation of its initial round of tariffs beyond a statement issued on June 15.

CARS, DISK DRIVES AND PUMP PARTS
U.S. Customs and Border Protection officials are due to collect 25 percent duties on a range of products including motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.

The list avoids direct tariffs on consumer goods such as cellphones and footwear. But some products, including thermostats, are lumped into intermediate and capital goods categories.

China has threatened to respond with tariffs on hundreds of U.S. goods, including top exports such as soybeans, sorghum and cotton, threatening U.S farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.

Chinese buying of soybeans has already ground nearly to a halt ahead of the duties.

In the latest sign that the risk of penalties is hitting trade, a vessel carrying U.S. coal and heading for China switched its destination to Singapore.

Asked whether U.S. companies would be targeted with “qualitative measures” in China in a trade war, Gao said the government would protect the legal rights of all foreign companies in the country.

Gao said China’s foreign trade was expected to continue on a stable path in the second half of the year, though investors fear a full-blown Sino-American trade war would deal a blow to Chinese exports and its economy.

Foreign companies accounted for $20 billion, or 59 percent, of the $34 billion of exports from China that would be subject to new U.S. tariffs, with U.S. firms accounting for a significant part of that 59 percent, Gao said.

Guo Shuqing, head of China’s banking and insurance regulator, said that a trade war would not affect China’s own reforms and opening up, adding, “The progress of China’s economy cannot be reversed by any force.”

FORD MAINTAINS CHINA PRICING
U.S. carmaker Ford Motor Co said on Thursday it has no plans currently to hike retail prices of its imported Ford and Lincoln models in China, despite the steep additional tariffs on imported U.S. vehicles set to come into play on Friday. Ford said it would “continue to monitor the situation as it evolves.”

Adding to the tensions, a Chinese court this week temporarily barred Micron Technology Inc from selling its main semiconductor products in the world’s biggest memory chip market, citing violation of patents held by Taiwan’s United Microelectronics Corp (UMC).

Beijing has made the semiconductor sector a key priority under its “Made in China 2025” strategy, which has intensified after a U.S. ban on sales to Chinese phone maker ZTE Corp underscored China’s lack of domestic chips.

Chinese stocks slipped on Thursday and the yuan steadied from earlier losses as a targeted cut of reserve requirements for banks took effect.

(Reporting by Elias Glenn and Christian Shepherd; Additional reporting by Ben Blanchard, Stella Qiu and Michael Martina; Editing by Robert Birsel, Shri Navaratnam and Will Dunham)

(c) Copyright Thomson Reuters 2018.

http://gcaptain.com/as-tariff-deadline-looms-china-accuses-u-s-of-firing-first-shot-in-trade-war/
 

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China targets Trump country with tariff retaliation as America's farmers, car makers and oil producers will bear the brunt of 'biggest trade war in economic history'

  • U.S. tariffs on $34 billion in Chinese goods went into effect at midnight
  • Trump is targeting computers, aerospace, car parts and other technology
  • China retaliated immediately but is focusing on oil, agriculture and auto plants
  • That means most of Beijing's countertariffs are falling on parts of the country that supported Trump in 2016
  • About 1 in 5 pro-Trump counties will see at least 25 per cent of their local economies affected by the economic fight
  • Beijing is calling Trump's project the 'biggest trade war in economic history'
http://www.dailymail.co.uk/news/article-5924811/US-tariffs-effect-China-retaliates.html
 

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Is President Trump already winning the trade war?

CBS News
Anthony Mirhaydari
11 hrs ago



After months of threats and gamesmanship, President Trump's tariffs on $34 billion worth of Chinese industrial imports took effect a minute after midnight Friday. It's the latest in a line of protectionism aimed at the U.S. trade deficit with China, which totaled nearly $600 billion in 2017, and includes tariffs on imports of steel and aluminum as well as items like washing machines and solar panels.

And much more has been threatened. Mr. Trump said on Thursday that another $16 billion worth of tariffs against China are coming in two weeks -- and U.S. total alone could reach $550 billion in the next few months.

The actions appear to be having the intended effect, if at the cost of pushing up inflation (prices for washing machine in the U.S. have spiked 16% in recent months, for example). The U.S. trade imbalance with China in May totaled $43.1 billion, down from the $47.2 billion posted in March; it's the smallest monthly deficit since October 2016 and caps the largest three-month reduction in 10 years.

China responded early Friday with its own tariffs on a $34 billion range of American goods including soybeans and pork. The risk now is that the tit-for-tat that marked the verbal standoff will translate into escalation in action, as each side tries to one-up the other.

There are reports that American imports into China are being slow-walked through customs. Moreover, China's currency has weakened markedly in recent weeks in a possible bid to offset U.S. tariffs -- a strategy Trump frequently called out as "currency manipulation" on the campaign trail.

