international trade

Trump Trade Initiatives Face Stronger Headwinds

Regions like the Pacific Northwest rely heavily on international trade to bolster their economies. Concerns are growing the US economy may suffer because Trump administration trade initiatives such as the new NAFTA are foundering.

Regions like the Pacific Northwest rely heavily on international trade to bolster their economies. Concerns are growing the US economy may suffer because Trump administration trade initiatives such as the new NAFTA are foundering.

Trump administration trade talks with China remain in limbo and negotiations with the European Union have flatlined. Now Trump’s new NAFTA trade agreement is faltering in Congress. The absence of agreements and the continuation of tariffs are piling more stress on manufacturers and farmers. 

No one expected trade talks with China would be a cake walk. Bruised relationships with European political leaders may contribute to stalled negotiations with the EU over agricultural products. But Trump trumpeted his success in maneuvering Mexico and China into a trade deal only to see the agreement flounder amid bipartisan complaints.

The early onset of the 2020 presidential election only complicates the situation with trade policies morphing into trade politics.

Trump’s protectionism has begun to chafe with traditionally free-trade Republicans, many of whom represent agricultural interests that are paying the price of a trade war with lost sales and the prospect of lost markets.

Republican Senate Finance Chair Charles Grassley has flatly told Trump he won’t move the new NAFTA trade deal until Trump lifts steel and aluminum tariffs on Mexico and Canada. Canada has strongly objected to the continuing tariffs, which has become an issue in its upcoming elections. Trump trade officials believe Chinese steel producers are evading the tariffs by shipping through Mexico.

“The tariffs are going to come off because the president has a good agreement,” Grassley told The Washington Post. “It’s just a matter of his realizing that nothing’s going to happen until the tariffs go off. And so the tariffs come off if he wants to get a win.” Grassley said Trump has refused because he feels the tariffs have revived the domestic steel industry and is insisting on quotas as a fallback when tariffs are lifted.

The AFL-CIO has refused to endorse the trade agreement until the Mexican parliament approves promised labor reforms. House Democrats aren’t on board, either. Speaker Nancy Pelosi said she won’t put the agreement on the House floor until she sees proof of tougher, effective enforcement provisions. 

Liberal Democrats say the deal is a nonstarter because of provisions they say codify exclusive 10-year rights to biologics, which they view as a “total giveaway to Big Pharma.”

Trump officials remain optimistic. Treasury Secretary Steven Mnuchin posed for pictures late last week after a bargaining session with his Chinese counterparts that he deemed “productive,” even as several deadlines have come and gone. The International Trade Commission’s analysis of new NAFTA won’t be completed until mid-April, which starts the congressional clock on approval.

However, negotiations face a political clock as leading Democratic presidential contenders oppose the new NAFTA, heartland farmers grow restive as they see hard-earned global markets evaporate, the US economy begins to show signs of stalling and trade deficits keep climbing.

 

‘America First’ Policies Raise Questions about US Leadership

President Trump’s ‘America First’ policies have played well with his political base, but not so well with global leaders as tensions are growing over the specter of spiraling trade war with consumers at home and abroad likely to pay the price.

President Trump’s ‘America First’ policies have played well with his political base, but not so well with global leaders as tensions are growing over the specter of spiraling trade war with consumers at home and abroad likely to pay the price.

One of the unintended successes of President Trump’s ‘America First’ policies has been to galvanize the European Union, Japan and China to preserve and bolster multilateral trade, regulatory and security arrangements Trump disdains.

“After months of denialangerbargaining and depression, Europe and other parts of the world have accepted that Mr. Trump and his mission of disruption are not going away,” reports The New York Times.

Accounts suggest foreign leaders are stunned by Trump’s continuing attacks on traditional allies, cozy relations with Russian President Vladimir Putin and seeming disavowal of America’s role as the leading advocate of a liberal world order.

EU leaders are especially astonished at being referred to as “foes.” In June, 29 EU ambassadors to the United States sent an open letter to Trump in defense of free trade and investment policies.

“Together, the US and EU have created the largest and wealthiest market in the world. The transatlantic economy accounts for half of the global gross domestic product by value, which directly supports more than 15 million high-quality jobs and $5.5 trillion in commercial sales. And nearly one-third of the world’s trade in goods occurs between the EU and United States alone,” the letter said. The ambassadors added that EU investment in the United States exceeds US investment in Europe.

EU leaders, despite qualms about Chinese trade practices that mirror Trump’s, have met with Chinese leaders without US involvement. According to the Times, the “summit meeting produced an unusual joint declaration and a common commitment to keep the global system strong.”

The EU then signed what has been described as the largest free-trade agreement in history with Japan, again with no US involvement.

Now, the EU is preparing “whopping tariffs” in response to proposed Trump tariffs on items such as German-made cars, noting that 45 out of 50 US states export more goods and services to Europe than China, totaling around $500 billion in 2016.

