Tag: trade war

Trump blasts Fed for not helping manufacturers

President TrumpOpens a New Window. on Tuesday continued to take on the Federal ReserveOpens a New Window., saying the central bank “loves” to watch American manufacturers struggle.

“The Federal Reserve loves watching our manufacturers struggle with their exports to the benefit of other parts of the world. Has anyone looked at what almost all other countries are doing to take advantage of the good old USA? Our Fed has been calling it wrong for too long!”

Trump has heavily criticized the Fed and its chairman, Jerome PowellOpens a New Window. multiple times over the past several months. The president’s biggest issue with the Fed is over the size of its latest interest rate cut. While the central bank lowered the benchmark federal funds rate by a quarter-point last month, Trump has repeatedly called for a larger cut.

Meanwhile, manufacturing activityOpens a New Window. across Mid-Atlantic States showed little improvement in August, according to data released Tuesday from the Federal Reserve Bank of Richmond.

“The composite index rose from -12 in July to 1 in August, buoyed by increases in the indexes for shipments and new orders,” the survey found. “However, the third component, employment, fell. Firms reported increasing capital expenditures and inventories, but the measure of local business conditions was slightly negative. Manufacturers were, however, optimistic that conditions would improve in the next six months.”

The survey indicated that while wage growth continues, firms were having difficulty finding employees with the necessary skills for open positions — and it anticipates that both of these trends will continue. Also, “many firms saw employment decline while the average workweek increased in August,” according to the survey.

[Fox Business]

Beijing denies Trump’s claim that China called US officials to restart talks

President Donald Trump said U.S. and Chinese officials spoke Sunday and he is optimistic China wants to make a deal after the trade war between the two countries escalated in recent days.

“They want to make a deal,” Trump told reporters Monday during a meeting with Egyptian President Abdel-Fattah el-Sissi at the Group of Seven Summit. “That’s a great thing.”

The conversations Sunday between the U.S. and Chinese officials were the first since the two countries lobbed a new round of tariffs at each other last week. Neither side formally broke off talks and White House officials had said they expected negotiations to continue despite the new tariffs. But investors had feared China could walk away from the negotiating table.

Speaking to reporters, Trump heaped praise on Chinese President Xi Jinping, calling him a “great leader” and said China wants “to do something very, very badly.” He said the calls were at the “highest levels.”

“We are probably in a much better position now than any time in the negotiations,” Trump said in a meeting Monday with German Chancellor Angela Merkel.

When asked about the phone calls, Chinese Foreign Ministry spokesperson Geng Shuang said, “I haven’t heard about this.” News of Trump’s comments was breaking as he was addressing reporters.

Hours earlier, Chinese Vice Premier Liu He said China sought “calm” negotiations and opposed an escalation.

“We are willing to solve the problem through consultation and cooperation with a calm attitude,” he said, according to Chinese newspaper Caixin. “We firmly oppose the escalation of the trade war,” he said, adding that it “is not conducive to China, the U.S. and the interests of people all over the world.”

Liu, China’s top trade negotiator, was speaking at a tech conference in Chongqing in southwest China, the Chongqing Morning Post reported.

The stock market fell sharply Friday after China announced it would slap retaliatory tariffs on $75 billion worth of U.S. goods, and Trump hit back saying he would increase existing tariffs on $250 billion in imports to 30 percent from 25 percent Oct. 1.

He also said that a planned 10 percent tariff on a further $300 billion in Chinese goods would now be taxed at 15 percent starting next month.

But the continued talks and optimism from Trump eased financial market jitters. U.S. stock futures pointed to a recovery Monday morning, with Dow futures jumping more than 200 points.

Trump’s top economic adviser, Larry Kudlow, said Sunday afternoon that he was anticipating a call from the Chinese this week and for Chinese officials to still come to Washington as planned.

“You’ve got both sides playing their game, we get that,” Kudlow told reporters. “As long as they are talking, I’m good.”

Trump also signaled a hint of optimism on Iran.

He said he didn’t feel disrespected by the surprise arrival of Iranian Foreign Minister Mohammad Javad Zarif at the seaside town where the meeting of world leaders is taking place. Trump said French President Emmanuel Macron let him know Zarif was coming on the day of his arrival.

“I don’t consider that disrespectful at all, especially when he asked for my approval,” Trump said of Macron.

