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Trade Wars
March 5, 2019

President Trump is ending a preferential trade status for India and Turkey, effective in about 60 days, U.S. Trade Representative Robert Lighthizer announced Monday.

The Generalized System of Preferences (GSP) allows countries to export up to $5.6 billion in goods to the U.S. duty-free. India, the program's largest beneficiary, shrugged off the news. "It's meant for least-developed countries, and India has graduated out of that," said Monideepa M. Mukherjee, a spokeswoman for India's commerce ministry, adding that India will hold off on retaliatory tariffs.

Turkey was less sanguine, slamming the decision as harmful to Turkish and American small and medium businesses. Trump complains frequently about trade deficits. Peter Weber

January 9, 2019

China and the U.S. wrapped up three days of trade negotiations in Beijing on Wednesday, one day later than scheduled, and the U.S. delegation sounded upbeat about the talks. It has been "good few days," U.S. Under Secretary of Agriculture Ted McKinney told reporters. The talks "went just fine," he added. "It's been a good one for us." President Trump tweeted late Tuesday night that "talks with China are going very well!" China's Foreign Ministry said only that "the two sides were indeed very serious in conducting the consultations," and a formal statement was forthcoming.

China and the U.S. are racing to reach a deal before a March 2 deadline set by Trump and Chinese President Xi Jinping in December. This was the first face-to-face negotiations between China and the U.S. since that agreement, and if no deal is reached, Trump says he will raise tariffs on $200 billion worth of Chinese imports to 25 percent, from 10 percent. Analysts are skeptical that the two sides can reach a deal addressing America's concerns about Chinese structural trade barriers and investment regulations before the March 2 deadline.

"Even if a deal is cobbled together, the more strident trade hawks in the White House and Trump may not sign off," suggested Mizuho Bank's Vishnu Varathan. China has made concessions on agricultural and energy imports, but neither side seems to have shifted their position on the structural reforms, said Jake Parker at the U.S.-China Business Council. "These issues are much more difficult to solve immediately but are, frankly, much more compelling to U.S. companies." Higher-level talks are scheduled for later in January. Peter Weber

January 2, 2019

U.S. and Chinese trade negotiators are meeting in Beijing this week to begin high-stake talks to avert a bigger trade war before a March 2 deadline announced by President Trump and Chinese President Xi Jinping after a recent meeting in Argentina. The task of redefining the U.S.-China trade relationship in a way that benefits the U.S. rests largely with U.S. Trade Representative Robert Lighthizer, a longtime China hawk and Trump's chief U.S. trade negotiator.

Before he does that, "Lighthizer will need to keep a mercurial president from wavering in the face of queasy financial markets, which have suffered their steepest annual decline since 2008," The New York Times reports. "Trump is increasingly eager to reach a deal that will help calm the markets, which he views as a political electrocardiogram of his presidency." On Saturday, after speaking to Xi on the phone, Trump cheered investors by tweeting that the "deal is moving along very well."

Specifically, Lighthizer views his role as "preventing the president from being talked into accepting 'empty promises' like temporary increases in soybean or beef purchases," and he has a tool at his disposal, the Times reports:

When Mr. Lighthizer senses that anyone — even Mr. Trump — might be going a little soft on China, he opens a paper-clipped manila folder he totes around and brandishes a single-page, easy-reading chart that lists decades of failed trade negotiations with Beijing, according to administration officials. [The New York Times]

Lighthizer also has Florida real estate on his side, the Times reports: "He has joked to colleagues that he has more influence with Mr. Trump during winter months because he is able to hitch a ride on Air Force One during the president's flights down to Mar-a-Lago, which is several miles from Mr. Lighthizer's own $2.3 million waterfront condo in Palm Beach." You can read more at The New York Times. Peter Weber

September 14, 2018

On Thursday, The Wall Street Journal reported that Treasury Secretary Steven Mnuchin had asked Chinese officials for a new round of trade talks in September, giving Beijing a chance to avert new tariffs on $200 billion in Chinese exports. Some Trump administration officials believe the U.S. has China over a barrel, the Journal says, but there's also "a steady rise in political pressure on President Trump to ease up on trade fights" from farm and business groups, and "Chinese officials said they have grown wary of the Trump administration's unpredictable decision-making process and may be hesitant to accept without a clear sign U.S. negotiators have authority to speak for the president."

Trump validated those concerns with a tweet on Thursday: "The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing."

"The president's expectation that financial hardship will prompt Chinese President Xi Jinping to cave in a fresh round of diplomatic talks is misplaced," The Washington Post reports, citing analysts. Chinese markets have fallen significantly this year while U.S. markets are rising, "but unlike in the United States, the ups and downs of the Chinese stock market affect relatively few people, meaning sell-offs are unlikely to translate into pressure on Chinese leaders," the Post notes. And China's slowing economy — its economy is growing at about 6.5 percent — is due to a lot of factors that have nothing to do with the U.S. trade war.

