China’s Biggest Refiner Sinopec Delays U.S. Oil Buys Amid Tit-for-Tat Tariffs
August 3, 2018 by Bloomberg
tcly / Shutterstock
By Sheela Tobben and Rachel Adams-Heard (Bloomberg) — Rising trade tensions between China and the U.S. may soon affect global oil flows.
China’s largest refiner, Sinopec, will delay making any purchases of U.S. oil for September amid concern that the Asian giant will slap tariffs on American crude, making imports more expensive, according to a person familiar with the matter. Beijing declined to stop imports from Iran, dealing a blow to U.S. efforts to isolate the Islamic Republic, though it agreed not to increase shipments, according to officials familiar with the negotiations.
Petroleum was left off the list of products on which Beijing said Friday it plans to levy duties of 5 percent to 25 percent as soon as the Trump Administration enacts measures. The world’s biggest oil importer took a record volume from the U.S. in June, increasing the potential hit to American producers if China does enact tariffs.
The Trump administration has warned that even allies would face sanctions if they didn’t show “significant” progress in reducing Iranian oil purchases by Nov. 4, ruling out broad exemptions or waivers.
The Chinese state-run firm is waiting until it is clear when or if China’s 25 percent tariff threat on U.S. crude imports might begin, the person said. Friday’s announcement of additional tariffs on liquefied natural gas and other products comes as President Trump has directed U.S. Trade Representative Robert Lighthizer to consider increasing proposed tariffs on $200 billion in Chinese goods to 25 percent from 10 percent.
Sinopec had already been reducing its U.S. oil purchases, mainly because the discount for West Texas Intermediate crude against international marker Brent had narrowed. In July, the company bought four supertankers, compared with six to seven in June. The state-run firm didn’t purchase any U.S. crude for August loading for similar reasons, the person said. Unipec, the trading arm of Sinopec, buys oil for the refiner.
China took 15 million barrels of U.S. crude in June, the most in data going back to 1996, according to U.S. Census Bureau and Energy Information Administration. Sinopec media officials in New York didn’t return an email or phone call request for comment.
India could step in to buy some of the displaced oil if Chinese demand dissipates.
“With China out of the picture, India could take another few hundred thousand barrels a day of U.S oil,” Matt Smith, ClipperData LLC’s director of commodity research, said by phone. The South Asian country is already starting to take more U.S. crude and volumes will average 200,000 barrels a day in July and August, he said.
Indian refiners won’t entirely fill the void left behind by China, since it has other suppliers, he added. Other potential buyers in Asia could be South Korea and Taiwan, he added.
Also, India’s refineries are designed to process heavy, high-sulfur Iranian crude, which has been sanctioned. The majority of new American production is light, sweet shale oil.
Other potential buyers in Asia could be South Korea and Taiwan, Smith said.
Trans-Atlantic markets could pick up some of the slack. Unlike Asia, the European market is already saturated with American oil, and has plenty of alternatives from the Atlantic Basin including West African and North Sea crudes.
“Asia would basically be where the bulk of the Chinese volume would go instead of Europe,” Smith said.
Hope you all take the time to read this piece by an Ohio soybean farmer caught up in Trump’s trade wars.
Tariffs hurt the many and help the few. The “tyranny of the minority,” if you will, and that is before taking into account the casualties of tit-for-tat retaliation.
Let me tell you a riddle.
“I slept with a billionaire because he said he loved me. I expected to make love, but in the morning I realized I was getting screwed. When I went to tell the world, I was offered cash to keep my mouth shut.”
Who am I? No, I’m not a model or someone named Stormy. I’m the American farmer.
In the mid-1980s we were awash with over production in the corn and soybean sectors. Agriculture got busy, boarded planes, trains and automobiles and started building markets around the world, one handshake and one relationship at a time. We used our own funds through our check off dollars and trade associations to build markets in Mexico, Canada, Latin America and the Pacific Rim. And we didn’t stop there.
In partnership with the U.S. taxpayers, we built an ethanol industry to ensure another renewable energy source for U.S. consumers.
Big special election in Ohio’s 12th Congressional District on Tuesday. President Trump was stumping today for the Republican candidate. The seat has been held by Republicans since 1920, except for an eight-year stretch in the 1930s and a two-year term in 1980. It’s tight, folks
In a recent poll, the president’s approval rating among men is 54 percent positive and 45 percent negative. Among women, it’s 32 percent positive and 65 percent negative. There are many more women registered voters than men.
Moreover, the revulsion toward the president among women has not only made them more likely to vote but has turned them into activists. Women are running for office this year in record numbers.
Recall it was the African-American women who put Doug Jones over the top in Alabama’s special U.S. Senate election against Roy Moore last year. Exit polls showed that 98 percent of black women supported Jones.
Do the math, folks. Listen to the water cooler talk, read the cartoons.
The Dems will control the House, and probably Senate come next January. PredictIt gives the Dems a 68 percent probability of taking back the House but only a 30 percent chance of taking the Senate. We will take that bet, however, a 3,600 percent compounded annual return if Chuck becomes the next Majority Leader.
A Lavender Wave is not even remotely priced by the markets.
We suspect panic will begin to seep in when everyone returns from the beach in September. Not a political statement just our observations and inferences based on the data.
Steel Giants With Ties to Trump Officials Block Tariff Relief for Hundreds of Firms
By JIM TANKERSLEY
6 hrs ago
WASHINGTON — Two of America’s biggest steel manufacturers — both with deep ties to administration officials — have successfully objected to hundreds of requests by American companies that buy foreign steel to exempt themselves from President Trump’s stiff metal tariffs. They have argued that the imported products are readily available from American steel manufacturers.
Charlotte-based Nucor, which financed a documentary film made by a top trade adviser to Mr. Trump, and Pittsburgh-based United States Steel, which has previously employed several top administration officials, have objected to 1,600 exemption requests filed with the Commerce Department over the past several months.
To date, their efforts have never failed, resulting in denials for companies that are based in the United States but rely on imported pipes, screws, wire and other foreign steel products for their supply chains.
The ability of a single industry to exert so much influence over the exclusions process is striking even in Mr. Trump’s business-friendly White House, given the high stakes for thousands of American companies that depend on foreign metals. But the boundaries of trade policy are being tested by the scope of Mr. Trump’s multifront trade war with allies and adversaries alike, which includes tariffs on up to $200 billion worth of goods from China and possible tariffs on automobiles and auto parts.
Mr. Trump’s decision to impose 25 percent tariffs on steel and 10 percent on aluminum, even from allies like Canada, Mexico, the European Union and Japan, is just one part of that battle. But it has drawn a strong rebuke from foreign governments, Republican lawmakers and many business groups, including automakers, beverage companies, farm equipment manufacturers and food packagers, who say it will inflict financial pain on companies that employ millions of American workers.
To help minimize the impact, the administration established a process for companies to request “exclusions” for any product they could not otherwise buy in the United States, such as tire rods or razor blades. But the Commerce Department, which is overseeing the process, also allowed American companies to argue against an exclusion request. The metal tariffs are the only ones so far to have such a process.
Since May, companies have filed more than 20,000 requests for steel tariff exemptions. As of the end of July, the Commerce Department had denied 639 requests.
Half of those denials came in cases where United States Steel, Nucor or a third large steel maker, AK Steel Holding Corporation, filed an objection, a New York Times analysis shows. Nearly all of the rest were in cases where the company applying for an exclusion erred in its submission, Commerce Department officials say.
Department officials said on Friday that they have not granted a single steel exclusion request that drew an objection. They have granted 20 aluminum exclusions over an objection, because the objecting company did not actually cite the product in question.
Wilbur Ross, the commerce secretary, has defended the exclusion process and said the steel makers’ ability to provide products should be taken into account.
“If a product is available in enough quantity and quality to meet demand, the objection is generally sustained,” Mr. Ross said in an email. “Each situation is treated individually. If no objection has been filed, and there is no specific national security issue regarding the import, we generally grant the exclusion request.”
Mr. Trump has made no secret that he wants to boost American steel makers, and several of his top administration officials have deep ties to the steel industry. As the head of a private equity fund, Mr. Ross bought and operated several steel companies, which he later sold at a profit, and he sat on a steel company’s board of directors until his confirmation.
The United States trade representative, Robert Lighthizer, represented United States Steel and other steel manufacturers in private practice as a lawyer, and so did his deputy, Jeffrey Gerrish. Nucor spent $1 million to fund a documentary, “Death by China,” made by Peter Navarro, a Trump trade adviser, in 2011.
Nucor has played a role in one-quarter of the denials. In most cases, at least one other company also objected to a request that drew an objection from the three large steel makers.
“The tariffs are working,” said John Ferriola, Nucor’s chairman, chief executive and president. “They are protecting our national security and stimulating additional domestic steel production.”
The rejected companies do not agree.
“They’re hiding behind the government to try to keep them going,” said Joel Johnson, the chief executive of the United States arm of Borusan Mannesmann, a Turkish-owned manufacturer that imports steel pipes from its parent company and finishes them at its plant in Baytown, Tex. The company’s exclusion requests were denied by the Commerce Department after United States Steel and others objected.
In a 31-page objection filed in May, United States Steel officials said, “There is no national security interest in drawing further foreign Turkish investment into the United States to produce a product that is already produced in the United States, and for which substantial excess capacity exists.”
Mr. Johnson said the company requested an exclusion so it could have time to build a United States-based factory that could produce what it now imports. The investment would create more than 170 jobs, on top of the 264 people Borusan Mannesmann now employs in Texas.
He said the objections were an obvious attempt to block the competition that would come from his company’s proposed new mill in Texas. “I’d be doing exactly what they’re doing, if I were them,” he said.
The tariffs are beginning to reap dividends for the steel industry — a development that Mr. Trump frequently boasts about.
“Tariffs have had a tremendous positive impact on our Steel Industry,” Mr. Trump said in a tweet on Saturday.
Some companies that have been denied exclusions have been forced to enter negotiations with Nucor over supplying steel products that are subject to tariffs or dropping its objections to their requests, according to a lawyer who works with those companies.
Critics say the exclusions process has overwhelmed Commerce Department staff members, who do not have the resources to sift through thousands of complicated requests and objections and judge them on their merits. They say the default position is to simply listen to a company that objects, regardless of whether the objection is legitimate.
In April, Senator Orrin G. Hatch of Utah, the Republican chairman of the Senate Finance Committee, and Senator Ron Wyden of Oregon, the panel’s top Democrat, sent a letter to Mr. Ross urging him to improve the process and expressing concern about whether the Commerce Department was taking steps to prevent the program “from being abused for anticompetitive purposes.”
The three large steel makers are by far the most aggressive objectors in the exclusions process. Nucor and United States Steel have each filed more than 1,000 objections, some of which overlap. AK Steel has filed nearly 700 objections.
