Ensnarled in an impeachment investigation over his request for Ukraine to investigate a chief political rival, President Donald Trump Thursday called on another nation to probe former Vice President Joe Biden: China.
“China should start an investigation into the Bidens,” Trump said in remarks to reporters outside the White House. Trump said he hadn’t directly asked Chinese President Xi Jinping to investigate Biden and his son Hunter but said it’s “certainly something we could start thinking about.”
Trump and personal lawyer Rudy Giuliani have also tried to raise suspicions about Hunter Biden’s business dealings in China, leaning on the writings of conservative author Peter Schweizer. But there is no evidence that the former vice president benefited financially from his son’s business relationships.
Trump’s requests for Ukrainian President Volodymyr Zelenskiy to dig up dirt on Biden, as well as Giuliani’s conduct, are at the center of an intelligence community whistleblower complaint that sparked the House Democratic impeachment probe last week.
Trump’s comments came as he publicly acknowledged that his message to Ukrainian President Volodymyr Zelenskiy and other officials was to investigate the 2020 Democratic presidential contender. Trump’s accusations of impropriety are unsupported by evidence.
“It’s a very simple answer,” Trump said of his call with Zelenskiy. “They should investigate the Bidens.”
Trump has sought to implicate Biden and his son in the kind of corruption that has long plagued Ukraine. Hunter Biden served on the board of a Ukrainian gas company at the same time his father was leading the Obama administration’s diplomatic dealings with Kyiv. Though the timing raised concerns among anti-corruption advocates, there has been no evidence of wrongdoing by either the former vice president or his son.
America’s economy runs into a major speed bump Sunday as new tariffs increases between president Donald Trump and China began and economic experts expect prices to rise on many retail goods and drive down spending by consumers.
Many U.S. companies warned Trump that the 15% hike in tariff taxes on goods from China forces them to raise prices on items imported. At present, America buys 87% of textiles and clothing from China, along with 52% of shoes.
Trump is threatening to raise even more import fees of 15% more on Dec. 15 to cover any and all items from China.
China, of course, is targeting items from America for import penalties and tech company executives say that will give the orientals an advantage because the government there subsidizes the tech items that compete with U.S. products.
Trump lies to Americans with his claim that China pays the tariffs he imposes but economic research shows the costs of those taxes falls on American businesses and consumers.
A new study by J.P. Morgan says Trump’s tariffs costs the average American household at least $1,000 a year, which means Americans have less money to spend in our own economy.
“The data indicate that the erosion of consumer confidence is now well underway,” says Richard Curtin, who heads the University of Michigan’s consumer sentiment index.
Some retailers say they will try to absorb the tariff increases without raising prices but that trend won’t last long, say economic analysts. Consumer spending is dropping, the Michigan study warns, and latest data shows the most drastic drop since December 2012.
Expect a direct hit on many U.S. consumers from President Donald Trump’s latest round of tariffs on Chinese imports. He had no intention of pulling back on import taxes set to kick in Sunday.
“They’re on. They’re on,” the president told reporters Friday before departing for a weekend stay at Camp David.
Americans were largely spared from higher prices in his previous rounds of trade penalties. No longer. The 15% tariffs on $112 billion in Chinese imports will apply to items ranging from smartwatches and TVs to shoes, diapers, sporting goods and meat and dairy products.
For the first time since Trump launched his trade war, American households faced price increases. Many U.S. companies said they would be forced to pass on to customers the higher prices they had to pay on Chinese imports.
Despite the looming pocketbook pain for Americans, Trump tried to frame the tariffs as putting the United States “in an incredible negotiating position” with Beijing. “It’s only going to get worse for China.”
For more than a year, the world’s two largest economies have been locked in a high-stakes duel marked by Trump’s escalating penalties on Chinese goods and Beijing’s retaliatory tariffs.
The two sides have held periodic talks that seem to have met little progress despite glimmers of potential breakthroughs. All the while, they have imposed tariffs on billions of each other’s products in a rift over what analysts say is Beijing’s predatory tactics in its drive to become the supreme high-tech superpower.
“We’re going to win the fight,” Trump asserted.
American consumers so far had been spared the worst of it: The Trump administration had left most everyday household items off its tariff list (valued at $250 billion in Chinese products so far) and instead targeted industrial goods.
Under the new tariff schedule, 69% of the consumer goods Americans buy from China were facing his import taxes, compared with 29% now.
Higher tariffs also were set to kick in for another batch of Chinese products — $160 billion worth — on Dec. 15. By then, roughly 99% of made-in-China consumer goods imported to the United States will be taxed, according to calculations by Chad Bown of the Peterson Institute for International Economics.
Overall, Trump’s trade war will have raised the average tariff on Chinese imports from 3.1% in 2017, before the hostilities began, to 24.3%.