But White House aides said they felt blindsided by the unanticipated visitor, and some were upset at the French over the move, U.S. officials said shortly after Zarif’s arrival.

A spokesman for Zarif announced that he had arrived in Biarritz at the invitation of the French foreign minister “to continue talks” between the Iranian and French governments.

Trump said it would have been too soon to meet with the Iranians, and he declined to comment when asked if he sent any message to Zarif. There is no indication Zarif would have been willing to meet with the U.S. officials.

Trump said he isn’t looking for regime change in Iran, but that he wants to see the country abandon its nuclear program and stop its terrorism funding before lifting financial restrictions that have crippled its economy.

“We are looking to make Iran rich again,” Trump told reporters Monday. “Let them be rich.”

[NBC News]

Reality

Beijing has no idea what Trump is talking about.

Panicked Trump retweets claim farmers love him and Democrats are to blame for auto industry job losses

President Donald Trump seemed panicky Sunday night, searching for validation that everything is going well in his country despite reports to the contrary.

The president retweeted the chair of the Republican Party, who posted a video showing an Iowa farmer who loves Trump. The move comes after Trump’s Secretary of Agriculture got an ear full from farmers about not doing “great” under this presidency.

“We are not starting to do great again,” said Brian Thalmann, who serves as the president of the Minnesota Corn Growers Association. “We are starting to go down very quickly.”

Second, the president tweeted that a Joe Biden presidency would kill the fossil fuel industry and the auto industry along with it. Unfortunately for the GOP, the auto industry is already making a move to more fuel-efficient vehicles and autonomous cars. One plant that Trump promised to save in 2017 just closed in an Ohio townthat isn’t far from Michigan.

“He came to our community and said: ‘Don’t sell your house. These jobs are coming back,’” said David Green, president of United Auto Workers Local 1112. “We’ve seen nothing but job losses around here.”

Trump went on to retweet claims the economy is strong and everything in the United States is going extremely well.

[Raw Story]

Trump administration labels China a currency manipulator

The Trump administration on Monday designated China a “currency manipulator,” after the country’s central bank allowed its currency to weaken amid the ongoing trade dispute.

The move comes hours after Trump accused Beijing of depreciating its currency on Twitter, adding later that such measures have been used to “steal our business and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices. Not anymore!”

The People’s Bank of China allowed its currency to fall below 7 yuan to the American dollar, which is considered to be a psychologically important marker, for the first time in a decade. The move was seen as a retaliatory measure following Trump’s threat to slap a 10% tariff on $300 billion of Chinese goods.

The yuan’s depreciation comes amid a longstanding trade war between Washington and Beijing as each side has slapped economic penalties alongside on-again, off-again negotiations.

Presidents have often used the twice-a-year currency report as a diplomatic tools while engaging with countries that are seen as having exchange rates that harm US jobs and economic growth.

The United States hasn’t labeled a country a currency manipulator since it tagged China in the early 1990s, under President Bill Clinton. Designating a country doesn’t immediately trigger penalties, but it is seen by other governments as a provocation.

Treasury has repeatedly declined to label China a currency manipulator, despite Trump’s pledge to do so during his 2016 campaign. Instead, the country was placed on Treasury’s “monitoring list” in its review of US trading partners along with eight other countries.

Treasury’s report highlighted “significant concerns” over the meaningful depreciation of China’s currency against the US dollar, a critical component of ongoing trade talks, and urged China to take steps to avoid “a persistently weak currency.”

But on Monday Treasury said China’s central bank openly acknowledged that it has “extensive experience manipulating its currency and remains prepared to do so on an ongoing basis,” pointing to an earlier statement released by the People’s Bank of China.

The PBOC’s statement noted that it “has accumulated rich experience and policy tools, and will continue to innovate and enrich the control toolbox, and take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market.”

Trump has repeatedly argued that the Chinese have depreciated their currency slowly in the last year to help offset tariffs on billions of dollars of Chinese goods amid an ongoing trade war between the two major economic superpowers.

[CNN]

Reality

Donald Trump knows nothing about economics and it’s again abundantly clear after he labeled China a currency manipulator after the yuan dropped 1.7 percent, claiming China purposefully forced the yuan down.