The department has granted more than 1,300 steel exclusions. More than 70 percent of those exclusions — nearly 1,000 of them — have gone to a single company that has managed to draw few objections to its requests: South Carolina-based Greenfield Industries, which makes drill bits, saw blades and other cutting tools. Since 2009, Greenfield has been owned by a Chinese company, Top-Eastern.
Steel makers’ objections to others’ requests take a variety of forms. Sometimes, the steel makers allege the company seeking an exclusion made an error in its filings. Sometimes, they criticize companies for choosing not to produce steel in the United States and instead buying it from overseas producers; one company’s decision to cease domestic production of steel slab “directly undermines U.S. steel production and should not be rewarded with the requested product exclusions,” Nucor wrote in a comment.
Often, the steel makers claim that an American mill is producing the product in question, or could produce it if asked. “Nucor can offer a substitute for the requested product out of stock immediately (i.e., within 8 weeks),” the company wrote in response to an exclusion request from Houston-based SEBA Tubular, which had sought to import steel bars from Turkey, citing insufficient supplies from American mills. “To the extent that further manufacturing is required, Nucor can ship/deliver the product within the above-referenced time frames.”
The SEBA request was denied. Company officials did not respond to a request for comment.
Mr. Ferriola, the Nucor chairman, said his company generally objects to exclusion requests if it produces the product in question or a substitute, or if it believes that granting the exclusion would undermine national security. “We should be able to compete against any steel maker in the world, but we cannot compete against those who dump artificially cheap steel into our market at prices that are lower than our cost of production,” he said. “That is why Nucor continues to assess market conditions, and will be proactive and aggressive in pursuing trade cases and objecting to exclusion requests, when and where it is appropriate.”
Asked if the company’s success in blocking exclusion requests was related to the investment in Mr. Navarro’s film, a company spokeswoman, Katherine Miller, said in an email that “as America’s largest steel producer, we have been actively engaged in the trade arena for almost two decades. Over this time, we have been outspoken that our government must take a much tougher line with countries that continuously violate the rules of free trade. The documentary produced seven years ago provided another medium to discuss this critical economic issue.”
A United States Steel spokeswoman, Meghan M. Cox, noted that the company has filed comments on “less than 10 percent of the total requests posted by the Commerce Department” and “only on those tariff exclusion requests that are for products that we make.”
“With the restart of one blast furnace earlier this year and preparations for another blast furnace restart in October underway at our Granite City Works,” Ms. Cox said, “we are willing and able to support substantial proportions of increased domestic demand for many steel products.”
All hope abandon ye who think the trade war with China has any hope of ending soon.
One month ago, Beijing ordered China's state media "not to use aggressive language" for Trump. As of Sunday, that directive has clearly expired, and after a weekend of bluster by President Trump in which he proclaimed that he has the upper hand in the trade war with China, Beijing finally responded angrily through state media, saying the nation is ready to endure the economic fallout, and launched an "unusually personal attack" against Trump’s trade policies on Monday, saying Trump’s trade “extortion” would not work according to Reuters.
An editorial in the nationalist Global Times on Sunday evening declared that China is prepared for a "protracted war" and doesn’t fear sacrificing short-term economic interests, "considering the unreasonable U.S. demands, a trade war is an act that aims to crush China’s economic sovereignty, trying to force China to be a U.S. economic vassal."
Separately, in a front-page editorial on Monday, the overseas edition of People’s Daily said Trump was "starring in his own carefully orchestrated street fighter-style deceitful drama" in which diplomacy had been reduced to nothing but a “trading game in which everything should follow the rule of America first”.
"To realise the goal of reviving the American economy, Trump has chosen a simple but crude way. He has bypassed the multilateral trading system of the WTO and started trade conflicts, forcing countries, including its traditional allies, to cede their interests to those of the United States,” the People's Daily said.
It also claimed that the US was “turning international trade into a zero-sum game” in the hope of forcing China to make a tremendous compromise. “But China will never surrender to blackmail and will definitely rise to defend itself when it involves national interests and national dignity,” it said.
The onslaught continued with an editorial by the China Daily, the flagship state-run English newspaper, which said that "in the face of the bullying of the Donald Trump administration, Beijing must remain sober-minded and never let emotion override reason when deciding how to respond. Given China’s huge market, its systemic advantage of being able to concentrate resources on big projects, its people’s tenacity in enduring hardships and its steadiness in implementing reform and opening-up policies, the country can survive a trade war."
The latest volley in the trade row between the countries comes as Chinese leaders gather in the coastal resort of Beidaihe near Beijing for their informal, annual summit to discuss the domestic, economic and foreign policies of the coming year according to the SCMP. The trade war is expected to be high on the gathering’s agenda.
The heated war of words following Beijing's announcement on Friday that it would add duties ranging from 5 to 25% on an additional US$60 billion in US goods if the Trump administration went ahead with similar action, warning that further countermeasures were ready at any time.
Earlier in the weekend, Trump told an audience of supporters that playing hardball on trade is "my thing" and said that “we have really rebuilt China, and it’s time that we rebuild our own country now."
Then in Sunday Twitter posts Trump said the US’ punitive tariffs were “working big time” and that the US is winning the trade war, highlighting the drop in the Shanghai Composite offset by the resilience in the S&P500.
“Every country on Earth wants to take wealth out of the US, always to our detriment. I say, as they come, tax them. If they don’t want to be taxed, let them make or build the product in the US. In either event, it means jobs and great wealth."
“Because of tariffs we will be able to start paying down large amounts of the US$21 trillion in debt that has been accumulated, much by the Obama administration, while at the same time reducing taxes for our people,” he said, referring to his predecessor Barack Obama.
* * *
Following China's aggressive response, the yuan resumed its slide, following a rally triggered by a surprise China central bank move to make it more expensive to bet against the currency. As we reported before, China stepped in Friday to try to cushion the yuan after a record string of weekly losses saw the currency closing in on the key milestone of 7 per dollar.
Also on Monday morning, China reported that its current account returned to a surplus in the second quarter after a surprise deficit in the first three months of the year, although it was still the first H1 current account deficit on record.
“Policy makers will pay more attention on the changes in current account as it approaches a balance near zero, signaling less room for currency appreciation,” according to Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Bank Ltd. in Hong Kong.
Despite China's heated rhetoric, as JPM explained over the weekend, China's options are shrinking and are all uniformly negative as follows:
intervene in currency markets to offset market pressures risking a new wave of reserve depletion;
raise interest rates to defend the currency causing monetary tightening and risking economic weakness; or
let the currency depreciate beyond the above critical levels along with market pressures risking capital outflows and a more abrupt move
In other words, the longer trade war goes on, the worse it will be for China, even as the US remains largely isolated from immediate adverse consequences, if only judged by the stock market.
China disagrees however, as the People's Daily editorial makes clear:
China has to defend its right to development, and we don't fear sacrificing short-term interests. However, the US will bear losses as well. It's a mutual depletion where people in both countries have to pay the same price.
Throughout history, the US arrogantly initiated many wars that eventually ended up hurting itself. Washington's arrogance this time is up against a major power. When others believed that the US was just playing tricks with trade, the White House thought it could strike down China. But the US' ability doesn't match its ambition.
China has time to fight to the end. Time will prove that the US eventually makes a fool of itself.
My understanding of it is that China does not have sufficient consumer base to consume most of what it produces. Ie: it needs foreign markets in order to keep its production going, which in turn keeps its people working. If 3/4ths of China's populace were good little consumers like those of the American variety, it would very likely be a different story.
My understanding of it is that China does not have sufficient consumer base to consume most of what it produces. Ie: it needs foreign markets in order to keep its production going, which in turn keeps its people working. If 3/4ths of China's populace were good little consumers like those of the American variety, it would very likely be a different story.
China’s Gas Tariffs Are a Permian-Size Problem: Opinion
August 6, 2018 by Bloomberg
Wojciech Wrzesien / Shutterstock
By Liam Denning (Bloomberg Opinion) — Energy dominance sure does seem to come with a hefty dose of self-flagellation.
The latest bit of America’s energy sector to feel the over-the-shoulder lash is the liquefied natural gas-export business. On Friday, LNG joined the list of goods that China will hit with tariffs in retaliation for U.S. ones. This is problematic when you consider China has taken 13 percent of U.S. LNG exports (and more like a quarter last winter), according to Bloomberg New Energy Finance.
As I wrote here about U.S. oil, a tariff imposed by one of the world’s largest importers of fuel will act as an effective tax on exporters. China buys U.S. LNG on the spot market, so its demand is very sensitive to the spread between benchmark U.S. natural gas prices and Asian prices. That spread has to absorb the cost of converting U.S. gas into a liquid (typically a 15 percent premium) and shipping it across the world (about $2 per million BTU via the Panama Canal, according to BNEF’s LNG Shipping Calculator).
Using futures prices for Henry Hub natural gas and the Japan-Korea Marker (JKM) as proxies, here’s what happens to the theoretical netback, or margin, of an exporter on the U.S. Gulf Coast selling LNG to Shanghai if a 25 percent tariff is imposed:
The really fun thing about the LNG trade, though, is that, like with most other trades, everything is connected. So apart from the LNG sector, these tariffs could really cause problems for a bigger business up the pipe: the Permian basin’s oil producers.
How so? A side-effect of the surge in Permian oil output is a similar surge in associated gas that comes up alongside it. As long as oil prices encourage more fracking for oil, the gas essentially comes for free. This is a problem in west Texas because, short of coming up with an ingenious method allowing local residents to breathe the stuff, there isn’t enough demand there to take it all. Hence, gas priced in Waha, Texas, trades at a discount of almost 80 cents per million BTU, or 28 percent, to the Henry Hub benchmark.
Just as lifting the crude-oil export ban helped alleviate a similar problem in oil a couple of years ago, so the ability to get gas to the Gulf Coast and ship it worldwide is a vital escape valve here. In an analysis published in May, Sanford C. Bernstein estimated that rising associated gas production – the vast majority of it from the Permian basin – would be enough to meet most of the increase in domestic U.S. demand and exports through 2025. And given that U.S. gas demand is barely growing – in part because it is in a knife fight with renewable energy in markets such as Texas and California – exports are key:
Notice that the growth in LNG exports drops off after 2020. That’s because, after the initial wave of new export capacity has opened up, there’s a gap because new projects haven’t yet received a final investment decision. Given that it takes three to four years to build a new terminal, those decisions need to be made soon if exports are to grow appreciably in the early 2020s.
Guess what could really bother an energy executive contemplating taking the plunge on a multi-billion-dollar investment in a facility built for the sole purpose of international trade? And guess what could really bother a potential trade partner thinking about maybe signing a 20-year contract with said facility?