“The bottom line is that, for the first time, Trump’s trade war is likely to directly raise prices for a lot of household budget items like clothing, shoes, toys, and consumer electronics,” Bown wrote in an report.
Trump famously declared that trade wars are “easy to win.” But for months, he falsely claimed that China itself paid the tariffs and that they left Americans unscathed. In fact, U.S. importers pay the tariffs. They must make a high-risk decision: absorb the higher costs themselves and accept lower profits or pass on their higher costs to their customers and risk losing business.
This has become an ever-more-difficult decision.
After years of ultra-low inflation, consumers have grown more resistant to price hikes, especially when they can easily compare prices online for household products and choose the lowest-price options. For that reason, many retailers may choose not to impose the cost of the higher tariffs on their customers.
The higher costs U.S. importers faced could be offset somewhat by the declining value of China’s currency, which has the effect of making China’s products somewhat less expensive in the United States.
Still, the prices of certain goods will cost Americans more. Trump tacitly acknowledged this a few weeks ago by announcing a delay in his higher tariffs on $160 billion in imports until Dec. 15 — to keep them from squeezing holiday shoppers.
Even before the December tariffs, though, 52% of shoes and 87% of textiles and clothing imported from China were to be hit by Trump’s tariffs, according to Peterson’s Bown. And not even counting the increase — from 10% to 15% — that Trump announced for his new tariffs a week ago, J.P. Morgan had estimated that his import taxes would cost the average household roughly $1,000 a year.
“The story that holiday goods (were) given a reprieve is fake news,” said Stephen Lamar of the American Apparel and Footwear Association. Overall, the 15% September and December tariffs will force Americans to pay an extra $4 billion a year for shoes and boots, according to a footwear trade group.
Retailers, engaged for a battle for survival with Amazon and other e-commerce rivals, braced for the worst.
Macy’s raised an alarm when it reported earnings in August. In May, Trump had raised separate tariffs on $250 billion in Chinese goods from 10% to 25%. In response, Macy’s tried to raise prices of some items on the hit list — luggage, housewares, furniture. But according to CEO Jeff Gennette, customers just said no.
Some retailers were trying to force their suppliers to eat the higher costs so they would not have to raise prices for shoppers. Target confirmed to The Associated Press that it warned suppliers that it would not accept cost increases arising from the China tariffs. Some small retailers were even more vulnerable.
“Any cost increase puts us in a tough place,” said Jennifer Lee, whose family owns the Footprint shoe store in San Francisco. “It makes it tough for business owners because we will have to take a hit on our margins, but it will also be difficult for us to pass it on to our shoppers.”
Albert Chow, who owns Great Wall Hardware in San Francisco, said he’s already raised prices on some Chinese-made products because an earlier round of tariffs led his suppliers to raise prices 10% to 20%.
“I will try to keep the prices down for as long as I can,” Chow said. “But at some point, when the tariffs are just too much, we have to eventually raise the prices, and then it goes down to the end user — the customer.”
What’s frustrating for retailers is that consumers might otherwise be in an exuberant mood this holiday season. For most Americans, their jobs are safe and their wages are rising. Unemployment is near a half-century low.
Yet the economy itself looks increasingly fragile. Growth is slowing as the global economy weakens. And Trump’s mercurial approach to trade policy — imposing, delaying, reimposing import taxes via tweet — makes it nearly impossible for companies to decide on suppliers, factory sites and new markets. So they delay investments, further straining the economy.
China on Friday threatened retaliation if U.S. President Donald Trump’s planned tariff hikes go ahead, while the renewed acrimony between the two biggest global economies sent stock markets tumbling.
China’s government accused Trump of violating his June agreement with President Xi Jinping to revive negotiations aimed at ending a costly fight over Beijing’s trade surplus and technology ambitions.
Trump rattled financial markets with Thursday’s surprise announcement of 10% tariffs on $300 billion of Chinese imports, effective Sept. 1. That would extend punitive duties to everything the United States buys from China.
If that goes ahead, “China will have to take necessary countermeasures to resolutely defend its core interests,” said a foreign ministry spokeswoman, Hua Chuying.
“We don’t want to fight, but we aren’t afraid to,” Hua said at a regular news briefing. She called on Washington to “abandon its illusions, correct mistakes, and return to consultations based on equality and mutual respect.”
Washington and Beijing are locked in a battle over complaints China steals or pressures companies to hand over technology. The Trump administration worries American industrial leadership might be threatened by Chinese plans for government-led creation of global competitors in robotics and other technologies. Europe and Japan echo U.S. complaints those plans violate Beijing’s market-opening commitments.
Washington earlier imposed 25% tariffs on $250 billion in Chinese products. Beijing has retaliated by raising import duties on $110 billion of U.S. goods.
Beijing is about to run out of American imports for retaliation due to their lopsided trade balance.
China imported U.S. goods worth about $160 billion last year. But regulators have extended retaliatory measures to include slowing down customs clearance for American companies and putting off issuing license in insurance and other fields.