The reality is the yuan’s decrease was from three different forces, first trade wars can cause a country’s currency to plunge. For example this happened to Mexico during Trump’s trade war for NAFTA 2.0.
(See: https://www.cnbc.com/2019/05/31/peso-plunges-vs-the-us-dollar-after-trump-announces-mexican-import-tariffs.html)

Second, a stronger dollar causes other countries currencies to devalue in relation. This is basic economics. As a side note Donald Trump doesn’t want a stronger dollar and has tried to get the Fed to artificially weaken the dollar. You know… manipulate currency.
(See: https://www.investopedia.com/terms/d/devaluation.asp)

Finally China had actually been propping up the yuan during Trump’s trade wars, the action China took was to just stop and accepting current market forces. Again, China most likely stopped fighting market headwinds as retaliation to Trump’s escalation of his trade wars, so the correct assessment is they were artificially manipulating the currency before by propping it up, but Trump is saying they are manipulating the currency now, which is just plain incorrect.
(See: https://www.ft.com/content/9d24c1ca-b7cd-11e9-96bd-8e884d3ea203)

Trump is speeding us into a Smoot-Hawley scenario, which exacerbated the Great Depression, and will make the next recession worse than it normally will be with his backwards understanding of basic economics.

Trump Calls Bannon One of His ‘Best Pupils’ After the Former Aide Showers Him With Compliments on T

President Donald Trump took to Twitter on Friday to embrace  former White House chief strategist Steve Bannon as one of his “best pupils” after his ex-aide appeared on CNBC and dissed Trump’s 2020 rivals. “Nice to see that one of my best pupils is still a giant Trump fan,” the president wrote on Twitter. “Steve joined me after I won the primaries, but I loved working with him!” The tweet, which also included a clip of Bannon praising Trump as a “great leader,” was a far cry from Trump’s earlier Twitter takedowns of his former aide, in which he mocked Bannon as “Sloppy Steve” and claimed he’d “cried” when he was booted from the White House. In his comments to CNBC, Bannon talked up Trump’s chances of winning a second term and said no current Democrat in the presidential race could beat Trump. “If the Democratic Party wants to take on Donald Trump, I got a news flash for them: They’re not going to take on Donald Trump with Joe Biden,” he said, adding that Biden likely couldn’t take Trump’s “withering assault” during the campaign. He described the rest of the Democratic field as “a pillow fight” that couldn’t withstand the “amazing campaigner” Trump is. “If they want to take out Donald Trump, I don’t see anybody on the stage on either night that are going to come close to taking out Donald Trump,” Bannon said.

Trump brags about his China trade war ‘success’ as stock ticker shows market tanking

President Donald Trump on Monday boasted about how successful his trade war with China has been — even though stock markets took an absolute beating on the news that China was about to slap tariffs on $60 billion of American goods.

While giving remarks to White House reporters on Monday, Trump bragged that his tariffs were making the United States richer, while a stock-market ticker showed that the Dow Jones Industrial Average was falling by more than 600 points.

“We’re taking in right now hundreds of billions of dollars,” Trump said of his tariffs on Chinese goods. “We’re taking in billions of dollars of tariffs, and those tariffs are going to be tremendously, if you look at what we’ve done thus far with China, we’ve never taken in ten cents until I got elected, now we’re taking in billions of billions.”

Trump also falsely credited the tariffs for economic growth in the first quarter of 2019, even though the majority of economists say the tariffs had nothing to do with strong GDP growth.

“This is a very positive step,” Trump said as the stock ticker continued showing a bloodbath in the markets. “I love the position we’re in.”

[Raw Story]

Trump doubles down on China tariffs, saying there is ‘no reason’ for US consumers to pay them

President Trump on Monday argued in a series of tweets that China will bear the brunt of the new tariffs his administration is imposing on the country, a day after one of his top economic advisers said both the U.S. and China would be hurt by the economic fight.

Trump wrote in the tweets that there was no “reason” for U.S. consumers to pay the tariffs, arguing in part that people in the United States could avoid paying the tariffs by buying products produced in other countries or in the United States.

“Their is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today,” Trump wrote in one of the posts on Twitter.

In a second tweet, he said a consumer could “buy the product inside the USA (the best idea).”

He said companies would leave China for other countries, such as Vietnam, to avoid the tariffs.

https://twitter.com/realDonaldTrump/status/1127886307118678016?ref_src=twsrc%5Etfw
https://twitter.com/realDonaldTrump/status/1127886307995336705?ref_src=twsrc%5Etfw

Trump’s comments come just a day after his top economic adviser, Larry Kudlow, in an interview on “Fox News Sunday” said both China and U.S. consumers would be hurt by the tariffs.