Much depends on how President Trump and the communists in Beijing play the next round in the trade war game. According to calculations by Goldman Sachs, if the full scope of Trump's proposed protectionism is implemented, it would raise the total amount of goods subject to tariffs to nearly $800 billion. Or about four times the cumulative amount proposed just a few months ago.

China appears more vulnerable, with Societe Generale economists estimating that the Chinese economy could lose 1 percentage point of GDP growth and upwards of four million jobs while the U.S. would suffer a modest 0.2 percentage point drag on GDP growth.


© Provided by CBS Interactive Inc.

While U.S markets are taking this in stride, Chinese share prices are down 12 percent over the past month on reports that U.S. export orders have shrunk as customers wait to see what happens with tariffs and thus the cost of sourcing.

According to a report by the AP, Ningbo Top East Technology, which makes soldering irons south of Shanghai, has suffered upwards of a 50 percent drop in U.S.-bound orders, which used to make up roughly a third of its total order book. The problem is that the company is asking customers to split the cost of the tariff hike. But few are willing.

Another wrinkle to the China trade war story is a Reuters report that the European Union flatly rejected a proposal by Beijing to form a strategic alliance to take on the U.S. on trade. This is possibly because Europe knows deep down that China's mercantilism is real -- and that they have been guilty of similar behavior in the past. German Chancellor Angela Merkel, who just barely survived a recent internal political spat over immigration, warned Germany's lower house of parliament that trade tensions risk reversing the multi-lateralism that quickly quelled the global financial crisis after the U.S. housing bubble popped.

As the trade rhetoric turns to trade actions, business surveys suggest commerce is already being impacted. JPMorgan's Global Purchasing Managers' Index (PMI) data show that new export activity has nearly stalled, returning to a low ebb not seen since the middle of 2016 as China was coming off a destabilizing round of currency volatility.

If this impacts U.S. corporate earnings estimates in coming quarters, investors will have no choice but to pay attention. But for now, hope springs eternal that a de-escalation is coming -- or, if the trade spat worsens but remains contained, that U.S. equities will fare the best.

Put another way: That America has the most to gain from taking a firmer stance on trade terms. Small-cap stocks, which rely less on trade trends than large-cap stocks, in particular are hot lately, with the Russell 2000 up more than 9 percent for the year-to-date with the bulk of the gains coming since the beginning of May.

Read more from Anthony Mirhaydari and other top money experts

Anthony Mirhaydari is founder of the Edge , an investment advisory newsletter, and Edge Pro, options newsletter. Previously, he was a markets columnist for MSN Money; a senior research analyst with Markman Capital Insight, a money management firm; and an analyst with Moss Adams focusing on the financial services industry.

http://www.msn.com/en-us/money/mark...y-winning-the-trade-war/ar-AAzFTsT?ocid=ientp
 

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China appears more vulnerable, with Societe Generale economists estimating that the Chinese economy could lose 1 percentage point of GDP growth and upwards of four million jobs while the U.S. would suffer a modest 0.2 percentage point drag on GDP growth.
Bottom line? They need us more than we need them.

It's far easier for us to consume (or find another market for) the smaller quantity of stuff they buy from us, than it is for them to consume (or find another market for) the huge amount of stuff we buy from them.

the European Union flatly rejected a proposal by Beijing to form a strategic alliance to take on the U.S. on trade.
Who's gonna buy all that stuff they make, other than us?
South America? lol
Africa? lol lol
Australia? again, lol.
 

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GOP runs into Trump tax law in New Jersey

The Hill
Naomi Jagoda
7 hrs ago

Democrats in New Jersey are hoping that President Trump's tax-cut law provides them with a boost in the midterm elections.

The law caps the state and local tax (SALT) deduction at $10,000, a change that hurts people in high-tax states such as New Jersey, which has the highest property taxes of any state.

All but one New Jersey Republican voted against the tax law, in large part because of the limit on state and local tax deductions. Democrats on the campaign trail say restoring the full deduction means putting their party back in charge of the House.

"The capping of the state and local tax deduction is devastating for New Jersey families, and will be a major campaign issue this fall," said Democratic Congressional Campaign Committee spokesman Evan Lukaske. "Make no mistake: regardless of their votes or rhetoric, every Republican on the ballot owns every dollar of these tax hikes."

Republicans highlight that most New Jersey taxpayers are expected to see a tax cut as a result of the new law.

The Urban-Brookings Tax Policy Center (TPC) estimated that 61.5 percent of households in the state will see a tax cut in 2018 due to the major individual income tax provisions in the law.

"With a roaring economy and consumer confidence near an all time high, Republicans stand to benefit greatly at the ballot box this fall," said National Republican Congressional Committee spokesman Jesse Hunt.

However, TPC estimated that 10.2 percent of New Jersey households will see a tax increase - the greatest percentage of any state. And a big reason is a change in the state and local tax deduction.

It could be critical in the race for the House majority itself.

