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.
Demonstrator holds an anti-U.S. placard during the annual Quds, or Jerusalem Day rally in Tehran, Iran. The Farsi translates to, Death to America — twice. (AP Photo/Vahid Salemi)
In President Donald Trump’s reckoning, an Iran tamed by him no longer cries “death to America,” the border wall with Mexico is proceeding apace, the estate tax has been lifted off the backs of farmers, the remains of U.S. soldiers from North Korea are coming home and China is opening its wallet to the U.S. Treasury for the first time in history.
These statements range from flatly false to mostly so.
Here’s a week of political rhetoric in review:
IRAN:
TRUMP, speaking about Iranians “screaming ‘death to America’” when Barack Obama was in the White House: “They haven’t screamed ‘death to America’ lately.” — Fox News interview Friday.
THE FACTS: Yes they have. The death-to-America chant is heard routinely.
The chant, “marg bar Amreeka” in Farsi, dates back even before Iran’s 1979 Islamic Revolution. Once used by communists, it was popularized by Ayatollah Ruhollah Khomeini, the revolution’s figurehead and Iran’s first supreme leader after the U.S. Embassy takeover by militants.
It remains a staple of hard-line demonstrations, meetings with current Supreme Leader Ayatollah Ali Khamenei, official ceremonies, parliamentary sessions and main Friday prayer services in Tehran and across the country. Some masters of ceremonies ask audiences to tone it down. But it was heard, for example, from the crowd this month when Khamenei exhorted thousands to stand up against U.S. “bullying.”
In one variation, a demonstrator at Tehran’s Quds rally last month held a sign with three versions of the slogan: “Death to America” in Farsi, “Death to America” in Arabic,” ″Down with U.S.A.” in English.
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WAGES and TAXES
TRUMP: “Wages are growing, and they are growing at the fastest rate for — this is something so wonderful — for blue-collar workers. The biggest percentage increase — blue-collar workers.” — remarks Tuesday in Council Bluffs, Iowa.
THE FACTS: He’s claiming credit for a trend of rising wages for lower-income blue-collar workers that predates his presidency.
Some of the gains also reflect higher minimum wages passed at the state and local level; the Trump administration opposes an increase to the federal minimum wage.
With the unemployment rate at 3.6%, the lowest since December 1969, employers are struggling to fill jobs. Despite all the talk of robots and automation, thousands of restaurants, warehouses, and retail stores still need workers.
They are offering higher wages and have pushed up pay for the lowest-paid one-quarter of workers more quickly than for everyone else since 2015. In April, the poorest 25% saw their paychecks increase 4.4% from a year earlier, compared with 3.1% for the richest one-quarter.
Those gains are not necessarily flowing to the “blue collar” workers Trump cited. Instead, when measured by industry, wages are rising more quickly for lower-paid service workers. Hourly pay for retail workers has risen 4.1% in the past year and 3.8% for hotel and restaurant employees. Manufacturing workers — the blue collars — have seen pay rise just 2.2% and construction workers, 3.2%.
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TRUMP: “And to keep your family farms and ranches in the family, we eliminated the estate tax, also known as the ‘death tax,’ on the small farms and ranches and other businesses. That was a big one. … People were having a farm, they loved their children, and they want to leave it to their children. … And the estate tax was so much, the children would have to go out and borrow a lot of money from unfriendly bankers, in many cases. And they’d end up losing the farm, and it was a horrible situation.” — remarks in Council Bluffs.
THE FACTS: There still is an estate tax. More small farms may be off the hook for it as a result of changes by the Republican-controlled Congress in 2017 but very few farms or small businesses were subject to the tax even before that happened.
Congress increased the tax exemption — temporarily — so fewer people will be subject to those taxes.
Previously, any assets from estates valued at more than $5.49 million, or nearly $11 million for couples, were subject to the estate tax in 2017. The new law doubled that minimum for 2018 to $11.2 million, or $22.4 million for couples. For 2019, the minimums rose to $11.4 million, or $22.8 million for couples. Those increased minimums will expire at the end of 2025.
According to an analysis by the nonpartisan Tax Policy Center, only about 80 small farms and closely held businesses were subject to the estate tax in 2017. Those estates represent about 1 percent of all taxable estate tax returns.
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NORTH KOREA
TRUMP: “I think we’re going to do very well with North Korea over a period of time. I’m in no rush. … Our remains are coming back; you saw the beautiful ceremony in Hawaii with Mike Pence. We’re getting the remains back.” — joint news conference Wednesday with Poland’s president.