GOP Senator Ben Sasse from Nebraska may have spoken for the wave of critics who think Trump’s tariffs are undermining US exports that have taken years to cultivate and who believe his proposed $12 billion package of one-time financial aid to farmers won’t come close to co vering the long-term damage done by the tariffs.

GOP Senator Ben Sasse from Nebraska may have spoken for the wave of critics who think Trump’s tariffs are undermining US exports that have taken years to cultivate and who believe his proposed $12 billion package of one-time financial aid to farmers won’t come close to co vering the long-term damage done by the tariffs.

On the regulatory front, the EU fined Google $5.1 billion for antitrust behavior, which drew a sharp rebuke from Trump. Google plans to appeal the EU ruling, but it may be forced to reckon with it in the marketplace in the meantime.

Interestingly, the basis for the fine echoed an unusually American-sounding rationale. “Google has used Android as a vehicle to cement the dominance of its search engine,” Margrethe Vestager, Europe’s antitrust chief, told the Times. “These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere.” 

European Commission President Jean-Claude Juncker travels to DC this week to discuss the deteriorating EU trading relationship with Trump officials.

Meanwhile, the impact of tariffs is beginning to be felt. The Associated Press carried a story last week about the stress felt by US soybean farmers, who are a target of retaliatory Chinese tariffs. One soybean farmer said he already has lost $250,000 in value for his current crop. Soybeans on the Chicago Board of trade have dropped $2 per bushel in value. Farmers interviewed say they still support Trump, but want to know what the end game is.

The Oregonian posted a story last week listing five Oregon exports at risk in a spiraling trade war with China. Noting Oregon exported $3.5 billion worth of goods to China in 2017, the article said the most vulnerable are:

  • Computer and electronic products ($2.1 billion)
  • Machinery ($435 million)
  • Chemicals ($363 million)
  • Transportation equipment ($262 million)
  • Agricultural products ($235 million)

Oregonian reporter Mike Rogoway provided a more comprehensive look at Oregon exports in a piece published in June. Among the interesting statistics Rogoway uncovered: 87,000 Fords produced in the United States were exported through the Port of Portland, 90 percent of which headed to China.

US business interests also remain frustrated at Trump efforts to negotiate changes in the North American Free Trade Agreement, which appear to have stalled and made more difficult by the election of a leftist president in Mexico.

Global tensions are growing over the budding trade war, as reflected by a statement coming out of the G20 meeting held in Argentina over the weekend. US Treasury Secretary Steven Mnuchin attended the meeting and agreed to sign the joint statement.

Mnuchin acknowledged what he called “micro impacts” caused by the Trump tariffs, but defended them as a pathway to freer trade that is fair to the United States. News reports said Mnuchin and Chinese finance officials conversed during the 2-day meeting, but only engaged in “chitchat,” not serious negotiations.

There are harsher judgments of Trump’s policies. WorldPost editor Nathan Gardels. wrote, “The ‘American First’ president who denigrates democratic allies as foes is no longer the leader of the free world….Trump appears to be not even the leader of the United States.”

 

Republicans Hold Their Breath; Democrats Keep Debating Themselves

The 2018 midterm election is just six months away, with congressional Republicans eager to defend their record in the face of unpredictable Trump tweets and Democrats still groping for the right mix of messages that will move America.

The 2018 midterm election is just six months away, with congressional Republicans eager to defend their record in the face of unpredictable Trump tweets and Democrats still groping for the right mix of messages that will move America.

With the pivotal 2018 midterm elections less than six months away, it is timely to assess likely Republican and Democratic campaign themes. They aren’t exactly obvious. And neither is the election outcome, which could be a blue wave or red dawn.

The one sure thing is that Republican candidates will be tethered to President Trump, whether they like it or not. His zig-zags on trade, immigration and diplomacy will vex GOP incumbents and hopefuls, especially in Farm and Rust Belt states. Trump’s doubling-down on culture war issues will buoy social conservatives and complicate campaigns for Republicans running in swing districts or blue states.

Democrats appear to be still arguing over their 2018 themes. Do they run against Trump and tout the prospect of his impeachment? Or do they focus on bread-and-butter issues such as health care, income security and retooling job training? And what about the ongoing Russia investigation?

Senate Majority Leader Mitch McConnell told NPR last week congressional Republicans should run on their record. “This is the best year and a half for right-of-center policies since I've been here,” he said. “Everything from tax relief, to repealing the individual mandate to 15 uses of the Congressional Review Act. We mentioned the courts, comprehensive tax reform.”