Democrats need to have a net gain of 23 seats to take back control of the House.

They have a chance to gain as many as four seats in New Jersey.

According to the Cook Political Report, New Jersey's second congressional district, where GOP Rep. Frank LoBiando is retiring, is likely to fall to Democrats.

The 11th district, where GOP Rep. Rodney Frelinghuysen is retiring, is leaning Democrat, according to the Cook Report.

Frelinghuysen's seat is one of the two districts in the state most impacted by the deduction change. The second is the seventh district held by Rep. Leonard Lance (R), who is running for reelection in a race rated as a toss-up by Cook.

Both Frelinghuysen and Lance voted against the tax bill, but it remains an issue Democrats are seeking to use in their favor.

"That's probably one of the crucial issues in this campaign," said Mikie Sherrill, the Democratic nominee in the 11th district seeking to succeed the retiring Frelinghuysen.

The Republican nominee in the district, Jay Webber, said he would have advocated to keep the full state and local deduction, but that he would have supported the final measure. He cited data from House Ways and Means Committee Republicans that the median family of four in the district will get a tax cut of more than $6,000 under the law.

"It's a win for New Jersey's 11th and the nation overall," he said, adding that Democrats are focused on a "blemish" in an otherwise great bill.

Tom Malinowski, the Democratic nominee running against Lance, said that if elected, he would only vote for a House speaker candidate who promises to promptly put a bill on the floor that would restore the full SALT deduction.

"If you want those deductions back, you're not going to get that by voting [for] congressman Lance and empowering the House GOP leadership," he said.

But Lance was positive about his chances for re-election, noting that he carried the district in 2016 by many more votes than Democratic presidential nominee Hillary Clinton did. And he said that his constituents are aware that he voted against the tax bill because of concerns over the deduction cap.

"This is a highly educated district," Lance said.

Patrick Murray, director of the Monmouth University Polling Institute in New Jersey, said he thinks that the issue could influence the outcome of the two races, given that New Jersey has high taxes and the districts are wealthy. He said it could give moderates a reason to vote for Democrats.

"The tax bill is what you use to appeal to moderates who look at their own pocketbooks," he said.

A Monmouth poll conducted late last month found the race in the 11th district to be within the margin of error, and that voters in the district were split on their opinions of the tax law. Thirty-eight percent said they expected their taxes to go up because of the new law, compared to only 19 percent of voters who said they expected their taxes to go down. About one third of voters in the district said the tax law will have a major impact on their vote, and more people in that group said they planned to vote for Sherrill than Webber.

But other political experts in New Jersey said they thought that the tax issue may be overshadowed by other issues.

"It hasn't been a significant factor thus far," said New Jersey GOP strategist Carl Golden.

The SALT deduction cap has also been an issue in the race for New Jersey's third congressional district, where Rep. Tom MacArthur, the only House member in the state to vote for the tax law, is seeking reelection.

The district is more conservative than the seventh and 11th, and Cook rates it as competitive but leaning Republican.

MacArthur has been aggressive in defending his vote and making the case to voters that the tax law will benefit them. His campaign website notes that he helped to secure a $10,000 SALT deduction when top GOP policymakers initially wanted to scrap the deduction all together.

Chris Russell, a strategist for MacArthur's campaign, said that voters "feel comfortable that Tom MacArthur went out and fought for them."

But MacArthur's Democratic challenger, Andy Kim, has been criticizing the incumbent for his vote.

"Tom MacArthur broke with every other lawmaker from New Jersey and voted to hike taxes on New Jersey middle class families," Kim said.

In addition to the tax law coming up in New Jersey House races where Democrats are hoping to flip seats, Sen. Bob Menendez (D-N.J.) has been making the issue a priority as he seeks to win reelection.

Menendez is likely to win re-election but faces some obstacles. The Senate Ethics Committee admonished him in April, finding that he accepted gifts without approval and without disclosing all of them. Menendez was on trial last fall but the jury deadlocked and the Justice Department subsequently dropped the charges.

Menendez offered an amendment to the tax law to preserve the full SALT deduction, but it was rejected. Since the tax law was enacted, he has frequently brought up the SALT deduction in hearings.

"The answer is we need more Democrats - not Republicans - in Congress to fight the Trump agenda and restore the SALT deduction," said Menendez campaign chairman Michael Soliman.

But his GOP opponent, Bob Hugin, argues that he's in a better position than Menendez to fight to eliminate the SALT deduction cap.

"[Menendez has] been an absentee senator and now we're paying the price. If elected, I will work with both sides of the aisle to lower taxes and make New Jersey more affordable," Hugin said.

http://www.msn.com/en-us/news/polit...p-tax-law-in-new-jersey/ar-AAzJR4H?ocid=ientp
 

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The reality is quite simple,

WE HAVE BEEN AT WAR FOR DECADES!