THE FACTS: The U.S. is not currently getting additional remains of American service members killed during the Korean War.
With U.S.-North Korea relations souring, the Pentagon said last month it had suspended its efforts to arrange negotiations this year on recovering additional remains of American service members. The Pentagon said it hoped to reach agreement for recovery operations in 2020.
The Defense POW-MIA Accounting Agency said it has had no communication with North Korean authorities since the Vietnam summit between Trump and North Korean leader Kim Jong Un in February. That meeting focused on the North’s nuclear weapons and followed a June 2018 summit where Kim committed to permitting a resumption of U.S. remains recovery; that effort had been suspended by the U.S. in 2005.
The agency said it had “reached the point where we can no longer effectively plan, coordinate, and conduct field operations” with the North during this budget year, which ends Sept. 30.
Last summer, in line with the first Trump-Kim summit in June, the North turned over 55 boxes of what it said were the remains of an undetermined number of U.S service members killed in the North during the 1950-53 war. So far, six Americans have been identified from the 55 boxes.
U.S. officials have said the North has suggested in recent years that it holds perhaps 200 sets of American war remains. Thousands more are unrecovered from battlefields and former POW camps.
The Pentagon estimates that about 5,300 Americans were lost in North Korea.
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BORDER WALL
TRUMP: “We’re building a wall … And by next year, at the end of the year, we’re going to have close to 500 miles of wall.” — remarks Tuesday at the Republican Party of Iowa annual dinner.
TRUMP: “We’re going to have close to 500 miles of wall built by the end of next year. That’s a lot. And we’re moving along very rapidly. We won the big court case, as you know, the other day. And that was a big victory for us.” — remarks Monday with Indianapolis 500 champions.
THE FACTS: He’s being overly optimistic. It’s unclear how Trump arrives at 500 miles (800 km), but he would have to prevail in legal challenges to his declaration of a national emergency or get Congress to cough up more money to get anywhere close. Those are big assumptions. And by far the majority of the wall he’s talking about is replacement barrier, not new miles of construction.
So far, the administration has awarded contracts for 247 miles (395 km) of wall construction, but more than half comes from Defense Department money available under Trump’s Feb. 15 emergency declaration. On May 24, a federal judge in California who was appointed by Obama blocked Trump from building key sections of the wall with that money. In a separate case, a federal judge in the nation’s capital who was appointed by Trump sided with the administration, but that ruling has no effect while the California injunction is in place.
Even if Trump prevails in court, all but 17 miles (27 km) of his awarded contracts replace existing barriers.
The White House says it has identified up to $8.1 billion in potential money under the national emergency, mostly from the Defense Department.
Customs and Border Protection officials say the administration wants Congress to finance 206 miles (330 km) next year. The chances of the Democratic-controlled House backing that are between slim and none.
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TRADE
TRUMP: “Right now, we’re getting 25% on $250 billion worth of goods. That’s a lot of money that’s pouring into our treasury. We’ve never gotten 10 cents from China. Now we’re getting a lot of money from China.” — remarks Monday.
TRUMP: “We’re taking in, right now, billions and billions of dollars in tariffs, and they’re subsidizing product.” — remarks Tuesday in Council Bluffs.
THE FACTS: He’s incorrect. The tariffs he’s raised on imports from China are primarily if not entirely a tax on U.S. consumers and businesses, not a source of significant revenue coming into the country.
A study in March by economists from the Federal Reserve Bank of New York, Columbia University and Princeton University, before the latest escalation, found that the public and U.S. companies were paying $3 billion a month in higher taxes from the trade dispute with China, suffering $1.4 billion a month in lost efficiency and absorbing the entire impact.
It’s also false that the U.S. never collected a dime in tariffs before he took action. Tariffs on goods from China are not remotely new. They are simply higher in some cases than they were before. Tariffs go back to the beginning of the U.S. and were once a leading source of revenue for the government. Not in modern times. They equate to less than 1% of federal spending.
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TRUMP: “Look, without tariffs, we would be captive to every country, and we have been for many years. That’s why we have an $800 billion trading deficit for years. We lose a fortune with virtually every country. They take advantage of us in every way possible.” — CNBC interview Monday.
THE FACTS: Trump isn’t telling the whole story about trade deficits.