In the same interview, McConnell admitted the GOP faces a stiff wind to hold on to one or both houses of Congress. That’s largely because of the shadow cast by the Robert Mueller investigation into Russian meddling in the 2016 election, potential Trump campaign collusion with Kremlin-connected Russians and presidential obstruction of justice. The failure to reach a deal on immigration – from an expanded border wall to protections for DREAMers who were brought to the United States illegally by their parents, but have grown up in America. Then there is Trump going off message, even on the issue of the importance of the 2018 mid-term elections. 

Democrats are torn by deep divisions, which have clouded their 2018 campaign messaging and eroded what once was a commanding leaded over Republicans. The progressive wing of the Democratic Party wants the campaign to center on new initiatives such as universal health care insurance, a federal jobs guarantee, tougher enforcement of anti-trust regulations and allowing the US Post Office to enter the consumer lending business. Center-left Democrats worry that isn’t the political chemistry to turn red states into blue ones. In early-state contested primaries, progressive candidates seem to be carrying the day, but the question remains whether they can win in November.

If Democrats have an ace up their sleeve, it is the number of women running for office.

If Democrats weren’t confused enough, conservative commentators have egged them on, with political cracks about House Speaker Nancy Pelosi and identity politics.

The gang at FiveThirtyEight conducted an online chat about midterm election themes. Micah Cohen, the politics editor, put government corruption and Trump’s behavior at the top of his list and downplayed trade, the economy, education, Social Security and the Russian investigation. Nate Silver, the creator and editor of FiveThirtyEight, said Democrats should concentrate on health care, the Russian investigation and gun control because they are tangible issues. Senior political writer Claire Malone recommended centering on Trump administration corruption, ethical lapses and rollbacks of environmental and consumer protection.

Polling continues to show that Trump’s political base remains solid, even though there are some cracks beginning to appear among college-educated women and disaffected union workers. The same is true on the Democratic side, which has been energized by Trump policies and congressional attempts to repeal Obamacare. Republicans need to hold on to their moderates while Democrats need to hold on to their progressives. Both parties need to appeal to unaffiliated voters who think the country isn’t moving in the right direction and GOP control of all the levers of federal power hasn’t moved in the country in the right direction.

While the national stakes in the election are clear – control of the House and Senate, most congressional elections tend to boil down to local issues and candidates. But national politics does play a role. Texas Senator Ted Cruz’ role in a federal government shutdown earned him an unusually well-funded Democratic opponent. Democratic Senator Jon Tester of Montana is facing a stiff re-election test in the face of criticism by Trump on Tester’s role in blocking his nominee to head the Veterans Administration. If Trump can pull off a verifiable deal to denuclearize North Korea, that could sway voters in the fall.

Only 48 out of 435 House seats are regarded as competitive by political experts. To regain control of the House, Democrats need to flip 25 GOP seats and not lose any of their incumbents. Democrats will likely concentrate on the 25 House districts that gave majorities to Hillary Clinton in 2016, but are held by Republicans. A 25-seat switch in the midterm election following a presidential election is not uncommon historically.

Democratic chances to regain control of the Senate, which the GOP holds by a slim 51-49 margin, are complicated because they have far more incumbents to defends. Democratic hopes go out the window if they lose seats they hold now in West Virginia, Indiana, Missouri and Montana. Their best hopes to gain seats are in Nevada, Arizona, North Dakota and Tennessee,

Meanwhile, congressional Republican candidates will be holding their breath about the next Trump tweetstorm and Democrats will continue debating how to approach the American electorate as a preferred alternative to GOP control. For Republicans, six months can be like infinity. For Democrats, six months can go by in a blink of the eye.

 

Wyden Could Be a Tax Panel Kingpin

Oregon Senator Ron Wyden could find himself chairing the powerful Senate Finance Committee in the next Congress following if Democrats can hold on to control of the Senate in the 2014 elections.Oregon Senator Ron Wyden may be next in line to become chairman of the Senate Finance Committee, which overseas taxation, trade and Medicare. The one hitch is that Democrats will have to fight to retain control of the Senate in the 2014 elections.

Wyden's potential ascension is due to the announcement today that current Chair Max Baucus, a Montana Democrat, has decided not to seek reelection. Earlier, the ranking Democrat on the committee, West Virginia Democrat Jay Rockefeller, said he was retiring.

The bad news for Wyden is that it may be hard for Democrats to retain those two Senate seats and a few others in the 2014 mid-term elections when there isn't a presidential race to activate all Democratic constituencies.

Elected to the U.S. House in 1980, Wyden moved into his first major chairmanship this term by taking the gavel of the Senate Energy and Natural Resources Committee. It takes that long in seniority-based Congress to move to the front of the line.

For a small state like Oregon, having the chairmanship of one of the most powerful committees in Congress is a big deal. Former Senator Bob Packwood chaired Senate Finance in the early 1980s and engineered a major tax overhaul. At the same time, the late Senator Mark Hatfield chaired Senate Appropriations, which made the two Oregon senators among the hottest phone numbers in DC.