Beijing also is threatening to release an “unreliable entities” blacklist of foreign companies that might face restrictions on doing business with China. Plans for that were announced after Washington imposed crippling restrictions in May on sales of U.S. technology to Chinese tech giant Huawei Technologies Ltd.
Trump’s announcement surprised investors after the White House said Beijing promised to buy more farm goods. It came as their latest trade talks ended in Shanghai with no sign of a deal. Officials said they would resume next month in Washington.
The announcement “is likely to put a comprehensive deal further out of reach,” said Fitch Solutions in a report.
Tokyo’s main stock market index fell 2.5% by midday and Hong Kong’s benchmark lost 2.3%. Markets in Shanghai, Sydney and Seoul also declined.
Earlier on Wall Street, the benchmark Standard & Poor’s 500 fell for a fourth day, losing 0.9% to 2,953.56.
The Dow Jones Industrial Average declined 1% to 26,583.42. The Nasdaq composite ended 0.8% lower at 8,111.12.
Also Friday, China’s yuan fell to its lowest level this year against the dollar after Trump’s tariff threat fueled concerns about slowing economic growth, coming close to breaking the politically sensitive level of seven to the U.S. currency.
The yuan tumbled to 6.9520 to the dollar, its weakest since December, but recovered slightly by midday.
Trump’s threat “will likely put more depreciation pressure” on the currency, said Tao Wang of UBS in a report. She said Beijing is likely to “tightly manage” the exchange rate “to avoid any significant depreciation.”
The currency’s weakness is helping to fuel Washington’s trade complaints. The U.S. Treasury Department declined in May to label China a currency manipulator but said it was closely watching Beijing.
The level of seven yuan to the dollar has no economic significance but could revive U.S. attention to the exchange rate.
Trump’s earlier tariffs were intended to minimize the impact on ordinary Americans by focusing on industrial goods. But the new tariffs will hit a vast range of consumer products from cellphones to silk scarves.
China’s foreign minister criticized the move.
“Imposing tariffs is definitely not the right way to resolve trade frictions,” Wang Yi told reporters in Bangkok, where he was attending a meeting of the Association of Southeast Asian Nations.
Trump has long said he was preparing to tax the $300 billion in additional Chinese tariffs. But he had suspended the threat after meeting Xi at a gathering of the Group of 20 major economies in Osaka, Japan.
The president accused Beijing of failing to follow through on stopping the sale of fentanyl to the United States or on purchasing large quantities of farm goods such as soybeans. Speaking to reporters Thursday at the White House, Trump complained Xi is “not moving fast enough.”
Talks broke down in May after the United States accused the Chinese of reneging on earlier commitments.
President Donald Trump intensified pressure Thursday on China to reach a trade deal by saying that beginning Sept. 1, he will impose 10% tariffs on the remaining $300 billion in Chinese imports he hasn’t already taxed. The move immediately sent stock prices sinking.
The president has already imposed 25% tariffs on $250 billion in Chinese products, and Beijing has retaliated by taxing $110 billion in U.S. goods.
U.S. consumers are likely to feel the pain if Trump proceeds with the new tariffs. Trump’s earlier tariffs had been designed to minimize the impact on ordinary Americans by focusing on industrial goods. The new tariffs will hit a vast range of consumer products from cellphones to silk scarves.
The president’s action came as a surprise, just as U.S. and Chinese negotiators were concluding a 12th round of what the White House called “constructive” trade talks in Shanghai. The negotiations ended Wednesday without any sign of a deal but are scheduled to resume next month in Washington.
The Dow Jones Industrial Average, which had been up nearly 300 points earlier, was down nearly 200 points soon after Trump’s tweets announcing the new tariffs.
Trump has long said he was preparing to tax the $300 billion in additional Chinese tariffs. But he suspended the threat after meeting with President Xi Jinping in Osaka, Japan, in June.
It isn’t clear when American consumers are likely to feel the impact of the additional tariffs, but higher prices could show up in stores this fall.
“Attention all Target & Wal-Mart shoppers … the price on the goods you buy ahead of the holidays are going up due to trade policy,” tweeted Joseph Brusuelas, chief economist at the consultancy RSM.
Trump also tweeted that “we look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!”
The president blamed China for not following through on stopping the sale of fentanyl to the United States or purchasing large quantities of farm goods such as soybeans.
The world’s two biggest economies are locked in a trade war over U.S. allegations that Beijing uses predatory tactics — including stealing trade secrets and forcing foreign companies to hand over technology — in a drive to overtake American technological dominance.
Talks had broken down in May after the United States accused the Chinese of reneging on earlier commitments.
“Unfortunately, these talks are not getting any easier,” said Wendy Cutler, a former U.S. trade negotiator who is now vice president at the Asia Society Policy Institute. “I don’t expect the Chinese to sit by … The combination of these latest tariffs, with Chinese counter retaliation, is going to take a heavy toll on US consumers, workers, farmers, and businesses.”