When he refers to $800 billion trade gaps, he’s only talking about the deficit in goods such as cars and aircraft. He leaves out services — such as banking, tourism and education — in which the U.S. runs substantial trade surpluses that partially offset persistent deficits in goods. The goods and services deficit peaked at $762 billion in 2006. Last year, the United States ran a record $887 billion deficit in goods and a $260 billion surplus in services, which added up to an overall deficit of more than $627 billion.
The U.S. does tend to run trade deficits with most other major economies. But there are exceptions, such as Canada (a nearly $4 billion surplus last year), Singapore ($18 billion) and Britain ($19 billion).
Mainstream economists reject Trump’s argument that the deficits arise from other countries taking advantage of the United States. They see the trade gaps as the result of an economic reality that probably won’t bend to tariffs and other changes in trade policy: Americans buy more than they produce, and imports fill the gap.
U.S. exports are also hurt by the American dollar’s status as the world’s currency. The dollar is usually in high demand because it is used in so many global transactions. That means the dollar is persistently strong, raising prices of U.S. products and putting American companies at a disadvantage in foreign markets.
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TRUMP: “You know, France charges us a lot for the wine and yet we charge them little for French wine. So the wineries come to me and they say — the California guys, they come to me: ‘Sir, we are paying a lot of money to put our products into France and you’re letting – meaning, this country is allowing this French wine which is great, we have great wine, too, allowing it to come in for nothing. It is not fair.’” — interview Monday with CNBC.
THE FACTS: Trump, who’s been in the wine business, is technically wrong about France applying tariffs. The European Union does.
He’s right about a disparity in wine duties.
Tariffs vary by alcohol content and other factors. A bottle of white American wine with 13 percent alcohol content imported into the EU carries a customs duty of 10 euro cents (just over 11 U.S. cents). A bottle of white wine from the EU exported to the United States has a customs duty of 5 U.S. cents.
The gap in duties is narrower for red wine with an alcohol content of 14.5 percent.
Bulk wines are another story. The U.S. tariff is double the EU one, a break for American producers because bulk wine represents 25% of the volume of U.S. wine coming into the EU, according to the French wine exporter federation.
The value of wine imported by France has jumped 200% over a decade. Americans are the top consumers of French wine exports.
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RUSSIA INVESTIGATION
TRUMP, on special counsel Robert Mueller’s report: “The Mueller report spoke. … It said, ‘No collusion and no obstruction and no nothing.’ And, in fact, it said we actually rebuffed your friends from Russia; that we actually pushed them back — we rebuffed them.” — remarks Wednesday in Oval Office.
THE FACTS: He’s wrong to repeat the claim that the Mueller report found no collusion between Russia and the Trump campaign; it’s also false that his campaign in 2016 denied all access to Russians. Nor did the special counsel’s report exonerate Trump on the question of whether he obstructed justice.
Mueller’s two-year investigation and other scrutiny revealed a multitude of meetings with Russians. Among them: Donald Trump Jr.’s meeting with a Russian lawyer who had promised dirt on Clinton.
On collusion, Mueller said he did not assess whether that occurred because it is not a legal term.
He looked into a potential criminal conspiracy between Russia and the Trump campaign and said the investigation did not collect sufficient evidence to establish criminal charges on that front.
Mueller noted some Trump campaign officials had declined to testify under the Fifth Amendment or had provided false or incomplete testimony, making it difficult to get a complete picture of what happened during the 2016 campaign. The special counsel wrote that he “cannot rule out the possibility” that unavailable information could have cast a different light on the investigation’s findings.
In an interview broadcast Wednesday with ABC News, Trump said if a foreign power offered dirt on his 2020 opponent, he’d be open to accepting it and that he’d have no obligation to call in the FBI. “I think I’d want to hear it,” Trump said. “There’s nothing wrong with listening.”
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REPUBLICAN SEN. LINDSEY GRAHAM, Judiciary Committee chairman, in response to Trump’s comments that he’d be open to accepting political dirt from foreign adversaries like Russia: “The outrage some of my Democratic colleagues are raising about President Trump’s comments will hopefully be met with equal outrage that their own party hired a foreign national to do opposition research on President Trump’s campaign.” — tweet Thursday.
THE FACTS: Graham is making an unequal comparison.