“In fact, both sides will pay in these things, and of course it depends,” Kudlow responded after host Chris Wallace pressed him on how importers of Chinese products hit by tariffs will pay those tariffs.

Most economists agree that the costs of the tariffs will be paid by U.S. consumers in the form of higher prices on imported products from China.

Kudlow did say that China would suffer, too, from the fight, saying they would be hit by gross domestic product losses and a diminishing export market.

The Trump administration announced it would hike tariffs on $200 billion in Chinese products on Friday. Tariffs that were 10 percent are jumping to 25 percent. 

It’s unclear how easy it would be for U.S. consumers to avoid higher prices coming because of the tariffs. It’s also not clear yet how prices will be effected, since the tariffs only went into effect on Chinese products leaving China on Friday.

[The Hill]

Stock Market Falls as Trump threatens tariffs on $11 billion of EU goods

U.S. stocks closed lower Tuesday, with the S&P 500 snapping its eight-day winning streak, on fears over escalation of trade tensions with the European Union and a weaker global outlook from the International Monetary Fund.

How did the benchmarks fare?

The Dow Jones Industrial Average DJIA, -0.72%  dropped 190.44 points, or 0.7%, to close at 26,150.58, while the S&P 500 index SPX, -0.61% fell 17.57 points. or 0.6%, to 2,878.20. The Nasdaq Composite Index COMP, -0.56% declined 44.61 points, or 0.6%, to 7,909.28.

What drove the market?

The office of the U.S. Trade Representative threatened to levy tariffs on many European goods late Monday. The threat is a retaliation against European companies’ subsidies for aircraft manufacturer Airbus SE EADSY, -1.82% If the U.S. follows through, the proposed tariffs would affect about $11 billion in imports to the U.S., including helicopters, bicycles, cheese and wine.

Lighthizer said the Trump administration would wait for World Trade Organization clearance to implement the duties. President Donald Trump Tuesday morning tweeted that the EU has taken advantage of the U.S., adding that it would “soon stop!”:

The U.S.-EU tensions comes with the administration reportedly close to resolving a yearlong spat with China, which has roiled markets amid fears the clash between the world’s largest economies could disrupt global economic growth.

The IMF lowered the outlook for global economic growth in 2019 to 3.3% from 3.5% projected in January, marking its third reduction of growth expectations in six months. The decline has been broadly felt, with all advanced economies, including the U.S., and most major emerging-market economies seeing deterioration in their outlook.

Meanwhile, data pointed to a tightening of the U.S. labor market. The number of job openings in the U.S. fell by 538,000 to 7.1 million on the last business day of February, marking the smallest number of job openings since March of 2018.

The National Federation of Independent Business’s small-business optimism index edged up 0.1 point to a seasonally adjusted 101.8, marking the third month in a row in a narrow range.

What were strategists saying?

“The tariff threat is probably what’s moving markets negatively,” Karen Cavanaugh, senior market strategist with Voya Investment Management, told MarketWatch, though she noted that tariffs being discussed are relatively small. “We’re in an information vacuum before earnings season, and right now any little thing could move markets until we get something substantial to sink our teeth into.”

“Sentiment in continental Europe is holding up well, considering the heightened tensions between Washington, D.C., and Brussels in relation to the threat of $11 billion worth of tariffs being imposed on European imports,” wrote David Madden, market analyst at CMC Markets, in a research note.

Which stocks were in focus?

Apple Inc. AAPL, -0.30%  surrendered early gains to fall 0.3%, bringing its nine-day win streak to a close as its effort to reclaim $1 trillion in market cap took a pause.

Shares of Wynn Resorts Ltd. WYNN, -3.86% dropped 3.9% after the company terminated talks to purchase Australia’s Crown Resorts.

Shares of Paris-listed Airbus SE AIR, -1.86%  were off 1.9% amid the U.S. tariff threat. U.S. listed shares EADSY, -1.82% also fell 1.8%.

Avaya Holdings Corp. AVYA, +4.17% shares gained 4.2% after Bloomberg reported that the communications software company is organizing a sales process for the company, following the receipt of unsolicited bids.

General Electric Co. GE, -2.85% shares slid 2.9% a day after J.P. Morgan analyst Stephen Tusa downgraded the stock.