The effects of Trump’s trade war were a factor in the Federal Reserve’s decision Wednesday to cut interest rates in an otherwise healthy economy. Chairman Jerome Powell pointed repeatedly to the uncertainty caused by Trump’s pursuit of trade wars on multiple fronts as a reason for the rate cut.
Sarah Bloom Raskin, a former Fed board member, and other economists have warned that the rate cut could embolden Trump to escalate trade battles because the president may feel confident that the Fed will then respond with additional rate cuts.
President Donald Trump dismissed the hard realities of his trade dispute with China as mere foolishness Monday and told people to expect humans on Mars “very shortly,” which isn’t happening.
Here’s a look at some of his statements in a news conference with Japanese Prime Minister Shinzo Abe and how they stack up with reality:
TRUMP: “You know, foolishly, some people said that the American taxpayer is paying the tariffs of China. No, no, no — it’s not that way. They’re paying a small percentage, but our country is taking in billions and billions of dollars.”
THE FACTS: That’s not true. U.S. consumers and the public are primarily if not entirely paying the costs of the tariffs, as his chief economic adviser, Larry Kudlow, has acknowledged. That’s how tariffs work: Importers pay the taxes and often pass on the cost to consumers. The U.S. is not “taking in” billions from China as a result.
A sustained trade dispute is not painless for China, either. Its goods become pricier and therefore less competitive. But China is not paying a tab to the U.S. Treasury in this matter.
As Kudlow said, accurately: “Both sides will suffer on this.” But in his view, “this is a risk we should and can take.”
TRUMP: “Prime Minister Abe and I have agreed to dramatically expand our nations’ cooperation in human space exploration. Japan will join our mission to send U.S. astronauts to space. We’ll be going to the moon. We’ll be going to Mars very soon.”
THE FACTS: Not very soon. The U.S. will almost certainly not be sending humans to Mars in his presidency, even if he wins a second term.
The Trump administration has a placed a priority on the moon over Mars for human exploration (President Barack Obama favored Mars) and hopes to accelerate NASA’s plan for returning people to the lunar surface. It has asked Congress to approve enough money to make a moon mission possible by 2024, instead 2028. But even if that happens, Mars would come years after that. International space agencies have made aspirational statements about possibly landing humans on Mars during the 2030s.
TRUMP on Iran: “If you look at the deal that Biden and President Obama signed, they would have access — free access — to nuclear weapons, where they wouldn’t even be in violation, in just a very short period of time. What kind of a deal is that?”
THE FACTS: That’s a misrepresentation of what the deal required . Iran would not have access to nuclear weapons capability in a “very short period” without violating the terms of the 2015 accord. The U.S. withdrew from the multinational agreement last year.
During the 15-year life of most provisions of the deal, Iran’s capabilities were limited to a level where it could not produce a nuclear bomb. Iran was thought to be only months away from a bomb when the deal came into effect.
After 15 years, Iran could have an array of advanced centrifuges ready to work, the limits on its stockpile would be gone and, in theory, it could then throw itself into producing highly enriched uranium. But nothing in the deal prevented the West from trying to rein Iran in again with sanctions. The deal included a pledge by Iran never to seek a nuclear weapon. In return, partners in the deal eased sanctions on Iran.
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Iowa farmer Tim Bardole survived years of low crop prices and rising costs by cutting back on fertilizer and herbicides and fixing broken-down equipment rather than buying new. When President Donald Trump’s trade war with China made a miserable situation worse, Bardole used up any equity his operation had and started investing in hogs in hopes they’ll do better than crops.
A year later, the dispute is still raging and soybeans hit a 10-year-low. But Bardole says he supports his president more today than he did when he cast a ballot for Trump in 2016, skeptical he would follow through on his promises.
“He does really seem to be fighting for us,” Bardole says, “even if it feels like the two sides are throwing punches and we’re in the middle, taking most of the hits.”
Trump won the presidency by winning rural America, in part by pledging to use his business savvy and tough negotiating skills to take on China and put an end to trade practices that have hurt farmers for years. While the prolonged fight has been devastating to an already-struggling agriculture industry, there’s little indication Trump is paying a political price. But there’s a big potential upside if he can get a better deal — and little downside if he continues to get credit for trying for the farmers caught in the middle. It’s a calculation Trump recognizes heading into a reelection bid where he needs to hold on to farm states like Iowa and Wisconsin and is looking to flip others, like Minnesota.
A March CNN/Des Moines Register poll of registered Republicans in Iowa found 81% approved of how Trump is handling his job, and 82% had a favorable view of the president, an increase of 5 points since December. About two-thirds said they’d definitely vote to re-elect him. The poll had a margin of error of 4.9 percentage points.