Tramp is the first one to actually recognize it rather than encourage it and try to reverse some of what has been going on,

The only piece I have not resolved as of yet is how he expects to maintain the dollar hegemony going forward?
That is the primary question as that is what allows the importation of deflation and the exporting of inflation.

Then too, the little socialist pigs cried and cried about our rivers and lakes and roads and forests and? all the above when there was actually a industrial base here. Their solution was to export the environmental damage to others.

All fine and dandy, but it plays into this big time, not to mention it very well is a nat security issue if we give up our industrial base to other countries. That stuff doesn't just get built and into production in any reasonable time frame when the chips are down.

Even during ww2 they were confiscating unrelated industry space to feed the war machine due to lack of capacity. Compare that to today when we have so little?

One could even argue that any of these tech companies producing overseas are technically a security risk, and a definite breach in nat security.
 

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Chinese Customs Clears Some U.S. Goods as New Tariffs Take Effect
July 9, 2018 by Reuters



FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China April 24, 2018. REUTERS/Aly Song/File Photo



BEIJING, July 9 (Reuters) – Major Chinese ports have started clearing goods from the United States on Monday, as new tariffs on U.S. imports have gone into effect, three sources told Reuters, as a trade spat between Beijing and Washington escalated into an outright war last Friday.

Customs officers had delayed the clearance of some U.S. goods on Beijing’s penalty list last Friday, as they waited for official instructions from the central government on whether to start collecting the new import tariffs.

Local customs at the port of Qingdao have let through American products they held up on Friday, and imposed higher tariffs on the goods, according to a trader briefed by a customs official at the port.

Shanghai customs has also started collecting new tariffs as of Monday on imported fruits and wine, among other U.S. products on the new tariff lists, two custom brokers told Reuters.

Full Coverage: U.S.-China Trade War

China’s General Customs Administration did not reply to a fax seeking comments.

Beijing had said that China’s punitive tariffs on U.S. products would immediately take effect after America imposed penalties on Chinese goods worth a similar amount.

However, the absence of an official confirmation earlier Friday afternoon had caused confusion in the markets, leaving customs at major ports in limbo.

China Accuses U.S. of Firing First Shot in Trade War

Later that day, China’s foreign ministry spokesperson announced that China has begun implementing new tariffs of 25 percent on some U.S. goods including automobiles and soybeans.

Customs at the port of Dalian, where the ship Peak Pegasus was currently anchored carrying 70,000 tonnes of U.S. soybeans, have updated their tariffs for the U.S. goods on Beijing’s list to the higher levels, according to a soymeal buyer briefed by a customs official at the port.

The Peak Pegasus caused a stir on Chinese social media as it raced to reach China before the tariffs started on Friday and remained berthed at Dalian and fully laden as of Monday afternoon, according to Eikon data.

It is unclear whether the soybean cargo, which did not arrive until after the penalties took effect, will pay the 25 percent higher tariff.

(Reporting by Hallie Gu, Yawen Chen, and Josephine Mason; Editing by Christian Schmollinger)

(c) Copyright Thomson Reuters 2018.

Read Next: Race Against the (Tariffs) Clock: China Roots for Ship Carrying Last U.S. Soybean Cargo

http://gcaptain.com/chinese-customs-clears-some-u-s-goods-as-new-tariffs-take-effect/
 

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SEC Knifes Its Whistleblower Program

Posted on July 9, 2018 by Yves Smith

The SEC always hated the whistleblower program that Congress imposed on it as part of Dodd Frank reforms. Congress was responding to the SEC’s grotesque institutional failure in ignoring Harry Markopolos’ repeated, detailed warnings about the Bernie Madoff fraud, a Ponzi scheme that reached $65 billion due to SEC inaction.

But as we’ll describe, the SEC issued new guidance – on a Saturday night in the summer – that guts the whistleblower program by imposing new standards that look to be contrary to the intent of Congress by making it difficult to win awards for large-scale frauds, and then reducing the payouts on them. It looks like career-minded SEC officials who resented that whistleblower filings could force them to probe wrong-doings of prospective employers are making sure the agency will only hand out parking tickets.

Admittedly, Congress had set out to enfeeble the SEC, by keeping it budget-starved and having Congressmen like Joe Lieberman threaten to cut its funding even further if it went too aggressively after big financiers. The agency had retreated to focusing enforcement almost entirely on insider trading, to the degree that became almost incapable of seeing the world any other way. For instance, it botched its first major crisis case involving the collapse of two Bear Stearns hedge funds, by bizarrely pursuing the execs managing the funds as insider traders, rather than understanding that they were victims of other Wall Street firms (and perhaps even Bear’s own trading desks) that were selling toxic subprime mortgage securities and CDOs.

Nevertheless, the new whistleblower program established an awards fund entirely outside the SEC’s budget, and also tasked the SEC to set up a “Whistleblower Office.” The agency was obligated to pay sources compensation set as a portion of the SEC’s recovery if they contributed information that was valuable to an enforcement action.