"There's a lot of overly wishful thinking on the American side," Jeff Moon, a former U.S. trade negotiator, tells the Post. "Every economy has problems. We have ­trillion-dollar deficits. That doesn't mean either economy is in fundamental danger. It's a massive miscalculation." You can read more about the complexities of the trade war at The Washington Post. Peter Weber

August 30, 2018

On Wednesday, the five-member U.S. International Trade Commission unanimously overturned Trump administration tariffs on Canadian newsprint, handing a win to struggling small and midsize newspapers and a loss to the New York private equity firm One Rock Capital Partners. The Commerce Department had levied the tariffs starting in January at the request of One Rock, which purchased the Washington State paper mill North Pacific Paper Co. (Norpac) in 2016. One Rock executives met with Commerce Secretary Wilbur Ross personally to push for the tariffs, arguing that Canadian newsprint was unfairly subsidized.

The ITC, an independent government agency that adjudicates unfair trade practices, disagreed, saying its investigation "determined that a U.S. industry is not materially injured or threatened with material injury by reason of imports of uncoated groundwood paper from Canada." Its ruling means Canadian newsprint providers will no longer have to pay the 20 percent tariff. The levies had caused significant damage to newspapers, prompting layoffs, reduced page counts and publication days, and even closures. Newsprint is typically the No. 2 cost for newspapers, after employee salaries. Lawmakers from both parties and across the country had protested the tariffs.

When Norpac filed its complaint, no other paper manufacturer joined it. "The rest of the industry has blamed the declining print newspaper business, rather than Canada, for its struggles," The New York Times reports. One Rock, "according to people within the paper industry, most likely paid a premium for the business in hopes that it could make the case for tariffs and boost the business's revenue. Now it appears that bet has been lost." Some newspaper publishers said they're not sure the cuts will be fully reversed, given the daunting economics of running a newspaper in the digital age. Peter Weber

July 30, 2018

President Trump is still pretty pleased with his expanding trade war, but many Republicans in Congress and prominent GOP donors and advocacy groups are not. And Trump's first salvo, tariffs on imported aluminum and steel imposed in June, might start irking American shoppers soon, too. "Consumers are starting to see higher prices for recreational vehicles, soda, beer, and other goods that now cost more to make as a result of recent tariffs on metals and parts," The Wall Street Journal reports. In recent days, Coke, Polaris Industries, Winnebago, and Sam Adams' Boston Beer Co. have all cited Trump's tariffs for coming price hikes.

Minnesota-based Polaris is also shifting some production for its Indian-brand motorcycles to Europe to get around retaliatory EU tariffs, joining its Wisconsin neighbors Harley-Davidson. If you don't buy canned beverages or plan to purchase an RV or motorcycle, you may not feel this round of tariffs, but barring quick resolution to Trump's trade fights, more broader hikes seem imminent. "Tariffs on a host of additional imported products from China this month have added costs for companies that use those components to assemble their products in the U.S.," the Journal reports. You can read more about the impact on consumers at The Wall Street Journal. Peter Weber

July 24, 2018

Some Senate Republicans are not impressed by the Department of Agriculture's announcement on Tuesday that farmers hurt by tariffs will receive $12 billion in aid.

The program will offer temporary relief as it offsets $11 billion in losses for soybean, cotton, sorghum, wheat, dairy, and pork producers, NBC News reports. Several senators said the Trump administration's tariffs targeting China, Canada, and Europe are harming farmers, and they want to see trade agreements like NAFTA finalized.

The program is "an acknowledgement" that imposing tariffs "has a lot of unintended consequences that creates a lot of collateral damage," Sen. John Thune (R-S.D.) said. "When you start doing this, where do you stop? This is not the right way to do this." Sen. Ben Sasse (R-Neb.) told NBC News the tariffs are "going to make it 1929 again. You choose a war of choice, which is what this trade war is, and then you say afterward, let's just solve it by buying people gold plated crutches? The farmers and ranchers of America, they don't want crutches, they want to work."

Sen. Bob Corker (R-Tenn.) likened the program to "welfare," and said instead of offering money to "farmers to solve a problem they themselves created, the administration should reverse course and end this incoherent policy." Catherine Garcia

July 6, 2018

President Trump imposed 25 percent tariffs on 800 Chinese products worth $34 billion Friday, and China took little time hitting back. "After the United States imposed unfair tariffs on Chinese goods, our tariffs on part of the U.S. products also took effect immediately," Chinese Foreign Ministry spokesman Hu Chunhua said Friday. China's Commerce Ministry accused Trump of launching "the biggest trade war in economic history" and said "China is forced to strike back to safeguard core national interests and the interests of its people." Beijing's retaliatory tariffs will affect 500 U.S. products, including soybeans, seafood, electric cars, and meat.

Economists say if the U.S. and China stop at $34 billion in tariffs, or even $50 billion, "the overall impact on both economies will be minimal even though some industries will suffer," CNNMoney says. But Trump threatened tariffs on up to $550 billion in Chinese goods Thursday — an amount "bigger than the $505 billion of goods that the United States imported from China last year," CNNMoney notes — and if he made good on his threat, the trade war would cause some serious damage to the U.S. and global economies.

China's state-run China Daily said in an editorial Friday that "the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China," and "its unruliness looks set to have a profoundly damaging impact on the global economic landscape in the coming decades, unless countries stand together to oppose it." Peter Weber

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