Tariffs aren’t likely to derail U.S. LNG exports in the near term, as cargoes can be switched elsewhere to a degree. But if this trade war is extended, then the combination of lower margins, likely lower utilization of terminals and the shadow hanging over trade policy in general is a strong deterrent to anyone thinking of financing or contracting with new U.S. capacity. China is, after all, expected to account for almost half the growth in global LNG demand over the next five years, and a fifth through 2030.
In weighing on U.S. competitiveness, tariffs would also encourage rival producers to invest in new capacity. “If Qatar had any doubts about expanding, they won’t now,” says Marianne Kah, a former chief economist of ConocoPhillips, now on the advisory board of the Columbia Center on Global Energy Policy.
We are currently witnessing a temporary slowdown in oil-production growth from the Permian basin due to inadequate oil pipeline capacity.
But that could drag on far longer if there’s no place for excess gas to go. The old option of flaring it and providing a Texan light show for astronauts is no longer tenable.
Tariffs, born of a policy of dominance, may ultimately stymie that for America’s gas producers. Just remember many of them also happen to pump out another product for which, similarly, dreams of dominance could backfire.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal’s Heard on the Street column and wrote for the Financial Times’ Lex column. He was also an investment banker.
Completing the latest round of tariffs pledged against China, the US Trade Representative announced on Tuesday (after the close of course) it will impose 25% tariffs on $16 billion-worth of Chinese imports starting August 23. The new round of tariffs completes Trump's previously disclosed threat to impose $50 billion of import taxes on Chinese goods. The first $34 billion-worth went into effect on July 6th.
According to the USTR statement, customs will collect duties on 279 product lines, down from 284 items on the initial list; as Bloomberg notes, this will be the second time the U.S. slaps duties on Chinese goods in about the past month, overruling complaints by American companies that such moves will raise business costs, tax US consumers and raise prices.
On July 6, the U.S. levied 25% duties on $34 billion in Chinese goods prompting swift in-kind retaliation from Beijing.
Of course, China will immediately retaliate, having vowed before to strike back again, dollar-for-dollar, on the $16 billion tranche.
The biggest question is whether there will be a far bigger tariff in the near future: as a reminder, the USTR is currently also reviewing 10% tariffs on a further $200 billion in Chinese imports, and may even raise the rate to 25%. Those tariffs could be implemented after a comment period ends on Sept. 5. President Donald Trump has suggested he may tax effectively all imports of Chinese goods, which reached more than $500 billion last year.
Over the weekend, Trump boasted that he has the upper hand in the trade war, while Beijing responded through state media by saying it was ready to endure the economic fallout. Judging by the US stock market, which has risen by $1.3 trillion since Trump launched his trade war with China, which has crushed the Shanghai Composite, whose recent drop into a bear market has been duly noted by Trump, the US president is certainly ahead now, even if the market's inability, or unwillingness, to push US stocks lower has led many traders and analysts to scratch their heads.
Trade tensions between the US and China have increased further over the last several days, with additional tariff measures announced by both sides over the past 24 hours, including China's latest retaliation just this morning. At the same time, other areas of trade policy have taken a more constructive turn, including NAFTA, where negotiations appear to be making some progress.
Looking ahead, Goldman writes that while the outlook is uncertain, it now gives a 70% chance (up from 60% previously) that the White House will move forward with tariffs on the majority of the next round of $200bn in imports proposed in July. The bank also expects that the recently proposed 25% tariff rate (up from the earlier proposed 10% rate) will be applied to a subset of the $200bn of targeted imports.
The good news is that even as trade war with China has escalated, at the same time other areas of trade policy have taken a more constructive turn according to Goldman economists, including NAFTA, where negotiations appear to be making some progress.
Below we present the latest Q&A on the current state of global trade wars, from Goldman economist Alec Phillips.
Q: What were the US tariffs just announced?
A: Yesterday's announcement finalizes the second installment of the tariffs on the original $50bn in imports. The US Trade Representative announced yesterday (August 7) that 25% tariffs on $16bn of imports from China would take effect August 23. This list of goods was the second installment of the original $50 billion in goods announced on June 15; the other $34bn of goods has already been subject to tariffs since July 6. The list is made up primarily of plastics, machinery, electrical equipment, and semiconductors (labeled US List 2 in Exhibit 1).
Q: How will China respond?
A: Retaliatory tariffs are likely. [ZH: China indeed announced it would retaliate in kind earlier today]
The Chinese Ministry of Commerce previously released a list of proposed retaliatory tariffs that would be implemented if the US followed through with these tariffs, and we expect that these will be imposed around August 23, when the US list is set to take effect. That list is composed mainly of chemicals, plastics, fuel, and precision equipment (labeled China List 2 in Exhibit 1).
Exhibit 1: Remaining Imports Not Subject to Tariff Diminish as Tensions Continue
Q: What will happen with the proposed US tariffs on $200bn of imports from China?
A: We expect the majority of those tariffs to take effect. While the outlook is uncertain, at this point we expect the White House to implement tariffs on the majority of the next round of $200bn in imports proposed in July (70% chance). A 10% tariff was initially proposed on those imports, but the USTR announced last week that a 25% rate is being considered. At this point we believe the most likely outcome is that the White House will follow through with the 25% rate on a subset of the $200bn of targeted imports—non-consumer categories would be more likely to face a higher rate, in our view—but this will depend in part on whether the CNY remains around its current level. If it does, we believe it is more likely than not that the White House will impose the higher 25% rate on at least some of those imports, rather than the originally proposed 10% rate.
Regardless of the specific rate, we expect the escalation to continue for two reasons. First, while a slim majority of US voters appear skeptical of increasing tariffs, political support for the Trump Administration’s stance on China appears solid among the President’s base. For example, 73% of Republican voters and Republican-leaning independents believe increased tariffs will be good for the US (Pew, July 2018). Most Democrats disagree, and the partisan divide has widened over the last several months.
Second, there are no planned negotiations between high-ranking Chinese officials and US counterparts on trade issues. At some point this might occur—President Trump and President Xi are both likely to attend the UN General Assembly in late September—but there does not appear to be substantial common ground for an agreement, which is likely why no formal meetings have been scheduled. While we believe that US and Chinese officials will eventually reach a deal, this seems unlikely to occur within the next couple of months.
Third, the apparent progress made on other issues seems likely to provide the White House additional political flexibility to pursue an aggressive trade strategy on US-China trade issues. As we recently noted, we believe the tentative agreement between the US and EU to negotiate tariff reductions and other concessions increases the probability that President Trump will impose additional tariffs on China, as it allows the White House to argue that imposing tariffs on trading partners ultimately leads to improved trade policies. A successful NAFTA renegotiation or, more likely, an announcement of an agreement on auto sector rules, could add to that argument.
Q: Don’t the midterm elections pose an obstacle to additional tariffs?
A: This is one of the strongest arguments against additional tariffs, but in our view not sufficient to prevent further tariffs from being imposed. Increasing the price of consumer goods shortly before the midterm election poses clear political risks. However, the tariffs the White House has proposed so far generally avoid consumer products and aim at intermediate inputs and capital goods instead. While tariffs on these goods have the political advantage of being less visible in consumer prices, they are more likely to be economically damaging because they increase costs for domestic producers.
Retaliatory tariffs on US exports could also pose political risks ahead of the midterms. The US agricultural sector, for example, has already been negatively impacted by Chinese tariffs on US exports like soybeans, where China makes up the majority of export demand. However, this is an outlier and most remaining US exports not yet subject to retaliatory tariffs do not have as concentrated exposure to China. In addition, the supplemental agricultural subsidies the Trump Administration recently announced should offset some of these effects.
Q: If the US moves forward with tariffs on some of the next $200bn, how will China respond?
A: Further retaliatory tariffs are likely. The Chinese Ministry of Commerce released a list of $60bn of imports from the US that would be subject to retaliatory tariffs of 5%-25%, with the timing of implementation dependent on “actions by the US administration.” While the announcement appears to be in response to the recent announcement that the USTR is considering a 25% tariff on the next $200bn of imports, rather than a 10% tariff, these retaliatory tariffs do not appear proportional, as the weighted average tariff rate works out to only around 13%, which would generate less than $8bn in tariff revenue, compared to the US proposal to apply a 10%-25% tariff on $200bn, which would generate $20bn to $50bn in revenue.
As our colleagues in Asia point out, the Ministry of Commerce appears to have proposed lower tariffs on US imports with a high share in China and higher tariffs on US imports that make up a low share of total imports in a given category. The same general strategy has been used by the USTR to compile US tariff lists, which have generally omitted import categories in which Chinese companies are the dominant suppliers. While we would expect that the primary motivation for this strategy is to minimize the effects on Chinese consumers, it also suggests that China’s capacity to respond to additional US trade measures through retaliatory tariffs is nearly exhausted, as most of the remaining import categories not yet proposed for additional tariffs are in sectors where tariffs might have little effect on trade volumes, like aircraft, where orders are placed years in advance, or pharmaceuticals.
Q: What about the auto tariffs?
A: We expect the process to continue but believe the risk that tariffs will be imposed this year has diminished. Our expectation at this point is that the Commerce Department will release a report on the issue by September, but that the President will stop short of imposing auto tariffs in response to the report (15% chance). The recent US-EU agreement to negotiate tariff reductions lacked specifics, but appears to have set the relationship on a slightly better footing. In our view, this takes some of the momentum out of the Administration’s push for auto tariffs, as President Trump had often focused on EU auto exports in public remarks even though the tariffs under consideration would have applied to all imports.
The case for moving forward with auto tariffs would weaken further if an agreement on NAFTA auto sector rules is reached (see below). If the EU, Canada, and Mexico were exempt from auto tariffs, this would leave only Japan and Korea among the major sources of auto imports that would be subject to US tariffs, which seems an unlikely outcome in our view as neither has been a primary focus for the Administration’s trade policy. US Trade Representative Lighthizer meets with Japanese Economic Minister Motegi August 9-10 and we expect this to be a central topic of discussion, though we are skeptical that an agreement could be brokered similar to the recent US-EU announcement.
Q: Where does this leave NAFTA?
A: We think a deal on the auto sector is fairly likely, but we believe it will be difficult to reach a finalized agreement covering all aspects of NAFTA renegotiation. NAFTA negotiations appear to be headed in a positive direction, and we believe it is fairly likely (60% chance) that an agreement on auto-sector rules of origin will be reached in the near-term. The US and Mexico appear to be closing in on a potential agreement that would raise the regional content requirement to around 70-75% with lower requirements on high-wage content and use of North American steel and aluminum.