He seeks to turn the tables on Democrats by pointing to their use of a dossier of anti-Trump research produced by Christopher Steele, a former British intelligence officer, that was financed by the Democratic Party and Hillary Clinton’s campaign. Graham also insists on “equal outrage” over Democrats using that information from a former intelligence officer of Britain, an ally with a history of shared intelligence with the U.S. That’s a different story from a foreign adversary such as Russia, which the Mueller report concluded had engaged in “sweeping and systematic” interference in the 2016 presidential election.
Moreover, Steele was hired as a private citizen, though one with intelligence contacts.
The Mueller report found multiple contacts between the Trump campaign and Russia, and the report said it established that “the Russian government perceived it would benefit from a Trump presidency and worked to secure that outcome, and that the Campaign expected it would benefit electorally from information stolen and released through Russian efforts.”
Trump and his GOP allies typically point to the Steele dossier as the basis for the Russia probe. But the FBI’s investigation began months before it received the dossier.
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TRUMP: “The Democrats were very unhappy with the Mueller report. So now they’re trying to do a do-over or a redo. And we’re not doing that. We gave them everything. We were the most transparent presidency in history.” — Oval Office remarks Wednesday.
THE FACTS: It’s highly dubious to say Trump was fully cooperative in the Russia investigation.
Trump declined to sit for an interview with Mueller’s team, gave written answers that investigators described as “inadequate” and “incomplete,” said more than 30 times that he could not remember something he was asked about in writing, and — according to the report — tried to get aides to fire Mueller or otherwise shut or limit the inquiry.
In the end, the Mueller report found no criminal conspiracy between the Trump campaign and Russia but left open the question of whether Trump obstructed justice.
According to the report, Mueller’s team declined to make a prosecutorial judgment on whether to charge partly because of a Justice Department legal opinion that said sitting presidents shouldn’t be indicted. The report instead factually laid out instances in which Trump might have obstructed justice, specifically leaving it open for Congress to take up the matter.
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FEDERAL RESERVE
TRUMP: “We have people on the Fed that really weren’t, you know, they’re not my people, but they certainly didn’t listen to me because they made a big mistake.” — CNBC interview.
THE FACTS: Actually, most of the members on the Fed’s Board of Governors owe their jobs to Trump.
In addition to choosing Jerome Powell, a Republican whom Obama had named to the Fed board, to be chairman, Trump has filled three other vacancies on the board in his first two years in office. Lael Brainard is the only Democrat on the board.
There are still two vacancies on the seven-member board. Trump had earlier intended to nominate two political allies — Herman Cain and Stephen Moore — but both later withdrew in the face of sharp opposition from critics.
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AUTOMAKERS
TRUMP: “Tariffs are a great negotiating tool, a great revenue producer and, most importantly, a powerful way to get … companies to come to the U.S.A., and to get companies that have left us for other lands to come back home. We stupidly lost 30% of our auto business to Mexico.” — tweets Tuesday.
TRUMP: “They took 30% of our automobile companies. They moved into Mexico. All of the people got fired.” — interview Monday with CNBC.
THE FACTS: He’s incorrect that Mexico took 30% of the U.S. automobile business in the years since the North American Free Trade Agreement took effect in 1994.
In 2017, 14% of the vehicles sold in the U.S. were imported from Mexico, according to the Center for Automotive Research, a think tank in Ann Arbor, Michigan. Parts imported from Mexico exceed 30%.
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TRUMP: “If the Tariffs went on at the higher level, they would all come back.” — tweet Tuesday.
TRUMP: “What will happen is the companies will move into the United States, back where they came from. … They would all move back if they had to pay a 25% tax or tariff.” — interview Monday with CNBC.
THE FACTS: He’s wrong to assume that auto companies in Mexico would immediately move back to the U.S. if there were a 25% tariff on Mexican-made vehicles and parts.
It takes three years or four years minimum to plan, equip and build an auto assembly plant, so there would be little immediate impact on production or jobs. Auto and parts makers are global companies, and they would also look to countries without tariffs as a place to move their factories. The companies could also just wait until after the 2020 election, hoping that if Trump is defeated, the next president would get rid of the tariffs.
“They’re not going to invest in duplicative capacity in response to short-term policy incentives,” said Kristen Dziczek, a vice president at the Center for Automotive Research.
It is possible that some production could be shifted back to the United States. General Motors, for instance, makes about 39% of its full-size pickup trucks at a factory in Silao, Mexico, mainly light-duty versions, according to analysts at Morningstar. If the U.S. imposed a 25% tariff on assembled automobiles, GM could shift some production to a factory in Fort Wayne, Indiana, that also makes light-duty pickups. But there are limits. That plant already is running on three shifts and is almost near its maximum capacity.