The program went live in 2012, and under Chairman Mary Jo White, the SEC feigned enthusiasm for the new initiative, dutifully reporting how many tips it had received and asking for more funding to do a better job, even as high level SEC insiders grumbled about how the whistleblower program trampled on the agency’s discretion.

Last Saturday, in the dead of night, the SEC moved to make explicit, with the release of draft rule revisions, what close observers long suspected, that despite the agency’s weak support for whistleblowers, they have proven nevertheless too successful.

The proposed new rules have two main thrusts. First, they would change the formula for computing whistleblower awards so that large awards would receive fewer dollars. Second, new barriers to receiving awards would be placed in front of whistleblowers who include any public information in their evidence of wrong-doing. The reason that matters, as we’ll explain in detail, is that whistleblowers who provide evidence of widespread or systemic frauds will almost certainly be relying significantly on public information. Perversely, that could even been deemed to include information the whistleblower got into the public domain via FOIA>

In recent years, whistleblowers have complained to us that the SEC has simply failed to respond to award applications. Mind you, we are not talking about the SEC ignoring tips about potential wrong-doing. Most of the SEC filings are along the lines of “Everything JP Morgan does is crooked,” as opposed to actionable information.

Instead, what the SEC frequently doesn’t respond to are the formal “award applications” that whistleblowers submitted after the SEC made an enforcement action where the whistleblower believes his filing made a contribution. The SEC requires that whistleblowers submit these requests in order to be considered for an award within 60 days of the SEC announcing a settlement.

The SEC has been remarkably and indefensibly, opaque about what is clearly a massive backlog of unresolved award claims. The agency produces a ludicrous annual report to Congress of its whistleblower program, full of useless statistics, such as the number of tips received by state, yet it has refused to disclose the number of outstanding award applications or their average age. Only once, in 2015, has it even reported on how many award claims it received in the previous year, which was 120. Contrast this figure with the fact the agency has been resolving about 40 claims a year in recent years. That means the SEC’s backlog of unresolved claims has been growing by approximately two years with each passing year. Its total backlog could realistically be more than five years at this point. That wait to receive an answer on an award is typically on top of the three to four years wait for an enforcement action to be prosecuted and resolved.

The SEC publishes heavily-redacted final orders ruling on each whistleblower award application. We found two recent ones where the agency took around five years to decide (5.25 years in one case and just under five years in the other):

https://www.sec.gov/files/PUBLIC%20FINAL%20ORDER%20-%202012-72.pdf
https://www.sec.gov/files/PUBLIC%20FINAL%20ORDER%20-%202012-24.pdf

In 2015, a Wall Street Journal article entitled SEC Backlog Delays Whistleblower Awards offered a similar snapshot of delay, as well as, the SEC resistance to disclosure:

Of the 297 whistleblowers who have applied for awards since 2011, about 247—or roughly 83%—haven’t received a decision from the SEC, according to data obtained by The Wall Street Journal in response to a public-records request. Some of the award claims have been delayed more than two years.​

Later in 2015, the Wall Street Journal also reported on a whistleblower who sued the SEC demanding an answer after waiting three years with no response to his award application. Almost immediately, the SEC coughed up a response, which Wikipedia, for what it’s worth, says was favorable.

Even when the SEC does rouse itself to rule in favor of an award application, the agency has shown a clear bias in favor of penny-ante cases.
Since the inception of the program, more than 60 percent of the awards have been for less than $2 million. While $2 million can seem like a life-changing windfall, keep in mind that many whistleblowers are represented by contingency fee counsel who will take a quarter of the award, and many awards are shared among multiple whistleblowers. As a result, a $2 million total award could ultimately amount to no more than a few hundred thousand dollars to a whistleblower after taking into account these factors, plus taxes. And bear in mind that the best positioned whistleblowers in many cases are highly-placed people in the financial industry who might be making a million or more dollars annually who risk never working again by becoming whistleblowers.

This brings us to the proposed changes to the program. By law, the SEC is required to pay an award to whistleblowers equal to between 10 and 30 percent of any fines, disgorgement, restitution, and interest paid by a defendant in an enforcement case, with the exact amount based on a formula keying off how helpful the whistleblowers were (for example, delay in reporting a fraud lowers the percentage). The SEC is now proposing to include a new factor in the formula, which is how large the recovery is, where larger recoveries would result in a penalty to the formula and small recoveries would receive a formula bonus.

This favoring of small-bore enforcement reflects the longstanding institutional bias of the SEC to chase petty frauds while overlooking big ones, a tendency that is more obvious during Republican administrations but operative in Democratic ones as well.