However, we are somewhat more skeptical that a full renegotiation will be completed by the late August deadline negotiators have laid out (35% chance), in light of uncertain progress to date on issues like the proposed 5-year sunset and changes to the dispute resolution system. While an agreement appears to be fairly close, we note that it appeared similarly close a few months ago, but was ultimately sidelined at least in part due to issues that remain unresolved, like the 5-year sunset. Since the US has made most of the demands in these negotiations, we believe it will be up to the US to soften its position in order to reach a deal. While this appears to have happened regarding the auto sector, it is unclear how much the US position on some of the other key issues has changed.
Published on Aug 9, 2018
An informal council of President Trump's friends is exerting sweeping influence over the US Department of Veterans Affairs from the President's Mar-a-Lago club. ProPublica reporter Isaac Arnsdorf reports.
U.S. Officials Scrambled Behind the Scenes to Shield NATO Deal From Trump
By HELENE COOPER and JULIAN E. BARNES
8 hrs ago
WASHINGTON — Senior American national security officials, seeking to prevent President Trump from upending a formal policy agreement at last month’s NATO meeting, pushed the military alliance’s ambassadors to complete it before the forum even began.
The work to preserve the North Atlantic Treaty Organization agreement, which is usually subject to intense 11th-hour negotiations, came just weeks after Mr. Trump refused to sign off on a communiqué from the June meeting of the Group of 7 in Canada.
The rushed machinations to get the policy done, as demanded by John R. Bolton, the national security adviser, have not been previously reported. Described by European diplomats and American officials, the efforts are a sign of the lengths to which the president’s top advisers will go to protect a key and longstanding international alliance from Mr. Trump’s unpredictable antipathy.
Allied ambassadors said the American officials’ plan worked — to a degree.
Mr. Trump did almost blow up the two-day meeting in Brussels that began on July 11. He issued a vague threat that the United States could go its own way if allies resisted his demands for additional military spending. After the gathering, he also questioned a pillar of the alliance: that an attack on one NATO country is an attack on all.
But the approval of the communiqué — renamed for the meeting as a declaration — was critical for the alliance. It ensured that, despite Mr. Trump’s rhetorical fireworks, NATO diplomats could push through initiatives, including critical Pentagon priorities to improve allied defenses against Russia.
“The president’s national security team did a good job of salvaging a minimally successful outcome to the NATO summit,” said James G. Stavridis, a retired four-star admiral who also once served as the supreme allied commander for Europe.
But, he added, “it is unfortunate that the president’s apparent personal animus continues to create friction in an alliance that has stood the test of time.”
In June, weeks before the meeting, Mr. Bolton sent his demand to Brussels through Kay Bailey Hutchison, the American ambassador to NATO. He wanted the NATO communiqué to be completed early, before the president left for Europe, according to five senior American and European officials familiar with the discussions who described them on the condition of anonymity to avoid angering the White House.
NATO’s secretary general, Jens Stoltenberg, reinforced Mr. Bolton’s directive during a gathering of the ambassadors on July 4. The usual infighting over the summit agreement, he said, had to be dropped.
He asked the delegations to finish their work by July 6 at 10 p.m. Brussels time.
Fearful of a repeat of the G-7 disaster — in which Mr. Trump refused to sign off on the joint communiqué, escalated a trade war and publicly derided Prime Minister Justin Trudeau of Canada — the emissaries from the NATO countries all agreed.
Two senior European officials said Secretary of State Mike Pompeo and Defense Secretary Jim Mattis were also keen to avoid another confrontation similar to the G-7, and the NATO declaration was completed days before leaders set foot in Brussels.
It achieved several goals critical to NATO officials.
Against Russian objections, the military alliance would formally invite Macedonia to join. It would establish an Atlantic Command post, hosted by the United States in Norfolk, Va., to coordinate a swift alliance response in the event of, for instance, a war in Europe between Russia and NATO allies.
And, most important, allies pledged to build up their militaries and provide 30 mechanized battalions, 30 air squadrons and 30 combat vessels, all ready to use in 30 days or less, by 2020 — a force to quickly respond to any attack on an alliance member.
Jamie Shea, a NATO deputy assistant secretary general, called the declaration “the most substantive” agreement that the alliance had put out in years. But its success, according to the American and European officials, lies in the feverish work before the summit meeting to keep it away from Mr. Trump.
“When you read the communiqué, and take into account the work that took place, this is one of the meatiest NATO summits that I can recall,” said Deborah Lee James, a former secretary of the Air Force in the Obama administration.
Eric Pahon, a Pentagon spokesman, said in an email on Thursday that the summit meeting was “extraordinarily successful, and the outcomes are now strengthening the alliance and trans-Atlantic security.”
Garrett Marquis, a spokesman with the White House National Security Council, said that the NATO declaration “displayed the unity of 29 sovereign nations across an array of tough international security challenges.”
Generally, deputy NATO ambassadors and lower-level bureaucrats work on communiqués for months before an alliance summit meeting. It always includes last-minute wrangling over language, particularly as smaller nations use the leverage of an impending deadline to tweak issues sensitive to them.
At a 2016 meeting in Warsaw, last-minute changes in the communiqué were shown to President Barack Obama. By contrast, American officials said, this year Mr. Trump was presented with only the broad outlines of what the meeting would deliver — not details of the document of 79 paragraphs, running 23 pages.
Approving the communiqué, even rebranded as a declaration, was critical to moving the alliance forward over the coming years.
The new agreement has given American national security officials the ability to assure the public, and skittish allies, that the country’s commitment to the alliance remains intact — no matter any anti-NATO tweets or interviews or statements from Mr. Trump.
The week after the summit meeting, during an interview with Tucker Carlson of Fox News, Mr. Trump questioned whether the United States would defend Montenegro, which is the newest NATO member state and has a fraught relationship with Russia. His national security team deflected questions and criticism by pointing to the NATO declaration as the true sign of American resolve.
The “Four 30s” initiative — the plan for 30 battalions, air squadrons and combat warships ready to respond within 30 days — was pushed hard by Mr. Mattis. It is viewed by the Pentagon as critical to getting America’s NATO allies more fit and able to react quickly to threats as they develop.
If successful, the readiness initiative will funnel new European military spending into building up allied units. That will help forces more quickly deploy to a conflict — a current shortfall the Pentagon and American military leaders have highlighted. Many European members of NATO thought Mr. Mattis was being too ambitious in pushing it.
But in the rush to get the agreement done before the meeting, the Four 30s initiative was approved.
The NATO countries also worked out a mobility agreement devised to let member states’ forces move quickly through sovereign alliance territory across Europe. It is another piece meant to help NATO countries respond quickly to Russian aggression.
The NATO ambassadors also said the American demand to get the agreement done before Mr. Trump arrived served to silence, for the moment, some of the squabbles within the alliance, including whether it is doing enough for southern allies or enough on counterterrorism.
Many large companies have for now decided to pass on those costs to consumers or absorb the losses into their profit margins. But some smaller US businesses have been forced to cut labor costs to offset the higher amounts they're paying for parts.
From Wisconsin to South Carolina, small businesses are starting to lay off employees, and they're citing Trump's tariffs. Many firms have warned that the worst is yet to come.
Mid-Continental Nail, the largest US nail producer, laid off 130 workers after steel prices jumped. One of its plant managers said the entire business could shut down over the next few months.
Element Electronics, a TV manufacturer, plans to lay off 127 workers from its South Carolina factory as "a result of the new tariffs that were recently and unexpectedly imposed on many goods imported from China."
Brinly-Hardy, an Indiana-based maker of lawn-care equipment, laid off 75 workers. "We are collateral damage in this effort," Jane Hardy, the company's CEO, told The Washington Post.
Some businesses, such as Moog Music, which manufactures electronic musical instruments, have not taken action but have warned that the tariffs could eventually lead to layoffs. Other small businesses have furloughed workers or paused expansion plans while they wait and see how the trade fights play out. Small operators in industries from lobster fishing to metal shapers have curtailed workers' hours.
While the tariffs are causing acute pain for some companies, more widespread labor-market issues have not yet appeared. Trump's tariffs apply only to a concentrated number of industrial goods, and the total number of US imports hit with tariffs remains low.
The July jobs report showed a steady increase in employment and a strong labor market, but economists have warned that business concerns about tariffs could start to weigh on hiring growth if the trade battles continue to escalate.
Trump backs boycott of Harley Davidson in steel tariff dispute
By Ginger Gibson
1 hr ago
President Donald Trump backed boycotting American motorcycle manufacturer Harley Davidson Inc on Sunday, the latest salvo in a dispute between the company and Trump over tariffs on steel.
The Wisconsin-based motorcycle manufacturer announced a plan earlier this year to move production of motorcycles for the European Union from the United States to its overseas facilities to avoid the tariffs imposed by the trading bloc in retaliation for Trump's duties on steel and aluminum imports.
In response, Trump has criticized Harley Davidson, calling for higher, targeted taxes and threatening to lure foreign producers to the United States to increase competition.
"Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better," Trump said in a Twitter post.
Harley Davidson has repeatedly declined to comment on Trump's remarks over the course of the dispute. The company could not be immediately reached for comment on Sunday.
Harley has forecast that the EU tariffs would cost the company about $30 million to $45 million for the remainder of 2018 and $90 million to $100 million on a full-year basis.
Trump met Saturday with a group of bikers who support him, posing for pictures with about 180 bikers at his golf resort in Bedminster, New Jersey, where he is on vacation.
Motorcycle companies based outside the United States include Japan's Honda Motor Co Ltd and Yamaha Corp, Europe's BMW and Ducati as well as India's Hero MotoCorp Ltd, Bajaj Auto Ltd, among others.
(Reporting by Ginger Gibson; editing by Grant McCool)
'We won't let Washington dictate to us with whom we can do business' - German economy minister RT
Published on Aug 13, 2018
Washington cannot dictate trade rules to others, Germany’s economy minister said, adding that his country should be more assertive and defy American sanctions – particularly by investing more in Iran. READ MORE: https://on.rt.com/9c8m
AP FACT CHECK: Trump's economic fiction: 'record' GDP, jobs
2 hrs ago
WASHINGTON — President Donald Trump is distorting the truth on U.S. economic growth and jobs, pointing to record-breaking figures that don't exist and not telling the full story on black unemployment.
He cites the highest-ever gross domestic product for the U.S. that's not there and predicts a spectacular 5 percent annual growth rate in the current quarter that hardly any economist sees. On black joblessness, he boasts of a "new" record low, but the numbers in fact have recently ticked upward, with greater declines seen during the Obama administration.
The statements marked a week of fiction in which Trump also made erroneous claims about the California wildfires and the Russia investigation and falsely declared that his tariffs on foreign goods will help erase $21 trillion in national debt.
Meanwhile, Sen. Bernie Sanders skimmed over the facts in asserting that his "Medicare for all" plan would reduce U.S. health spending by $2 trillion.
A look at the claims:
ECONOMY AND JOBS
TRUMP: "One new and great FACT — African American unemployment is the lowest ever recorded in the history of our Country. So honored by this." — tweet Friday.