Tariffs on Mexico probably would cost auto jobs in the U.S., too, because Mexico would almost certainly retaliate with tariffs of its own. Tariffs on both sides would raise prices of vehicles, because automakers probably would pass the charges onto their customers.
Industry experts say higher prices would cause more buyers to shift into the used-vehicle market, cutting into new-vehicle sales. Tariffs could be higher than 25% because parts go back and forth across the border multiple times in a highly integrated supply chain.
Vehicles built in Mexico get 20% to 30% of their parts from the U.S., so the tariffs would drive up prices there. That would hit lower-income people hard because automakers produce many lower-priced new vehicles in Mexico to take advantage of cheaper labor. About 62% of U.S. vehicle and parts exports go to Canada and Mexico, according to the Center for Automotive Research.
Tariffs would add $1,300 to $4,500 to the price of vehicles based just on the cost of parts, the center estimated.
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Associated Press writers Eric Tucker, Christopher Rugaber, Martin Crutsinger and Paul Wiseman in Washington, Elliot Spagat in San Diego, Tom Krisher in Detroit and Jon Gambrell in Dubai, United Arab Emirates, contributed to this report.
President Donald Trump. (AP Photo/Jacquelyn Martin)
President Donald Trump is bragging about a new deal with Mexico that provides for “large” sales of U.S. farm goods, but it doesn’t appear to exist.
In weekend tweets, he announced in all capital letters that he had won the agreement to benefit America’s “great patriot farmers,” and that U.S. sales would begin “immediately.” There isn’t any sign of that happening, however. Mexican officials denied that anything on agriculture was included in the deal on border security reached Friday to avert Trump’s threatened tariffs.
Trump also unfairly placed responsibility on Mexico for the entire U.S. drug problem, even though many of the known drug deaths have nothing to do with the country.
The statements came in a week where the apportioning of credit and blame often went awry in Trump’s remarks.
He hailed pristine air quality that isn’t, wrongly insisted that the U.S. was paying “close to 100%” of NATO and told Puerto Ricans they should love him because he got them hurricane aid that he’s actually been complaining about for months.
In the Democratic presidential campaign, meantime, Trump was accused of breaking a gun-control promise that in reality he kept.
A look at recent claims and reality:
MEXICO DEAL
TRUMP: “MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCT FROM OUR GREAT PATRIOT FARMERS!” — tweet Saturday, retweeted Sunday.
THE FACTS: There’s no evidence that Mexico agreed to “large” purchases of agricultural products from the U.S. as part of the deal to avoid tariffs. Nor did the White House provide any details to show such a deal exists.
The joint declaration between the U.S. and Mexico released by the State Department late Friday makes no mention of agriculture. Officials from Mexico deny an agreement was reached on farm goods as part of the talks.
“Everything that was negotiated was in the joint statement,” said a Mexican official familiar with the discussions who was not authorized to discuss the matter publicly and spoke on condition of anonymity. When Mexico’s ambassador to the United States, Martha Barcena, was asked repeatedly Sunday on CBS’ “Face the Nation” whether there was a new agricultural deal, she demurred, saying such trade between both countries should increase over time.
She referenced instead the potential impact of the separate United States-Mexico-Canada trade deal, which has yet to be approved by Congress.
“Is trade on agricultural products going to grow? Yes, it is going to grow, and it is going to grow without tariffs and with USMCA ratification,” Barcena said.
According to the office of the United States Trade Representative, Mexico bought $20 billion in U.S. agricultural goods last year, making it the United States’ second-largest ag export market.
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TRUMP: “Look, I’m dealing with Mexico right now. They send in $500 billion worth of drugs, they kill 100,000 people, they ruin a million families every year if you look at that. That’s really an invasion without the guns. … 100,000 people are killed, dead every year, from what comes through our southern border. They shouldn’t be allowing people to come through their country from Central, from Honduras and Guatemala, El Salvador.” — Fox News interview Thursday.
THE FACTS: Trump is inflating the death toll from drug overdoses — more than 70,200 in 2017 — and wrongly blaming all the known deaths on Mexico. Tens of thousands of those deaths have nothing to do with Mexico or Central America. They are from legally made prescription opioids, fentanyl laboratories in China or other sources of international drug smuggling and illicit manufacturing in the U.S. More than 17,000 of the deaths in 2017, for example, were from prescription opioids alone.