A February poll by the same organizations found 46% of Iowans approved of the job Trump was doing — his highest approval rating since taking office — while 50% said they disapprove. The margin of error was 3.5 percentage points.
Many farmers are lifelong Republicans who like other things Trump has done, such as reining in the EPA and tackling illegal immigration, and believe he’s better for their interests than most Democrats even on his worst day. They give him credit for doing something previous presidents of both parties mostly talked about. And now that they’ve struggled for this long, they want to see him finish the job — and soon.
“We are the frontline soldiers getting killed as this trade war goes on,” said Paul Jeschke, who grows corn and soybeans in northern Illinois, where he’s about to plant his 45th crop.
“I’m unhappy and I think most of us are unhappy with the situation. But most of us understand the merits,” he added. “And it’s not like anyone else would be better. The smooth-talking presidents we’ve had recently – they certainly didn’t get anything done.”
When the trade war started last summer, China targeted its first round of tariffs on producers in agricultural and manufacturing states that were crucial to Trump’s 2016 victory, such as Iowa, Michigan, Ohio and Wisconsin. Particularly hard hit were producers of soybeans, the country’s largest farm export.
The most recent round of trade talks between the Trump administration and China broke up earlier this month without an agreement, after Trump accused China of backing out on agreed-to parts of a deal and hiked tariffs on $200 billion of imports from China. China imposed retaliatory tariff hikes on $60 billion of American goods, and in the U.S. the price of soybeans fell to a 10-year low on fears of a protracted trade war. U.S. officials then listed $300 billion more of Chinese goods for possible tariff hikes.
As China vowed to “fight to the finish,” Trump used Twitter to rally the farming community.
“Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now,” Trump tweeted. “Hopefully China will do us the honor of continuing to buy our great farm product, the best, but if not your Country will be making up the difference based on a very high China buy.”
He added: “The Farmers have been ‘forgotten’ for many years. Their time is now!”
To partially offset the plunge in sales caused by the tariffs, Trump has promised an aid package, some $15 billion for farmers and ranchers, following $11 billion in relief payments last year.
Beside the help prompted by the tariff dispute, a farm bill that Congress approves every five years provides farmers with hundreds of millions in additional federal aid. The subsidies have remained relatively stable, with the latest farm bill approved in December. Most of the aid helps growers of the largest crops, including corn and soybeans. Farmers also benefit from billions of dollars annually in federal insurance subsidies.
It’s been six years since farmers did better than break even on corn, and five years since they made money off soybeans.
U.S. net farm income, a commonly used measure of profits, has plunged 45 percent since a high of $123.4 billion in 2013, according to the U.S. Department of Agriculture, reflecting American farmers’ struggle to return to the profitability seen earlier in the decade. Chapter 12 bankruptcy filings for farm operations in the upper Midwest have doubled since June 2014, when commodity prices began to drop. The hardest hit were farms and dairy operations in Wisconsin, a state that supported Democrats for president for most of recent history before backing Trump and that will be a fierce 2020 battleground.
“It’s awful expensive to put a crop in,” said Morie Hill, looking over countless green shoots peeking up from his fields in central Iowa. He isn’t sure why more farmers haven’t been forced out.
“Everyone I know is squeezing and doing everything they can, trying to go further with less,” he said.
Brent Renner, who farms with his father in northern Iowa, said while there’s strong support for Trump in their area, frustration is growing. Farming friends regularly check Twitter to see what Trump is saying, and how it might move the market.
“I don’t know how many farming friends I’ve had who’ve said ‘Why can’t someone just take his phone away?’” Renner said. “It’s impossible to think he hasn’t lost support at some level, but what that level is nobody knows.”
Patty Judge, a Democratic former Iowa lieutenant governor and state agriculture secretary, agreed people in Iowa haven’t rushed to move away from Trump. But she thinks voters will be ready for a change in 2020 — and a president who better understands the country’s role in international trade.
“It’s very important to us and to have gone into a trade war without a plan, without an exit strategy, is dangerous and wrong and I think Iowans are going to understand that before the next election,” she said.
The 2018 midterms showed Democrats’ difficulties outside metro areas. AP VoteCast, a national survey of more than 115,000 voters, found rural and small-town residents cast 35% of midterm ballots; 56% of those voted for Republican House candidates, compared with 41% for Democrats. Among small-town and rural white voters the advantage was greater, tilting 63-35 for Republicans.
Jeshke said he gives Trump credit for rolling back regulations that have made it tougher and more expensive for new herbicides to be approved, and for his proposed changes to the Waters of the U.S., an Obama-era environmental measure. Under the act, Jeshke said he needed government approval to mow some areas of his property or make changes to manmade lakes where kids go fishing.
“And I dug them!” he said.
Jeshke says most farmers are more concerned about getting the situation solved than pointing fingers. But if they were to place blame, most of it would be on China, and the rest would be on previous presidents who could have solved the trade imbalances more easily 15 or 20 years ago.