TRUMP: "I am proud to have fought for and secured the LOWEST African American and Hispanic unemployment rates in history." — tweet Saturday.
THE FACTS: Not exactly. He omits important caveats.
Black unemployment did reach a record low, 5.9 percent, in May. That rate has since risen to 6.6 percent in July.
Despite some recent progress, the black unemployment rate is now nearly double that of whites, which is 3.4 percent. The most dramatic drop in black unemployment came under President Barack Obama, when it fell from a recession high of 16.8 percent in March 2010 to 7.8 percent in January 2017.
TRUMP: "Economic growth, last quarter, hit the 4.1. We anticipate this next quarter to be — this is just an estimate, but already they're saying it could be in the fives ... I think we're going to be very shortly in the fives." — remarks Tuesday before a group of business executives.
TRUMP: "As you know, we're doing record and close-to-record GDP." — remarks Tuesday.
THE FACTS: No. These are the latest in a string of exaggerated claims that Trump has made about the U.S. economy.
While economists are generally optimistic about growth, very few anticipate the economy will expand at a 5 percent annual rate in the July-September quarter the president referred to. Macroeconomic Advisers, a consulting firm in St. Louis, forecasts 3.2 percent growth in the third quarter. JPMorgan Chase economists have penciled in 3.5 percent. The Federal Reserve Bank of Atlanta pegs it at 4.3 percent.
Whatever the final number turns out to be, none of these figures represents record or close-to-record growth for gross domestic product, the broadest measure of the nation's output. The 4.1 percent growth in the second quarter was simply the most since 2014.
TRUMP: "We've created 3.9 million more jobs since Election Day — so almost 4 million jobs — which is unthinkable." — remarks Thursday at prison reform event in Bedminster, N.J.
THE FACTS: It's not that unthinkable, since more jobs were created in the same period before the November 2016 election than afterward.
It's true that in the 20 months since Trump's election, the economy has generated 3.9 million jobs. In the 20 months before his election, however, employers added 4.3 million jobs.
TRUMP: "Great financial numbers being announced on an almost daily basis. Economy has never been better, jobs at best point in history." — tweet Aug. 6.
THE FACTS: He's exaggerating. The economy is healthy now, but it has been in better shape at many times in the past.
Growth reached 4.1 percent at an annual rate in the second quarter, which Trump highlighted late last month with remarks at the White House. But it's only the best in the past four years. So far, the economy is expanding at a modest rate compared with previous economic expansions. In the late 1990s, growth topped 4 percent for four straight years, from 1997 through 2000. And in the 1980s expansion, growth even reached 7.2 percent in 1984.
It's not clear what Trump specifically means when he declares that jobs are at the "best point in history," but based on several indicators, he's off the mark.
The unemployment rate of 3.9 percent is not at the best point ever — it is actually near the lowest in 18 years. The all-time low came in 1953, when unemployment fell to 2.5 percent during the Korean War. And while economists have been surprised to see employers add 215,000 jobs a month this year, a healthy increase, employers in fact added jobs at a faster pace in 2014 and 2015. A greater percentage of Americans held jobs in 2000 than now.
Trump didn't mention probably the most important measure of economic health for Americans — wages. While paychecks are slowly grinding higher, inflation is now canceling out the gains. Lifted by higher gasoline prices, consumer prices increased 2.9 percent in June from a year earlier, the most in six years.
TRUMP: "'Bob Mueller, isn't your whole investigation premised on a Fake Dossier, paid for by Hillary, created by a man who hates Donald Trump, & used to con a FISA Court Judge. Bob, I really think it's time for you to give up your phony investigation.' No Collusion!" — tweet Sunday, citing Fox News Channel host Jeanine Pirro.
THE FACTS: Trump quotes in part Pirro to falsely claim that special counsel Robert Mueller's Russia probe is based on a "fake dossier." In fact, the FBI's investigation began months before it received a dossier of anti-Trump research financed by the Democratic Party and Hillary Clinton's campaign. The FBI probe's origins were based on other evidence — not the existence of the dossier.
The Republican-controlled House Intelligence Committee found the Russia probe was initiated after the FBI received information related to Trump campaign foreign policy adviser George Papadopoulos, not the dossier. The committee's final report was praised by Trump.
TARIFFS AND THE DEFICIT
TRUMP: "Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people." — tweet Aug. 5.
THE FACTS: This isn't going to happen.
The Treasury Department estimates that all tariffs currently in place will raise about $40 billion in revenue in the 2018 budget year, which ends Sept. 30. Even with the recent tariff increases Trump has implemented or threatened to put in place, it clearly wouldn't be enough to reduce the $21 trillion national debt. It's just 5 percent of what the president would need to eliminate the annual budget deficit of $804 billion that the Congressional Budget Office predicts for this year. The national debt represents the accumulation of all the annual deficits.
The president seems to believe that foreigners pay tariffs, but they are import taxes paid for by American businesses and consumers. They may make it harder for other countries to sell things in the United States, but they are just another form of tax and do not result in lower taxes for the American people overall.
TRUMP: "Almost 3.9 million Americans have been lifted off food stamps — that's since the election. ... That's some number. That's a big number." — Ohio rally on Aug. 4.
TRUMP: "More than 3.5 million Americans have been lifted off food stamps — something that you haven't seen in decades." — remarks at White House on July 27.
WHITE HOUSE: "More than 2.8 million have stopped participating in the Supplemental Nutritional Assistance Program (SNAP) — commonly known as food stamps — since Trump's first full month in office." — information sheet released Tuesday, citing Fox Business report.
THE FACTS: Trump and the White House omit important context and overstate his role in reducing the number of people on food stamps. Nor is it accurate that recent declines are the biggest in decades. It's true, as the White House conveys, that more than 2.8 million people stopped participating in the program during the 15-month period from February 2017, Trump's first full month in office, to May 2018, the latest Agriculture Department data available. But this decline is consistent with a longer-term downward trend in food stamp usage because of an improving economy. Currently there are 39.3 million people in the program; food stamp usage peaked in 2013 at around 47.6 million, following the recession.
For instance, in the 15-month period before Trump's first full month in office, food stamps declined by 3.3 million — larger than the 2.8 million that dropped off under Trump's watch.
SEN. BERNIE SANDERS: "Medicare for All will lead to a $2 TRILLION REDUCTION in national health expenditures over 10 years." — tweet July 30.
THE FACTS: Sanders' tweet and YouTube video are being widely echoed by supporters of a government-run national health system. But the Vermont independent mischaracterizes a study from a libertarian policy institute that found his legislation would lead to a massive boost in federal spending and taxation.
The study from the Mercatus Center at George Mason University in Virginia also concluded that Medicare for all is unlikely to produce a dividend for U.S. society in the form of lower total health care spending. To get that result would require paying hospitals and doctors much less than they get now and risk putting some out of business.
The study found that if hospitals and doctors were willing to accept Medicare-based payments of 40 percent less for patients who currently have private insurance, then projected U.S. health care spending would decline by about 3 percent from 2022 to 2031, or $2.05 trillion. It's a big asterisk, and one that Sanders fails to disclose.
That's the number Sanders is celebrating.
But the study also said if medical providers continue to be paid about the same as now, U.S. health care spending would increase by $3.25 trillion over 10 years under Medicare for all. It works out to about 5 percent more.
That's far different from Sanders' assurance that his plan "will lead" to huge spending reductions.
WILDFIRES AND WATER
TRUMP: "California wildfires are being magnified & made so much worse by the bad environmental laws which aren't allowing massive amounts of readily available water to be properly utilized. It is being diverted into the Pacific Ocean." — tweet Aug. 6.
THE FACTS: That's not what state experts say.
"We have plenty of water" for battling the massive blazes burning in hills north of San Francisco, said Scott McLean, a spokesman for the California Department of Forestry and Fire Protection. The current spate of wildfires happens to be within range of large Northern California lakes and the state's biggest river, McLean said.
Nor is having enough water a problem in battling California wildfires in general. Firefighting aircraft can dip in and out of cattle ponds or other small bodies of water to scoop up water for dropping and spraying on flames. When fires burn in an area that happens to be without ponds, lakes or rivers, state officials typically call in more planes to ferry in water, McLean said.
California's battles over divvying up water in the arid state are unending, but a battle between firefighters and the Pacific Ocean hasn't been one of them, according to Jay Lund, a civil and environmental engineering professor at the University of California, Davis, and a longtime analyst of the state's water wars.
Trump's claim "is so physically impossible, you don't even really want to respond," Lund said.
For one thing, the wildfires are in the hills, far from the Pacific Ocean and from the man-made storage and distribution system that carries water from California's wetter north to the drier, more populated south.
TRUMP: "Governor Jerry Brown must allow the Free Flow of the vast amounts of water coming from the North and foolishly being diverted into the Pacific Ocean. Can be used for fires, farming and everything else. Think of California with plenty of Water - Nice! Fast Federal govt.
approvals." — tweet Aug. 6.
THE FACTS: Trump is raising an old dispute in California, the country's top farm state: the competition for water between agricultural and environmental groups, fishermen and others who want more water for wildlife and habitat. But the dispute has little to do with firefighting.
Republican lawmakers in California's agriculture-rich Central Valley complain the state and federal governments allow too much of the state's rainfall and snow melt to flow naturally through rivers and into the Pacific Ocean, instead of being diverted for irrigation.
TRUMP: "The Democrats are obstructionists. The only thing they do well, they're lousy politicians, they have horrible, stupid policies. You know, let's get rid of law enforcement, let's get rid of our military, let's not take care of our vets — all of these things. ... They'll do anything they can really to obstruct or resist." — remarks Aug. 4 at Ohio rally.
THE FACTS: On the contrary, in regards to veterans' issues, every major bill signed into law by Trump has passed with strong support from both Republicans and Democrats. In one case, House Democrats did block an emergency funding bill for the Veterans Choice private-sector program after veterans groups complained that it focused on too much private care instead of core VA programs. The Democrats' dissent resulted in additional funding for both private care and VA programs in the revised bill.
More recently, Robert Wilkie was confirmed by the Senate to serve as VA secretary on an 86-9 vote. It was a moment of strong bipartisan display compared to the partisan discord over other Trump nominees.
Alaska Commercial Fishermen Brace For China Tariff Pain
August 13, 2018 by Reuters
The 58-foot commercial fishing vessel Icy Mist on Akutan Island, Alaska
By Yereth Rosen (Reuters) – Alaska fishermen are used to coping with fickle weather and wild ocean waves. Now they face a new challenge: the United States’ trade war with China, which buys $1 billion in Alaskan fish annually, making it the state’s top seafood export market.