Trump’s SEC chairman, Jay Clayton, has explicitly promoted an enforcement agenda of re-directing resources away from frauds impacting institutional investors toward frauds impacting retail investors. His patter is, “We’re here for the little guy, and the big guys can fend for themselves,” though that assertion falls apart when you recognize that the institutional frauds he is tolerating impact millions of ordinary people. For example, as we have extensively covered, private equity firms defraud their public pension fund investors. That hurts public workers and taxpayers. Similarly, banks securitize mortgages and sell designed-to-fail CDOs to institutional investors and other banks, which had the effect of severely exacerbating the foreclosure crisis.

Clayton has instead amped up the SEC’s focus on penny stock fraud and very small Ponzi schemes. These frauds impact a tiny sliver of the investing public. Mary Jo White, the SEC chair under Obama, had her own version of this bias, which she articulated as a “broken windows” theory of enforcement. In practice, this meant citing big institutions for petty infractions under the supposed theory that Goldman Sachs and Bank of America would refrain from major frauds if they were fined a few hundred thousand dollars for technical infractions. This approach allowed White, as a good Democrat, to issue press releases naming powerful Wall Street enforcement targets while sparing those targets any real pain.

To their credit, when it was brought before them last week, the two Democratic commissioners on the five person board did vote against the entire proposal to change the whistleblower rules. Commissioner Kara Stein went so far as to question whether the proposed changes were even legal under the Dodd-Frank enabling statute. Their dissent makes it clear that insiders understand the genesis of the proposal, not as some re-balancing justifiable as an improvement to the whistleblower program, but as an explicit attempt to weaken it, including the incentive to report large frauds. After all, if the SEC were concerned merely that the financial incentive to report smaller frauds is too weak, it could simply change the formula to give a bonus in the smallest cases without penalizing awards in the largest cases. This is especially true because the SEC is effectively unconstrained by budget authority in this instance, since Congress appropriated $550 million to initially prime the award pump and authorized the SEC to pay awards from the fines it receives once that initial amount runs low.

Much of the initial press focus has been on the proposal to limit large awards, given the easy-to-grasp hostility to whistleblowers evident in this scheme. However, the much more impactful part of the SEC’s proposal imposes a new standard, misleadingly labeled as a “clarification” of the existing rule, which disqualifies many award claimants whose initial tips include what the SEC expansively considers “public records.” The SEC’s talking point here is that nobody should get paid a whistleblower award for sending the SEC New York Times articles about sketchy financial behavior.

But this extreme example, which Congress already disallowed in the enabling Dodd-Frank legislation, is a red herring.

The real issue is that massive evidence of financial and corporate fraud exists in public documents, including the SEC’s own publicly-accessible databases. The SEC proposes to deny awards based on such public records if the agency determines, in its own opinion, that it could have figured out the fraud without the whistleblower’s help, had it reviewed the public records presented by the whistleblower:

[A] whistleblower’s submission must provide evaluation, assessment, or insight beyond what would be reasonably apparent to the Commission from publicly available information. In assessing whether this requirement is met, the Commission would determine based on its own review of the relevant facts during the award adjudication process whether the violations could have been inferred from the facts available in public sources.​

Whistleblower lawyers call this as the “woulda, coulda, shoulda” standard, where the SEC would be relieved from arguing that it did know about a securities law violation prior to receiving a whistleblower’s public records, but instead would merely have to assert that it could have known if it had, for whatever reason, independently reviewed the documents presented by the whistleblower.

This proposal amounts to a middle finger directed at the entire securities analysis industry, where thousands of experts toil over public records looking for, among other things, signs of fraud. Make no mistake, given the resources allocated to them, professional investors are by far the most likely source of insight about credible, large-scale corporate fraud. Those insights are derived largely from public SEC filings. It must be very uncomfortable, whenever the SEC meets with such whistleblowers and asks them to explain the source of their evidence about fraud unknown to the SEC, and the whistleblowers effectively say, “I found it in your file cabinets.”

By contrast, Mary Jo White loved to sing the praises of corporate insider whistleblowers, whom she repeatedly described in public statements as giving the SEC insight into wrong-doing that would otherwise never have been visible to the agency. In other words, to some degree, the agency made its peace with the good citizen, corporate insider “see something, say something” paradigm, especially since the SEC staff was able to tell itself that these people have information advantages that no outside law enforcement person could ever hope to replicate. Stock analysts and professional fraud hunters like Ted Siedle, on the other hand, are at a clear information disadvantage relative to SEC staff, since they can’t do things like subpoena corporate records. Yet we’ve seen lots of evidence that these people are running circles around the SEC staff, In other words, it looks like resentment is driving this proposed change.

It’s also important to recognize that many of the most important securities law violations, in the sense of those that rise to the level of “industry practice,” can really only be uncovered with public records. The obvious reason is that, other than accountants and lawyers, who are barred from receiving awards, almost nobody is an insider at more than one company at a time, so if something pervasive is to be unearthed, it will almost certainly involve information that has leaked into the public domain.