One thing he knows for sure about Trump: “If he rolls over now, we’ll never be able to hold them accountable.”
Renner says farmers are used to having things happen that aren’t in their control — the weather, for example — but finding a way through. It’s a quality he says is clearly on display now.
“We’re an optimistic people,” he said. “We’ll keep our chins up and keep moving ahead.”
He’s been contradicted by one of his top advisers, dinged in regular fact checks and called out by top economists. Still, President Donald Trump has held firm to dubious declarations about trade policy, raising questions among experts and even his allies about whether he either can’t — or won’t — grasp the fundamentals of the issue.
This week, as he escalates a trade war with China, Trump has misstated how the tariffs are paid, who pays them and the significance and size of the trade deficit. His assertions came even as others in the White House worry about whether Trump’s zeal for tariffs could have a political price.
The president’s frequent claims provide a window into his long-held beliefs on trade and the difficulty of changing his economic worldview. They also signal that Trump may not back off the hawkish approach easily and is almost certain to continue to misrepresent the likely impact.
Trump’s views on tariffs depart from conventional economics in at least three ways: He has repeatedly claimed that the Chinese — not Americans — are paying the 25% tariff he has imposed on $250 billion of Chinese imports. He has described the trade deficits that the United States runs with other individual countries as total economic losses. And he argues that the U.S. trade deficit with all other countries combined is a result of bad trade policy.
On all three questions, trade experts fundamentally disagree.
It is U.S. companies that import — retailers, wholesalers and manufacturers — that pay the duties that Trump has imposed, not Chinese companies. One of Trump’s top economic advisers, Larry Kudlow, admitted as much in a television interview Sunday.
But Trump tweeted on Monday: “Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S.”
That’s simply not true. It’s certainly possible that a huge retail chain, for example, could push its Chinese supplier to cut its prices to offset the tariffs. China’s currency may also decline in value, which makes Chinese exports cheaper. And international corporations may decide to locate their plants elsewhere, such as in Mexico or Vietnam, depriving China of jobs and export revenue.
But studies released in March found that those factors haven’t made much difference, and that nearly the entire cost of the import taxes is falling on U.S. consumers and businesses. One of the studies , by economists at UCLA and the World Bank, found that American firms and shoppers lost $68.8 billion last year because of higher tariffs.
Trump made taking a tough line with China an animating feature of his underdog presidential campaign and some of his advisers believe that, even if the trade battle leads to short-term economic pain, it will have been worth it.
“This is an epic fail of the Wall Street junta to have President Trump accept a deal that was detrimental to the country. He rejected that,” says Steve Bannon, Trump’s chief strategist on the 2016 campaign. “He is not going to be tainted with a bad deal. He intuitively knows that this is the right thing to do.”
There has long been division within the West Wing about tariffs’ effectiveness. Trump has often sided with China hawk Peter Navarro, who argues that tariffs work. But Gary Cohn, the former director of the National Economic Council, argued strenuously against them.
“Tariffs don’t work. If anything, they hurt the economy because if you’re a typical American worker, you have a finite amount of income to spend. If you have to spend more on the necessity products that you need to live, you have less to spend on the services that you want to buy. And you definitely don’t have anything left over to save,” Cohn told the “Freakonomics” podcast in March.
His efforts to bring Trump around to that way of thinking were a failure.
“I was losing the war on tariffs every day with the president. I knew I wasn’t convincing him I was right,” Cohn said in the interview. “I was not going to take a 74-year-old man who’s believed something since he was 30 and convince him that I was right.”
Some of Trump’s fellow Republicans expressed weariness Tuesday about the standoff with China. Senate Majority Leader Mitch McConnell declared, “Ultimately, nobody wins a trade war.”
And Kansas Sen. Jerry Moran said: “It’s been said if you don’t like the tariffs just don’t buy something from China. I understand that sentiment. But what we do in Kansas is we sell to China. Not dealing with China is not an option.”
Economists also dispute Trump’s portrayal of the U.S. trade deficit with China, which reached $378.7 billion last year, as evidence that Beijing is “ripping off” the United States. Mary Lovely, an economics professor at Syracuse University, says Trump is ignoring a simple point: The U.S. obtained goods and services for that money.
“It’s like going to Walmart and you giving them money and they’re giving you goods,” she said. “There’s an exchange.”
Trade experts typically consider one nation’s trade deficit with another as economically irrelevant. The United States also has a trade deficit with all other countries in the world combined, which reached $622.1 billion last year. Most economists aren’t very concerned about that as long as so many nations are willing to finance that deficit by purchasing U.S. Treasury bonds and other assets.
Trump frequently blames the overall deficit on bad trade deals — he is in the midst of reworking several agreements, including one with Canada and Mexico — but that’s not really the cause. A country runs a trade deficit when, like the United States, it consumes more than it produces. That’s why the U.S. trade deficit typically falls sharply in a recession, when Americans spend less.