Beijing, in response to the Trump administration’s move to implement extra levies on Chinese goods, last month imposed a 25 percent tariff on Pacific Northwest seafood, including Alaskan fish, in a tit-for-tat that has engulfed the world’s two largest countries in a trade war.
The results could be “devastating” to Alaska’s seafood industry, the state’s biggest private-sector employer, said Frances Leach, executive director of United Fishermen of Alaska, the state’s largest commercial fishing trade group.
“This isn’t an easily replaced market,” she said. If the tariff war continues, she said, “What’s going to happen is China is just going to stop buying Alaska fish.”
For Alaska’s seafood industry, the timing could not be worse. The state has worked for years to attract the Chinese market, and just two months ago, Governor Bill Walker led a week-long trade mission to China in which the seafood industry was heavily represented.
Walker’s trade mission was a follow-up to an Alaska visit a year earlier by Chinese President Xi Jinping and his cabinet.
Fishermen are worried, said Alan Noreide, a fisherman in the Alaska port town of Seward, where he delivers some of his catch to the local Icicle Seafoods plant, an Alaska-based seafood processing company whose representatives accompanied Walker to China.
“We’d rather be left to our own challenges that we have. We don’t need any more,” said Noreide, who focuses on Gulf of Alaska black cod and halibut.
Marketers have found that middle-class Chinese customers view Alaska fish, particularly wild Alaskan salmon as a superior product from unspoiled waters.
Chinese buyers are interested in “clean, natural, organic” products, said Zoi Maroudas, founder of an Anchorage-based baby food company that sells products like pureed salmon bisque. Maroudas was part of the Alaska trade mission, and said the pitch about Alaskan food “resonated with the people.”
But higher prices due to tariffs could nudge Chinese consumers to products from competing countries such as Russia and Norway, closing Alaska’s emerging opportunity, said Jeremy Woodrow of the Alaska Seafood Marketing Institute, a state agency.
Farmers in the U.S. Midwest are expected to receive a $12 billion agricultural-aid package as a result of tariffs that are hitting soybean and other farmers. Walker and U.S. Senator Lisa Murkowski have argued that Alaska’s seafood industry also deserves aid.
The precise effects in Alaska have yet to be quantified and are likely to be uneven. A bit over half of the fish sent to China is processed there and re-exported, Woodrow said. While the Chinese government has exempted those products from tariffs, the Trump administration has proposed levies of up to 25 percent on the Alaska products shipped back from China to the United States.
Exports of fish that go straight into the Chinese consumer market, such as king crab, are most vulnerable, said Garrett Evridge, an Alaska seafood analyst.
Reporting By Yereth Rosen in Seward, Alaska, and Kodiak, Alaska; editing by David Gaffen and Susan Thomas
New Tension Between the US and European Union RT America
Published on Aug 13, 2018
New tension between the United States and the European Union. Germany has slammed President Donald Trump's new trade tariffs on the EU and Washington’s increased pressure on the Iran nuclear deal. The US Has upped rates on steel and aluminum for Europe, and its key NATO ally - Turkey. German leaders are warning of wide ramifications. For analysis, former UK member of parliament, George Galloway.
Chicago-area manufacturer to lay off 150 people as it moves operations to Mexico, in part to avoid tariffs on Chinese metal
By Alexia Elejalde-Ruiz, Chicago Tribune
9 hrs ago
A manufacturer of storage safes is closing its two Chicago-area factories and moving operations to Mexico, in part because of the Trump administration's tariffs on metal from China.
Stack-On Products plans to lay off 128 people at its facility in Wauconda, Ill., and 25 people at its McHenry, Ill., plant when it closes both facilities Oct. 12, said Al Fletcher, human resources director for Alpha Guardian, the Las Vegas-based parent company.
"The operation is really not profitable," Fletcher said. He said the decision to relocate operations to Juarez, Mexico, was made about two months ago when President Donald Trump announced tariffs on numerous goods and materials from China as well as other countries, to reduce what the president has called an unfair trade deficit.
"Mr. Trump is part of this," Fletcher said. So far, the United States has imposed tariffs on $34 billion of Chinese technology goods and $3 billion of Chinese steel and aluminum, and has proposed another $16 billion.
Stack-On, which has operated in the Chicago area for 40 years, makes storage products ranging from tool boxes to gun vaults that are sold at Menards, Walmart and other mass retailers.
The company already has a plant in China and another in Mexico, and its only U.S. factories were the two in the Chicago area, Fletcher said. The layoffs affect manufacturing jobs, warehouse jobs and some office staff, and those employees will be given the option to relocate to El Paso, Texas, just over the border from the Juarez plant, he said. Engineering and sales and marketing employees will be retained and relocated within the Chicago area.
The 153 layoffs at Stack-On are among 885 coming job cuts that Illinois employers reported last month to the state's Department of Commerce and Economic Opportunity. The Illinois Worker Adjustment and Retraining Notification Act requires employers with at least 75 workers to notify the state 60 days in advance of a plant closing or mass layoff that affects at least a third of the workforce.
Trump's military parade in Washington now delayed until 2019
8 hrs ago
WASHINGTON — The multimillion-dollar military parade through the nation's capital requested by President Donald Trump has been delayed until 2019, a Defense Department spokesman said Thursday.
"The Department of Defense and White House have been planning a parade to honor America's military veterans and commemorate the centennial of World War I," said Col. Rob Manning. "We originally targeted November 10, 2018 for this event but have now agreed to explore opportunities in 2019."
The estimate had risen substantially since February, when White House budget director Mick Mulvaney told Congress the price could be $10 million to $30 million.
The cost was initially reported as $12 million, and was based on the cost of the victory parade held in the capital after the 1991 Gulf War, said the official. The Washington Post estimated the cost of the 1991 victory parade as $8 million.
The defense official told NBC News that the internal estimate of the cost of the parade rose to $25 million after adjusting for more than 25 years of inflation. But that estimate did not take into account expenses borne by other federal agencies and some nonmilitary line items.
The $92 million figure is the current uppermost estimate, said the official, and includes security, transportation and other expenses.
"The American Legion appreciates that our president wants to show in a dramatic fashion our nation’s support for our troops," American Legion National Cmdr Denise Rohan said in a statement posted to Twitter. "However, until such time as we can celebrate victory in the War on Terrorism and bring our military home, we think the parade money would be better spent fully funding the Department of Veteran Affairs and giving our troops and their families the best care possible."
A March memo laid out the skeleton of a plan: a parade from the White House to the Capitol to include only wheeled vehicles (because tanks could damage the streets), capped by a big display of air power and vintage aircraft, with themes including veterans, women in the military and medal of honor recipients.
After that, three months went by with no major planning. With so many more pressing issues, the parade just was not a high priority for the military, a senior defense official said.
Officials recommended that the route begin at the Capitol, pass the White House and end at the National Mall, and the date was moved up a day to Nov. 10, from Nov. 11.
Thanks to strained manufacturing supply chains and a booming economy, an unprecedented run of orders for new big rigs has nearly doubled the backlog at truck factories to nine months, according to the Wall Street Journal, citing industry analysts.
North American freight-haulers ordered over 300,000 Class 8 trucks through July of this year, and are on track to order a record 450,000 of the heavy-duty haulers for the full year, according to ACT Research. The surge in demand would be the largest since 2004, when orders reached 390,000.
Meanwhile, the typical backlog is around five months for truck industry manufacturers - the longest wait since early 2006 when truckers stocked up on vehicles before harsh new environmental restrictions kicked in.
“It is longer than it should be,” said Magnus Koeck, vice president of marketing for Volvo AB’s North America operation, where Class 8 truck orders this year soared to 25,000 from 11,000 during the first six months of 2017. “Of course we are not alone in this situation,” he said. “Everyone is in the same boat.” -WSJ
North American fleets ordered over 52,000 trucks alone in July, an all-time monthly record, in an effort to keep up with swelling demand amid a booming economy and a shortage of drivers.
The orders are coming at a rapid pace as more U.S. companies, from construction equipment makers to retailers, say rising transportation costs and tight truck capacity are crimping their ability to grow and slicing into profit margins. Cass Information Systems Inc., which processes freight payments, says its monthly index of U.S. trucking costs rose more than 10% in July, the first double-digit year-over-year increase in the 13 years of the measure. -WSJ
Unfortunately for producers, it might be months before trucking capacity can scale up to meet the growing demand for transportation. Because many of the new trucks are aimed at replacing older vehicles, production has been strained. Manufacturers delivered 30,000 new trucks in June, according to ACT - however factories are still playing catch-up after manufacturing supply-chain issues threw a wrench in the gears.
“There’s basically a shortage of trucks right now because of supply-chain issues,” said FTR analyst Don Ake. Manufacturers “can’t build trucks fast enough because their suppliers can’t keep up.”
Cummins, Daimler, Volvo and Navistar International Corp have all reported supply-chain issues earlier this year. “It doesn’t matter if it’s one tiny screw or one tiny hose, if it’s missing or late, you can’t complete the truck,” said Volvo’s Koeck.
Any delays at one supplier can ripple across the business, companies say, because companies often build certain parts for several different truck manufacturers. And companies say the low national unemployment rate makes it tougher to fill vacant jobs. -WSJ
“The challenge was finding the labor, I suppose the next challenge is keeping the labor,” said Kenny Vieth with ACT.
In order to remedy the backlog, manufacturers report that their suppliers have hired the necessary staff to push through key parts at a faster pace. Meanwhile, Volvo Trucks North America deliveries spiked 71% over Q1'17 with 15,658 vehicles delivered.
“With the strong demand and the corresponding increases in production levels, the entire industry has been faced with supply constraints and pressure on delivery timing,” said Daimler Trucks senior VP of operations, Jeff Allen. “Recently we have begun seeing these constraints lifting and an overall improvement of the situation.”
That said, "The situation is week to week," said FRT's Don Ake.
Although China has backpedaled on proposed tariffs on U.S. crude imports, the move is indicative of its need to diversify sources and steps may now be taken to enable China to play the oil card in the future – including imports from Iran despite sanctions, and drawing closer to Russia.
A reshuffle of crude oil exports to Asia Asian oil refiners have been rushing to secure crude supplies in anticipation of an escalating trade war between the United States and China. Last week, Dongming Petrochemical, an independent Chinese refiner, said it has halted crude purchases from the U.S. and turned to Iranian imports amid escalating trade tensions between Beijing and Washington. U.S. crude oil exports to China reached 400,000 barrels per day (bpd) at the beginning of this July, but Beijing has recently threatened a 25 percent duty on imports of U.S. crude as part of its retaliation for Trump’s latest round of tariffs on US$34 billion worth of Chinese goods. In addition, Iran’s foreign minister said on 3 August that China was “pivotal” to salvaging a multilateral nuclear agreement for the Middle Eastern country after the United States pulled out. A reshuffle of crude oil exports to Asia is possible, with China vacuuming up much of the Iranian oil that other nations won’t buy because of the threat of U.S. sanctions.