The stock option back-dating scandal from the early 2000s is a classic example of outsiders finding what the SEC missed with the SEC’s won information, though it predated the whistleblower award program. A series of academic papers, leading to a Wall Street Journal series of articles, demonstrated that companies were pervasively back-dating stock options. The revelation leading to the resignation of more than 50 senior executives. How had the professors and the Wall Street Journal unearthed the practice? They simply compared the dates on companies’ more widely viewed SEC filings, which showed earlier dates for the option issuance, with the dates on more obscure, seldom viewed SEC filings, which showed that the options had been issued later.

Had this backdating been unearthed by a whistleblower, would they meet the standard for an award? Who knows? The SEC could merely claim that, if it had bothered to compare these different filings in the relevant cases, it would have spotted the date discrepancy. Notably, the SEC would not need to claim that there is any likelihood that it would have ever looked at this on its own, just that if it had reviewed the needles-in-a-haystack documents, once the whistleblower had done the work of pulling them out of the haystack, they would have figured it out.

Moreover, the SEC’s proposal tries to give comfort by claiming that public documents are admissible if the whistleblower uses them as a basis for “independent analysis,” which means revealing the pattern of fraud that otherwise would not be apparent to the SEC. The SEC contrasts this hazy standard with the non-qualifying action of a whistleblower who merely “aggregates information from multiple different sources.” Again, there is a reasonable argument that, basically, the academics and Wall Street Journal did little more than “aggregate information from multiple sources” in the options backdating case, since once the work of assembling the documents had been completed, it needed effectively no analysis.

We’ve heard over and over that the SEC hates cases implicating a large number of firms in wrong-doing. Such cases present severe staffing challenges for the agency. But more important, they challenge a core ideological assumption of the SEC, which is that wrong-doing is a problem of “a few bad apples.”

This orthodoxy is so strong within the agency that, when evidence of industry-practice lawbreaking emerges, the SEC is known to engage in “it’s me, not you” self-flagellation. This means the SEC embracing a narrative that it failed in some way to properly educate the industry about its legal obligations with respect to the practice where the widespread law-breaking is occurring. You can see how this attitude leads to a hostility toward the people bringing them evidence of widespread wrong-doing and results in the current effort to choke off incentives for such individuals to come forward.

It’s also worth noting that the concept of what the SEC considers a public record is extremely broad and encompasses many types of documents that the agency would effectively never have access to without whistleblowers. For example, a whistleblower might fly from the U.S. to Botswana and then travel hundreds of miles over dirt roads to access records of mine production that exist only on paper in a local government office there. These records could contradict statements that the mine owner makes in SEC filings about their mine productivity, thereby exposing a fraud. Yet the whistleblower in this case would get no credit for knowing the one location on Earth where the mine record exists or for having expended considerable effort to obtain it. Instead, the SEC would apply a test where it would look at the Bostwana mine record and the mining company’s SEC filings, and if the agency considered the fraud to be self-evident based on those, the whistleblower would be barred from an award.

Ultimately, the SEC whistleblower program closely parallels many financial reform initiatives we have chronicled on the blog. They are announced with great fanfare and hailed as showing real promise of implementing lasting reform. But success proves fragile and hostile forces look for every opportunity to weaken the initiative through inaction and bureaucratic strangulation. In moments when they are powerful, as the whistleblower program foes are now, they seek structural changes, often dressed up as mere administrative accommodations, that would permanently kill the program in all but name.

This entry was posted in Legal, Politics, Regulations and regulators, Ridiculously obvious scams on July 9, 2018 by Yves Smith.

https://www.nakedcapitalism.com/2018/07/sec-knifes-whistleblower-program.html
 

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America's Largest Auto Exporter To Move Some Production Out Of US, Blames Tariffs


by Tyler Durden
Tue, 07/10/2018 - 11:22


And cue the Trump tweet in 3...2...1...



According to The Post and Courier in South Carolina, BMW said Monday that it would move production for some of its SUVs out of the U.S. as a result of new tariffs placed on the vehicles.

BMW is the largest U.S. auto exporter, and employs 10,000 people at a plant in Spartanburg, S.C. The brand’s key SUV models are produced there.



As The Hill reports, the Germany-based automobile manufacturer signed an agreement with its Chinese partner, Brilliance Automotive Group Holdings, to increase the number of vehicles produced in the country, according to the Charleston newspaper, with the total reaching 520,000 by 2019.