“We run deficits because we’re a wealthy country that can buy things that it doesn’t produce,” said Joe Brusuelas, chief economist at RSM, a tax consulting firm. “Trade deficits fundamentally don’t matter.”
Lemire reported from New York. Associated Press writer Catherine Lucey contributed to this report.
Follow Lemire on Twitter at http://twitter.com/@JonLemire and Rugaber at http://twitter.com/@ChrisRugaber
President Donald Trump’s allies on Capitol Hill are scrambling to soften the blow from his trade war with China amid mounting anxiety from farm-state lawmakers that the protracted battle and escalating tariffs could irreparably damage their local economies.
Vice President Mike Pence met privately Tuesday with Senate Republicans for a second week in a row and urged them to stick with the White House. Senators were working with the administration to craft a relief package for farmers and ranchers, some $15 billion that Trump announced this week would be coming soon. Details of the package remained in flux.
“One thing I think we all agree on is that nobody wins a trade war,” Senate Majority Leader Mitch McConnell said after the private lunch meeting.
McConnell said there was hope that the tough negotiating tactics being used by the administration “get us into a better position, vis-à-vis China, which has been our worst and most unfair trading relationship for a very long time.”
Pence heard an earful from senators last week as uncertainty mounted.
The administration on Friday launched a fresh round of tariffs on some $250 billion of Chinese goods; China retaliated this week with tariffs on $60 billion on American goods on top of those already hurting U.S. markets.
The tariffs risk spiking prices for U.S. consumers while leaving growers with commodities they cannot sell to the Chinese markets. Already soybean and hog farmers are among those home-state interests senators say are struggling under Trump’s trade policies. With China talks stalled, senators pushed the White House to wrap up the negotiations and resolve the standoff.
“There’s a lot of concern,” said Sen. John Cornyn, R-Texas, a member of GOP leadership.
“If this is what it takes to get a good deal, I think people will hang in there, but at some point we’ve got to get it resolved,” Cornyn said. “If this goes on for a long time, everybody realizes it’s playing with a live hand grenade.”
On Tuesday, though, senators appeared more reserved, and largely held their fire as they tried not to undermine the president’s negotiating hand and worked to shore up their home-state communities with a new round of federal aid.
Pence told them that talks on another trade front, a new U.S.-Mexico-Canada deal to replace the North American Free Trade Agreement, were progressing. Senators said they were hopeful those talks were at the finish line and would open new markets for commerce, but the deal would need approval from Congress, which remained uncertain.
Sen. John Hoeven, R-N.D., the chairman of the agriculture appropriations subcommittee, is working with the administration on the latest aid package. Last year, Congress gave the Agriculture Department some $30 billion annually that can be tapped to provide up to $15 billion Trump wants to offer as aid. Congress could advance some of the money by tucking it into a disaster aid package that’s expected to be voted on next week.
The federal aid could go toward existing government programs, including those that provide market payments for certain agricultural producers or that fight hunger in poorer or war-torn countries abroad. Last year, the Trump administration made some $12 billion available to domestic producers of soy, corn, dairy, hogs and others hit hard by the retaliatory tariffs.
“We’re stepping forward with more assistance,” Hoeven said. “The goal is to get a trade agreement.”
Senators said they were hopeful that talks would resume before the latest Chinese tariffs kick in on June 1. Trump is expected to meet Chinese President Xi Jinping in late June at the G-20 summit in Japan.
Trade is the rare issue in Congress that cuts across party lines. Several top Democrats, including Sen. Chuck Schumer of New York, the Democratic leader, want the president to stay tough on China.
Schumer said that while Trump’s tariff fights with other countries “make no sense,” he thinks the president should work with U.S. allies to confront China. “We have to have tough, strong policies on China,” he said.
Other Democrats, though, doubt Trump’s ability to negotiate a good deal for Americans. “The president is essentially betting the farm — somebody else’s farm,” said Sen. Richard Blumenthal, D-Conn.
GOP Sen. Ron Johnson said agricultural and business interests back home in Wisconsin “really feel a lot of short-term pain.” But he said they also “really want the president to succeed on this.”
Associated Press writer Matthew Daly contributed to this report.
If there has been a constant to President Donald Trump’s tumultuous first two years in office, it has been that his foreign trips have tended to be drama-filled affairs — the president barreling through international gatherings like a norm-smashing bull, disrupting alliances and upending long-standing U.S. policies. But at this year’s Group of 20 summit, Trump appeared to settle in among his global peers.
A brisk two days in Argentina saw Trump reach a trade ceasefire with China and sign a three-way trade deal with Mexico and Canada. With little public spectacle, he joined the leaders of the other member nations on the traditional group statement. He buddied up with traditional allies and largely avoided controversial strongmen. Faced with Russia’s spiking aggression in Ukraine, he canceled his sit-down with Vladimir Putin. And when former President George H.W. Bush died, Trump gave respectful remarks and canceled what would likely have been a raucous press conference.