China, India, Japan and South Korea together account for almost 65 percent of the 2.7 million barrels a day that Iran exported in May. The U.S. has been lobbying these countries and other multinational oil giants to cut crude purchases from Iran to zero by November, the deadline for re-imposition of the secondary sanctions. In view of the current trade disputes with the U.S., China has reacted defiantly to U.S. sanctions banning business ties with the Islamic republic. This could be the determining factor in helping Tehran withstand the sanctions on its vital energy industry.
With China turning to Iran, U.S. oil would start flowing in greater amounts to other leading importers in the region, such as Japan and South Korea. In Japan, the oil industry has yet to respond to this issue publicly. The Petroleum Association of Japan previously warned refiners that they will have to stop loading Iranian crude oil from October onward if Tokyo doesn’t win an exemption on U.S.-Iran sanctions. However, this past weekend, South Korea’s embassy in Iran rejected media reports that the country had suspended oil purchases from Iran under pressure from the U.S. Whether Japan and South Korea would seek more crude imports from the U.S. remains to be seen.
China may have Russia on its side The sanctions imposed on Russia from the West, as well as the trade tensions between China and the U.S., may provide even more room for energy cooperation between China and Russia. Russia’s sour relationship with the West forces it to look for new trade and investment partners, which could include China and countries in the Middle East. Russia has already become Beijing’s single largest crude oil supplier, exporting crude oil worth US$23.7 billion to China in 2017. Now with Beijing possibly cutting imports from the U.S., Russia may seek to export even more crude oil to China.
On 19 July, China received the first ever liquefied LNG cargo from Russian natural gas producer Novatek via the Northern Sea Route (NSR) alongside the Arctic coast. The $27 billion Yamal project is the world’s largest Arctic LNG project and the first large-scale energy cooperation project to be implemented in Russia after the “Belt and Road” initiative. China’s National Energy Administration said China National Petroleum Corp (CNPC) will start lifting at least 3 million tonnes of LNG from Yamal starting in 2019. Therefore, it’s highly possible that China and Russia will deepen their cooperation in liquefied natural gas (LNG) trade despite U.S. sanctions.
In addition, according to an anonymous Russian government official, Russia is ready to invest US$50 billion in Iran’s oil and gas sector amid mounting pressure from the U.S. to economically and diplomatically isolate Tehran. Russia’s energy minister Alexander Novak said that Moscow was interested in developing an oil-for-goods program that would allow Iranian companies to buy Russian products in exchange for oil contracts to be sold to third world countries. This was evidence of Russia’s consistent strategy of using its strong oil and gas industry to meddle in Middle East issues. Under the current situation, even though China may somehow reach an agreement with the U.S. promising that it will cut oil imports if the U.S. is willing to reduce the trade tariffs, in the short-term China is still likely to get Russia on its side in defiance of the U.S. oil campaign.
Trump backed space force after months of lobbying by officials with ties to aerospace industry
David S. Cloud and Noah Bierman
1 hr ago
WASHINGTON — When President Donald Trump spoke to Marines at the Miramar Air Station in San Diego March 13, he threw out an idea that he suggested had just come to him.
"You know, I was saying it the other day, because we're doing a tremendous amount of work in space — I said maybe we need a new force. We'll call it the 'space force,'" he said. "And I was not really serious. And then I said what a great idea — maybe we'll have to do that."
The origin of the space force wasn't that simple.
The concept had been pushed unsuccessfully since 2016 by a small group of current and former government officials — some with deep financial ties to the aerospace industry — who see creation of the sixth military service as a surefire way to increase Pentagon spending on satellite and other space systems.
The idea of a space force "is not a new thing," said Stuart O. Witt, an aerospace executive and a member of White House's National Space Council Users Advisory Group. "The president just acted upon it."
But Rep. Jim Cooper, (D-Tenn., one of the early supporters of a separate service, complained that Trump's impromptu endorsement had "hijacked" the issue and could vastly inflate the budget process. "There are many vendors of all types who are excited at the prospect of an explosion of new spending, which was not our goal," he said.
Still, when Trump embraced the idea at Miramar — and began promoting it at other rallies — a moribund notion opposed by much of the Pentagon hierarchy and senior members of the Senate became a real possibility.
A few days after the San Diego speech, Trump took a phone call at his Mar-a-Lago resort in Florida from Rep. Mike D. Rogers, R-Ala., who is chairman of the House Armed Services subcommittee on strategic forces. He had been promoting the space force to Trump and his advisers for months.
"This is something we have to do," Rogers said he told Trump. "It's a national security imperative."
"I'm all in," Trump replied, Rogers said. "We are going to have a space force."
The story of how that happened is a window into the chaotic way Trump sometimes makes decisions, often by bypassing traditional bureaucracy to tout ideas that work well as applause lines but aren't fully thought out.
Only Congress can create a new military service, and the administration still has not said what the space force would do, what it would look like or what it would cost. The existing services — the Army, Navy, Air Force, Marine Corps and Coast Guard — not only deploy forces. They also run war colleges, recruiting stations, security and vast contracting operations, with costs in the billions of dollars.
Vice President Mike Pence said this month that the administration would send a legislative proposal to Capitol Hill next year and aims to establish a space force by 2020.
Congress has shown little appetite for a costly new expansion of government, especially one that would cut the Air Force budget, a service with powerful backing on Capitol Hill.
Those political headwinds could reduce the space force to a presidential rallying cry, like his unfulfilled vow to build a "big, beautiful wall" on the border with Mexico. But Trump's enthusiasm has clearly provided momentum, exciting proponents who see a rare opportunity to win more attention and resources for space defense.
They agreed on the threat. China and Russia were building weapons and cyber capabilities aimed at knocking out satellites that the Pentagon relies on for communication, precise targeting of bombs and missile defense, according to U.S. intelligence.
Last summer, Rogers and Cooper inserted an amendment in the annual defense policy bill to create a separate service they called the space corps. It would be part of the Air Force, just as the Marine Corps is technically part of the Navy.
But Rogers worried that putting it in the Air Force might not fly. The Air Force is dominated by flyers more interested in warplanes than in outer space, he noted in a speech last year, explaining Air Force opposition to a separate service.
"I mean, this is about money," Rogers said. "As long as space is in the (Air Force) portfolio, they can move money from space to support fighter jets, bombers or whatever. The Air Force is run by fighter pilots. Space will always lose."
Moreover, defense contractors involved in space "were complaining to us about how impossible it was to deal with the Air Force," Rogers said. "They kept describing this bureaucratic morass in Air Force procurement, where nobody had decision-making authority."
Rogers, who was first elected to Congress by a narrow thin margin in 2002, has solidified control of his rural district, with a campaign fund that has received considerable contributions from the aerospace industry. Defense industry companies have contributed $395,000 to his campaign committee and leadership PAC since 2017, becoming by far his largest industry donor, according to Open Secrets, a campaign spending database.
Also pushing for the space corps was Douglas L. Loverro, a retired Air Force officer and the former executive director of its Space and Missile Systems Center in El Segundo, Calif. Loverro said in an interview that a dedicated corps of space experts would be necessary to ensure that a space force could fulfill its mission.
The Air Force focus on conventional air combat prevents it from "building the best space war fighters — the ones who can conceive of, imagine, prepare for, and think doctrinally, operationally and technically about space," Loverro said at an industry conference in April. "But those are precisely the people we need today."
The space corps never got off the ground.
The Air Force lobbied to kill it. Defense Secretary James Mattis took the unusual step of sending a letter to Congress voicing his objections.
"At a time when we are trying to integrate the Department's joint warfighting functions, I do not wish to add a separate service that would likely present a narrower and even parochial approach to space operations," Mattis wrote.
Even the Trump White House called the idea "premature at this time" in a July 2017 statement.
That was enough to kill the plan in the Senate, though Rogers got other lawmakers to agree to order the Pentagon to study the idea and report on its findings.
He also began trying to enlist Trump.
Last December, Rogers said, he arranged for an intermediary to give Trump information his subcommittee had collected about Russian and Chinese development of anti-satellite weapons, and about the Air Force effort to kill a separate military service. He declined to identify the intermediary.
"With the Air Force having poisoned the well, I knew I needed to get some energy back in it," he said. "I knew once I got the word to him about what we'd found, I was certain he'd embrace it."
Trump seldom talked about space flight during the 2016 presidential campaign. When a 10-year-old boy asked him about space during a 2015 breakfast in New Hampshire, Trump said fixing roads was a higher priority.
"In the old days, it was great," Trump told the boy. "Right now we have bigger problems. You understand that, we've got to fix our potholes."
Once elected, Trump revived the space council, an advisory panel led by Pence that had been dormant since the early 2000s. The vice president had attended three space shuttle launches while serving in Congress, and was deeply interested in space.
When Pence gave an update during a Cabinet meeting in March, Trump marveled at model rocket ships displayed on the table in front of him. He touted the private space launch companies owned by billionaire businessmen, including Amazon's Jeff Bezos, Tesla's Elon Musk and Microsoft founder Paul Allen.
"We're letting them use the Kennedy Space Center for a fee," Trump said. "And you know, rich guys, they love rocket ships, and that's good. That's better than us paying for it."
But Trump showed no interest publicly in a space force until his speech in San Diego in March, indicating that it was his idea. By then, the Pentagon's attitude was beginning to shift. A Trump appointee, Deputy Defense Secretary Patrick Shanahan, had begun preparing the report ordered by Congress on whether to create an independent space force.
A former senior Boeing executive, Shanahan was familiar with the cumbersome Air Force procurement system. He became the administration's space force point person, consulting with Pence, Rogers, the Air Force and other Pentagon players, and the space council.
"I can hear my dad kind of whispering in my ear, 'Don't screw anything up,'" Shanahan said Aug. 9. "There are extensive military operations going on throughout the world right now and they're heavily reliant on space."
Trump began talking up a space force privately, telling Pence to take on the project, according to an administration official who confirmed reporting first published in Axios.
The aerospace industry, which was initially cool to the plan, began to come around, seeing a space force as a lucrative avenue not just for expensive new space systems, but also for uniforms, construction projects, support services and other needs of a new military service.
Former House Speaker Newt Gingrich called a space force "an excellent way to bypass the bureaucratic resistance President Trump would have faced had he tried to push our terrestrial service branches into focusing resources outside the atmosphere."
Gingrich, a space enthusiast and informal Trump adviser, credited Trump's marketing instinct with turning the space corps into the space force. "The genesis of the name was him writing it into a speech," he said in an interview.
Trump has continued to talk about the space force in public. In May, he told members of the West Point football team they would be part of "the five proud branches" of the armed forces. "And we're actually thinking of a sixth, and that would be the space force."