“Our agreement sets a long-term framework for our future in China - a future involving continued investment, further growth and a clear commitment to the development and production of electric vehicles,” said BMW CEO Harald Krueger said.​

One thing is certain, it did not take BMW long to make this change (signing a deal with China and abandoning South Carolina) - some might say they were "gone in 60 seconds," and acted "fast and furious."



https://www.zerohedge.com/news/2018...xporter-move-production-out-us-blames-tariffs
 

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'Germany is a captive of Russia': Trump dresses down NATO's secretary general and threatens Berlin over its lagging defense spending and energy partnership with Putin's government

  • Donald Trump unleashed his fury on NATO Secretary General Jens Stoltenberg on Wednesday morning after the leader asked him about gripes about Germany
  • 'Germany is totally controlled by Russia,' Trump charged. 'I think its a very bad thing for NATO.'
  • President Trump has berated America's European allies for failing to meet their defense spending obligations to NATO
  • The complaints come full circle this week at the NATO leaders' summit
  • On Tuesday, European Council President Donald Tusk hit back at Trump, telling him, 'America does not have and will not have a better ally than Europe'
  • Tusk said: 'America appreciate your allies. After all you don’t have that many'
  • President Trump tweeted minutes later: NATO countries must pay MORE, the United States must pay LESS. Very Unfair!'
  • He told reporters as he prepared to board Marine One that America has plenty of allies and put new pressure on NATO nations to increase their defense spending

http://www.dailymail.co.uk/news/art...dresses-NATOs-secretary-general-Brussels.html
 

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FWIW...………..dyodd

"Pay Up You NATO Deadbeats...Or Else!"


by Tyler Durden
Wed, 07/11/2018 - 03:30


Authored by Eric Margolis via EricMargolis.com,

"We are the schmucks" thundered President Donald Trump. The object of Trump’s wrath at his ‘Make America Great Again’ rally in Great Falls, Montana was the craven, stingy European members of NATO, only 16 of 22 members are on budget for their US-commanded military spending. Trump wants them to spend much more.


You will find more infographics at Statista



Trump and his fellow neocons want NATO to serve as a sort of US foreign legion in Third World wars in Africa and Asia.

NATO was formed as the North Atlantic Treaty Organization to defend western Europe, not to fight in Afghanistan and who knows where else?

Equally bad, according to Trump, is that the US runs a whopping trade deficit with the European Union which is busy shipping high-end cars and fine wines to the US. The wicked foreigners don’t buy enough American bourbon, corn and terribly abused pigs.



Trump is quite right that America’s NATO allies, particularly Germany and Canada, don’t spend enough on defense. Germany is reported to have less than twenty operational tanks. Canada’s armed forces appear to be smaller than the New York City police department.

But the Europeans ask, ‘defense against whom?’ The Soviet Union was a huge threat back in the Cold War when the mighty Red Army had 55,000 tanks pointed West. Today, Russia’s land and naval power has evaporated. Russia has perhaps 5,500 main battle tanks in active service and a similar number in storage, a far cry from its armored juggernaut of the Cold War.

More important, Russia’s military budget for 2018 was only $61 billion, actually down 17% from last year. That’s 4.3% of GDP. Russia is facing hard economic times. Russia has slipped to third place in military spending after the US, China and Saudi Arabia. The US and its wealthy allies account for two thirds of world military spending. In fact, the US total military budget (including for nuclear weapons and foreign wars) is about $1 trillion, 50% of total US government discretionary spending.

In addition, Russia must defend a vast territory from the Baltic to the Pacific. The US is fortunate in having Mexico and Canada as neighbors. Russia has North Korea, China, India, the Mideast and NATO to watch. As with its naval forces, Russia’s armies are too far apart to lend one another mutual support. Two vulnerable rail lines are Russia’s main land link between European Russia and its Pacific Far East.


You will find more infographics at Statista

Trump’s supplemental military budget boost this year of $54 billion is almost as large as Russia’s entire 2018 military budget. As for Trump’s claim that Europe is not paying its fair share of NATO expenses, note that that Britain and France combined together spend more on their military forces than Russia.

In Europe, it’s hard to find many people who still consider Russia a serious threat except for some tipsy Danes, right wing Swedes, and assorted Russophobic East Europeans. The main fear of Russia seems concentrated in the minds of American neoconservatives, media, and rural Trump supporters, all victims of the bizarre anti-Russian hysteria that has gripped the US.

Equally important, most civilians don’t understand that neither US and NATO forces nor Russia’s military are in any shape to fight war that lasts more than a few days. Both sides lack munitions, spare parts, lubricants, and battlefield equipment. The overworked US Air Force, busy plastering Muslim nations, has actually run low on bombs. US industry can’t seem to keep up supplies. There has even been talk of buying explosives from China!

These essentials of war have been seriously neglected in favor of buying fancy weapons. But such weapons need spares, electronics, fuel depots, missiles and thousands of essential parts. As former US Secretary of Defense Donald Rumsfeld observed, ‘you go to war with what you have.’ Neither side has enough. A war would likely peter out in days after supplies were exhausted. Besides, no side can afford to replace $100 million jet fighters or $5 million apiece tanks after a war, however brief.

President Trump has learned about war from Fox TV. Europeans have learned from real experience and don’t want any more.

https://www.zerohedge.com/news/2018-07-10/pay-you-nato-deadbeatsor-else