Shares of American Airlines Group Inc. AAL, -1.68% fell 1.7% after the company cut its first quarter guidance.

How were other markets trading?

Markets in Asia closed on a mixed note, with Japan’s Nikkei 225 NIK, -0.61%adding 0.2%, Hong Kong’s Hang Seng Index HSI, -0.35% rising 0.3%, while the Shanghai Composite Index SHCOMP, -0.39% lost 0.2%. European stocks were lower, with the Stoxx Europe 600 SXXP, -0.47% down 0.5%.

In commodities markets, the price of oil CLK9, +0.19% retreated from five-month highs, while gold futures GCM9, -0.13% settled higher. The U.S. dollarDXY, +0.02% was mostly unchanged.

[MarketWatch]

Trump announces second round of farm aid to offset trade damage

President Trump on Monday announced his administration was planning to disburse a second tranche of aid as part of a $12 billion package meant to assist American farmers stung by retaliatory trade measures enacted by China and other foreign governments.

“Today I am making good on my promise to defend our Farmers & Ranchers from unjustified trade retaliation by foreign nations,” Trump tweeted. “I have authorized Secretary Perdue to implement the 2nd round of Market Facilitation Payments. Our economy is stronger than ever–we stand with our Farmers!”

After this latest round of payments, farmers will have received about $9.6 billion in aid, according to Department of Agriculture figures. The largest payments will be for soybeans.

Agriculture Secretary Sonny Perdue said in a statement Monday that farmers “are continuing to experience losses due to unjustified trade retaliation.”

“This assistance will help with short-term cash flow issues as we move into the new year,” he added.

The Trump administration announced in July it was dispersing $12 billion in aid to farmers amid escalating trade disputes with China, Mexico, Canada and the European Union. The administration said it would dole out the first $6 billion in August.

Reuters reported earlier this month that the second portion of aid had been delayed by the administration.

The $6 billion that was dispersed in August included about $4.7 billion to producers of corn, cotton, dairy, pork, sorghum, soybeans, and wheat.

Perdue said in a statement at the time that “all of this could go away tomorrow, if China and the other nations simply correct their behavior.”

“But in the meantime, the programs we are announcing today buys time for the President to strike long-lasting trade deals to benefit our entire economy,” he said.

Trump has engaged in an escalating trade war with China that has hurt farmers in the U.S. who rely on China for exports.

The second portion of aid announced Monday was initially delayed because the Trump administration was worried about the cost of the program and was hopeful that China would resume buying soybeans from the U.S., according to Reuters.

[The Hill]

White House seeks to end subsidies for electric cars and renewable energy

White House economic adviser Larry Kudlow said on Monday the Trump administration wants to end subsidies for electric cars and other items, including renewable energy sources.

Asked about plans after General Motors Co (GM.N) announced U.S. plant closings and layoffs last week, Kudlow pointed to the $2,500-to-$7,500 tax credit for consumers who buy plug-in electric vehicles, including those made by GM, under federal law.

“As a matter of our policy, we want to end all of those subsidies,” Kudlow said. “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”

Asked about a timeline, he said: “It’s just all going to end in the near future. I don’t know whether it will end in 2020 or 2021.”

The tax credits are capped by Congress at 200,000 vehicles per manufacturer, after which the subsidy phases out. GM has said it expects to hit the threshold by the end of 2018, which means under the current law, its tax credit scheme would end in 2020. Tesla Inc (TSLA.O) said in July it had hit the threshold. Other automakers may not hit the cap for several years.

Experts say the White House cannot change the cap unilaterally. U.S. President Donald Trump last week threatened to eliminate subsidies for GM in retaliation for the company’s decision.

Kudlow made clear any changes in subsidies would not just affect GM. “I think legally you just can’t,” he said.

Democrats will take control of the U.S. House in January and are unlikely to agree to end subsidies for electric cars and many have been pushing for additional incentives.

Tesla and GM have lobbied Congress for months to lift the cap on electric vehicles or make other changes, but face an uphill battle make changes before the current Congress expires.

In October, Senator Dean Heller proposed lifting the current cap on electric vehicles eligible for tax credits but phase out the credit for the entire industry in 2022. Two other senators in September proposed lifting the per manufacturer credit and extending the benefit for 10 years.

Also in October, Senator John Barrasso a Republican who chairs the Senate Environment and Public Works Committee, proposed legislation to end the EV tax credit entirely.

[Raw Story]

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