Trump and Pence received a briefing at the White House that detailed the Air Force attempt to block a separate space force. Trump was so interested in the briefing that it went on for 45 minutes, according to Rogers, who was not present but heard from someone who was.
"My Air Force fought it?" Trump said at one point, according to Rogers.
A month later, Trump moved to dispel any remaining resistance in his administration. He did so in a typically theatrical way.
Before a June 18 meeting of the National Space Council, Trump mentioned to Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, that he was thinking about publicly endorsing the idea of a separate branch for space.
Dunford replied that the Pentagon was not quite ready, according to Rogers. But Dunford said he would do whatever the president ordered.
Just before going public, Trump gathered the industry-dominated panel that was supposed to be advising him on space policy and said it was a done deal. "It wasn't like there was a meeting weeks ahead of time," Witt said.
Trump then walked into the East Room for the public portion of the meeting, where a press pool was gathered.
"I'm hereby directing the Department of Defense and Pentagon to immediately begin the process necessary to establish a space force as the sixth branch of the armed forces," he said.
New Trump power plant plan would release hundreds of millions of tons of CO2 into the air
1 hr ago
President Trump plans next week to unveil a proposal that would empower states to establish emission standards for coal-fired power plants rather than speeding their retirement — a major overhaul of the Obama administration’s signature climate policy and one that could significantly increase the release of carbon dioxide into the atmosphere.
Trump plans to announce the measure as soon as Tuesday during a visit to West Virginia, according to two administration officials who spoke on the condition of anonymity because the White House was still finalizing details Friday.
The Environmental Protection Agency’s own impact analysis, which runs nearly 300 pages, projects that the proposal would make only slight cuts to overall emissions of pollutants — including carbon dioxide, sulfur dioxide and nitrogen oxides — over the next decade. The Obama rule, by contrast, dwarfs those cuts by a factor of more than 12.
The new proposal, which will be subject to a 60-day comment period, could have enormous implications for dozens of aging coal-fired power plants across the country. EPA estimates the measure will affect more than 300 U.S. plants, providing companies with an incentive to keep coal plants in operation rather than replacing them with cleaner natural gas or renewable energy projects.
By 2030, according to administration officials, the proposal would cut CO2 emissions from 2005 levels by between 0.7 percent and 1.5 percent, compared with a business-as-usual approach. Those reductions are equivalent to taking anywherefrom 2.7 million to 5.3 million cars off the road.
By comparison, the Obama administration’s Clean Power Plan would have reduced carbon dioxide emissions by roughly 19 percent during that same time frame. That is equivalent to taking 75 million cars out of circulation and preventing more than 365 million metric tons of carbon dioxide from entering the atmosphere.
Under the EPA’s new plan, sulfur dioxide and nitrogen oxides that help form smog would be cut between one percent and two percent by 2030 compared to 2005 levels. Under Obama, the agency projected its policy would reduce those pollutants by 24 percent and 22 percent, respectively, by the end of the next decade.
EPA did not respond to a request for comment, and the White House said it was looking into the matter.
As the world’s second-largest emitter of greenhouse gas emissions, the United States has targeted the burning of fossil fuels that is driving climate change. The power sector ranks as the second-biggest contributor to the nation’s overall greenhouse gas emissions, according to EPA, accounting for 28.4 percent of the total in 2016. Transportation made up 28.5 percent of U.S. greenhouse gas emissions that year.
While EPA projects that the U.S. power sector’s overall carbon output will decline over time due to market pressures and other factors after the new rule takes effect, the policy shift would make it increasingly difficult for America to meet the international climate goals it adopted under the previous administration.
Joseph Goffman, executive director of Harvard Law School’s Environmental Law Program andone of the architects of the Obama-era rule, said in a phone interview that the higher emissions that would result from the Trump proposal would damage the climate as well as public health.
“These numbers tell the story, that they really remain committed not to do anything to address greenhouse gas emissions,” said Goffman, who served as associate assistant administrator for climate in EPA’s Office of Air and Radiation between 2009 and 2017. “They show not merely indifference to climate change, but really, opposition to doing anything about climate change.”
Elements of the proposed rule were first reported by the New York Times on Friday evening.
Utility companies, which had joined states in suing to block the Obama climate rule, would save annual compliance costs for the industry by about $400 million a year.
Many utilities have moved to retire coal plants in recent years and switch to either natural gas or renewable power, which are now more economically competitive. But the proposed rule, which focuses on improving their heat efficiency and would allow for upgrades without triggering the kinds of pollution controls currently required under federal law, could shift that dynamic.
Since the outset of the administration, officials have said they intended to replace the Clean Power Plan because EPA exceeded its legal authority in crafting the policy. The rule, which has been stayed by the U.S. Supreme Court, established a program under which states could achieve emissions reductions by having utilities promote energy efficiency or build renewable power projects such as solar or wind.
“We’re going back to the agency’s historical interpretation and application of its authority” under the Clean Air Act, said one official in an interview. “That is respectful of the boundaries established by Congress.”
Utility industry executives hailed the administration’s proposal as one that adheres to the law and would ease the financial crunch they would have faced under a more sweeping rule. Jim Matheson, chief executive of the National Rural Electric Cooperative Association, said in a statement Saturday that it appears the measure will “provide electric co-ops the certainty and flexibility they need to meet their consumer-members’ energy needs.”
“The Clean Power Plan would have resulted in stranded assets and stranded debt, significantly increasing electricity costs for many consumers,” added Matheson, whose members get 41 percent of their energy from coal-fired generation.
The proposed rule, which does not yet have a name, has a 200-page preamble laying out EPA’s reasoning for the sweeping changes.
Rather than identifying specific reduction targets and then tasking state officials with devising plans to achieve them, it will define what constitutes the “best system of emission reduction” that utilities can undertake with technology that has been demonstrated to work. States will conduct a unit-by-unit analysis of plants in their state and will have three years to develop a plan to make their operations more efficient.
EPA will have one year to determine whether to approve a state’s plan, and if it does not meet the agency’s guidelines the EPA will have another year to impose a federal plan on the state.
As a result, it is difficult to determine exactly when the new measurewill be fully implemented. While the proposed rule analyzes its impacts through 2035, officials said, it may not be fully in compliant until 2037.
Bracewell LLP partner Scott Segal, who represents utilities that run coal-fired plants, said in an email that the Trump administration has sought to empower the states as it curbs the excesses of its predecessor.
“The previous administration’s effort to address greenhouse gases was a complex and unnecessarily burdensome overreach that took much of the responsibility for power systems away from the state regulators, who know them best,” Segal said. “It is why 29 states pushed back against the rules and the Supreme Court blocked their implementation with an unprecedented stay.”
Trump has repeatedly praised the U.S. coal industry, and his deputies have sought to enact an array of policies aimed at bolstering it. Those proposals range from relaxing rules for storing toxic waste from coal burning to ordering grid operators to buy power from coal-fired utilities.
The EPA’s analysis estimated that even under the new proposal, the power sector’s overall CO2 emissions would decline between 33 percent and 34 percent compared with 2005 by the time the rule is fully implemented.
Conrad Schneider, advocacy director for the environmental group Clean Air Task Force, said emissions may not drop as much as anticipated because of several policies the Trump administration has adopted to boost coal.
“This is the latest in the Trump administration’s effort to make coal great again,” Schneider said.
Trump announced more than a year ago that the United States would pull out of the 2015 Paris climate agreement, under which America pledged to cut its overall carbon output between 26 percent and 28 percent by 2025, compared with 2005 levels. While the country’s greenhouse gas emissions continues to decline, scientists say the United States cannot meet its Paris climate goal without policies such as the Clean Power Plan.
Carbon dioxide emissions from energy use in the United States declined by 0.5 percent last year, according to the International Energy Agency, due to an uptick in renewable energy and reduced overall energy demand. Globally, CO2 emissions from the energy sector rose 1.4 percent, reaching a historic high after remaining flat for three years.
Trump to shake up military leadership with new nominations: report
14 hrs ago
President Trump is expected to switch out commanders across the Middle East and Europe in the administration's most dramatic change to the US military leadership so far, according to a new report from The Wall Street Journal.
The Journal reported that the personnel shifts will affect officers fighting in the Middle East, as well as those working to counter Russia, overseeing Guantanamo Bay and engaging in stealth operations around the world.
Officials told the Journal that Army Lt. Gen. Richard Clarke is anticipated to be formally appointed to U.S. Special Operations Command, in Tampa, Fla. He would succeed Army Gen. Tony Thomas, who will retire next year. The Special Operations Command oversees the specialized forces of all military branches.
As of now, Clarke serves as the director of strategic plans and policy for the Pentagon's Joint Staff. He also served as operation officer at Joint Special Operations Command when the Pentagon initiated the raid that killed Osama Bin Laden. At that post, Clarke played a key role in the mission, participating in the planning, training and execution of the raid.
Trump will likely nominate two other commanders to replace retiring heads of regional combatant commands, several U.S. officials told the Journal.
Air Force Gen. Tod Wolters is anticipated to be chosen to head the U.S. European Command and North Atlantic Treaty Organization Supreme Allied Commander, Europe.
In the past, Wolters has served as the operations officer on the Joint Staff at the Pentagon. Wolters currently runs Air Force Europe, Air Force Africa, and Allied Air Command, all of which are based in Germany. He has especially focused on combating Russia in recent years.
Marine Lt. Gen. Kenneth McKenzie Jr. is expected to take on U.S. Central Command, after Army Gen. Joseph Votel, according to the Journal. That position is also out of Tampa and is thought of as the most prominent in the military. The post is responsible for all operations in the Middle East.
McKenzie is currently the director of the Joint Staff, which often situates officers well for top commands. He has years of experience in the nation's capital as well as in war zones in Iraq and Afghanistan.
The Journal reports that forces under the Special Operations Command have become increasingly important to the U.S. as it tries to lower its military presence across the world. Following from this emphasis, Trump nominated then commander of the Joint Special Operations Command Army Gen. Scott Miller to head up U.S. forces in Afghanistan.
McKenzie and Clarke's nominations will both require Senate confirmation, though it is rare for Senators to move to block military promotions.
The Pentagon and the speculated nominees declined to comment to the Journal.
In addition, two other high-ranking military posts are set to open next year, with the retirement of the Joint Chiefs of Staff Marine Gen. Joe Dunford and the vice chairman Air Force Gen. Paul Selva.
Several names have surfaced for the positions, including current Air Force chief of staff Gen. David Goldfein, Army chief of staff Gen. Mark Milley, and the head of U.S. strategic command Air Force Gen. John Hyten.
There may be two more additional openings, with the possible retirement of top U.S. commander in Afghanistan Army. Gen. John Nicholson and current commander of U.S. Forces, Korea Army Gen. Vince Brooks, officials told the Journal.