All told, for the often-undisciplined leader, the whirlwind trip was an unusual moment of Zen.
Trump’s election forced the world to reckon with sweeping populist movements and the impact of globalization. In the first two years of his presidency, he has brusquely rejected international engagement for what he views as a single-minded focus on U.S. national interests.
Public and private interactions with world leaders over his 48 hours in Argentina demonstrated Trump does have the capacity for restraint. And other world leaders, for their part, showed grumbling acceptance of Trump’s untraditional stylings.
It’s hardly as though Trump has suddenly abandoned his “America First” world view. But rather than challenge him at every turn, other leaders appear to be adapting to Trump, mindful that multilateral deals are weaker without the United States. Delegation “sherpas” worked through the night to revamp the joint communique so that it would be amenable to Trump, and allies knew to butter Trump up with over-the-top praise.
“From the outset, I would like to congratulate you on your historic victory in the midterm election in the United States,” declared Japanese Prime Minister Shinzo Abe at the start of their meeting Friday. He made no mention of the big electoral gains that Democrats notched in the U.S. House. Abe has long proved to be the world leader most adept at keeping on Trump’s good side, but even more challenging relationships appeared to find firmer ground. Trump’s meeting with German Chancellor Angela Merkel was outwardly all smiles, handshakes and praise.
The G-20 joint statement included U.S.-preferred language on reforming the World Trade Organization — something Trump demanded — and made note that the U.S. opposed the Paris climate agreement, which the president has announced plans to exit.
French President Emmanuel Macron called it a victory that the U.S. signed onto the statement at all, given the tensions going into the talks. He said, “With Trump, we reached an agreement. The U.S. accepted a text.”
American allies did express mild frustration with Trump at times. Canadian Prime Minister Justin Trudeau, at the signing of the revised North American Free Trade Agreement, needled “Donald” over U.S. tariffs on Canadian aluminum and steel.
But Trump, for his part, played the role of gracious victor, proclaiming that he and Trudeau, along with outgoing Mexican President Enrique Pena Nieto, were battle-tested friends. The new trade accord was a long-sought win for Trump, who as a candidate had promised to reform NAFTA, and he embraced its arrival as vindication of his abrasive negotiating tactics.
Most notably, Trump largely kept his distance from Putin and Saudi Crown Prince Mohammed bin Salman. He made small talk with the two strongmen but toed the line on a Western freeze-out of the pair — the former over Russia’s recent seizure of three Ukrainian naval vessels and their crews, and the latter over the murder two months ago of Saudi journalist Jamal Khashoggi.
In previous global summits, the shock factor invariably came from Trump. There was his speech lecturing NATO allies over defense spending in spring 2017. The surprise tete-a-tete with Putin at a G-20 dinner in Germany that summer. And the G-7 meeting earlier this year in Canada, where Trump agreed to a group statement on trade, only to withdraw from it on Twitter while flying to Asia, insulting Trudeau in the process.
This time, the viral moment of the weekend came when Putin and the crown prince, the two relative outcasts of the summit, exchanged an enthusiastic handshake.
Trump also showed control when word came during the summit of Bush’s death. While Trump has struggled to strike the right tone during moments of national loss, he sought to meet this one with grace. He followed the scripted playbook for the state funeral he wishes for himself when that day comes, swiftly declared a day of national mourning and ordered American flags to be flown at half-staff for 30 days. He lauded Bush as a man of “sound judgment, common sense and unflappable leadership.”
For Trump, the Bush family has been a longtime punching bag. He dubbed Jeb Bush “low energy” when they faced off during the 2016 Republican presidential primary. He has been highly critical of George W. Bush’s presidency. And he mocked George H.W. Bush’s signature phrase about a “thousand points of light” during his campaign rallies just this year.
Those insults were put aside Saturday as Trump spoke to reporters about his respect for the late president.
“We’ll be spending three days of mourning and three days of celebrating a really great man’s life. So we look forward to doing that, and he certainly deserves it. He really does. He was a very special person,” Trump said.
The president’s decision to cancel the planned news conference in the wake of Bush’s death helped keep him on a disciplined track. Those affairs can easily go off the rails, as did Trump’s news conference after a July summit with Putin in Helsinki, where Trump drew widespread criticism for failing to publicly denounce Russia’s interference in the 2016 U.S. election and appearing to accept Putin’s denials of such activity.
The president arrived back in the United States early Sunday, with a week of mourning for Bush ahead, a government funding fight on the horizon and more to come from the Russia investigation. The question now, as always, is just how long can this moment last?
Catherine Lucey has covered politics and the White House for the AP since 2012. Zeke Miller has covered the White House and politics in Washington since 2011. Miller reported from Buenos Aires, Argentina.