Mexico is indeed a significant conduit in the drug trade — it’s a leading source of heroin, for example — but it is hardly the only one.
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DISASTER AID
TRUMP, on signing a relief bill for multiple U.S. disasters: “Puerto Rico should love President Trump. Without me, they would have been shut out!” — tweet Thursday.
THE FACTS: That’s not likely.
The $19.1 billion disaster aid bill, passed by the House on Monday and signed into law by Trump on Thursday, ordinarily would have been approved by Congress months ago. But Trump injected himself into the debate, demanding that money for hurricane-rebuilding efforts that was sought by Puerto Rico’s elected officials, Republicans and Democrats both, be kept out.
Trump frequently inflated the amount of aid that Puerto Rico had obtained in previous bills and feuded with the island’s Democratic officials.
Congressional Democrats held firm in demanding that Puerto Rico, a territory whose 3 million people are U.S. citizens, be helped by the measure. The legislation ultimately included more money for Puerto Rico, about $1.4 billion, than Democrats originally sought.
The relief measure delivers money to states in the South suffering from last fall’s hurricanes, Midwestern states deluged with springtime floods and fire-ravaged rural California, among others.
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NATO
TRUMP: “We were paying so much. I think we were really paying close to 100% of NATO. So we were paying to protect all of these European nations. And it’s just not fair.” — interview Thursday with Fox News.
THE FACTS: It’s not true that the U.S. was paying “close to 100%” of the price of protecting Europe.
NATO does have a shared budget to which each member makes contributions based on the size of its economy. The United States, with the biggest economy, pays the biggest share, about 22%.
Four European members — Germany, France, Britain and Italy — combined pay nearly 44% of the total. The money, about $3 billion, runs NATO’s headquarters and covers certain other civilian and military costs.
Defending Europe involves far more than that fund. The primary cost of doing so would come from each member country’s military budget, as the alliance operates under a mutual defense treaty.
The U.S. is the largest military spender but others in the alliance obviously have armed forces, too. The notion that almost all costs would fall to the U.S. is false.
In fact, NATO’s Article 5, calling for allies to act if one is attacked, has only been invoked once, and it was on behalf of the U.S., after the attacks of Sept. 11, 2001.
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CLIMATE CHANGE
TRUMP, asked if he believes in climate change: “I believe that there’s a change in weather, and I think it changes both ways.” — interview with Piers Morgan that broadcast Tuesday.
THE FACTS: Trump is once again conflating weather and climate, suggesting that global warming can’t be happening if it gets cold outside. But weather is like mood, which changes daily. Climate is like personality, which is long term.
The data show Trump also is wrong in that there is a clear one-way warming trend. Earth is considerably warmer than it was 30 years ago and especially 100 years ago.
So far in this decade, there have been 301,292 daily heat records set in the contiguous United States, compared with only 141,892 daily cold records set, according to retired Weather Channel meteorologist Guy Walton’s analysis of government temperature records. That’s more than two heat records broken for every cold record, a ratio that is the largest of any decade since these types of records started in the 1920s.
According to Walton’s analysis, each decade since the 1970s has had a higher hot record-to-cold record ratio than the decade before it.
And that’s just the extreme weather. When it comes to global average temperature, April was the 412th consecutive warmer month than the 20th century average, according to records kept by the National Oceanic and Atmospheric Administration.
The last five years — 2014 to 2018 — have been the five hottest years on record globally, according to those records. Nine of the 10 hottest years on record have been in the past 15 years with records going back to 1880.
The White House in November produced the National Climate Assessment by scientists from 13 Trump administration agencies and outside scientists. “Climate change is transforming where and how we live and presents growing challenges to human health and quality of life, the economy, and the natural systems that support us,” the report said.
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TRUMP: “We have the cleanest air in the world in the United States, and it’s gotten better since I’m president. We have the cleanest water. It’s crystal clean and I always say I want crystal clean water and air. … We’re setting records environmentally.” — remarks Wednesday with Ireland’s Prime Minister Leo Varadkar.
THE FACTS: The U.S. does not have the cleanest air, and it hasn’t gotten better under the Trump administration.
U.S. drinking water is among the best by one leading measure.
Trump’s own Environmental Protection Agency data show that in 2017, among 35 major U.S. cities, there were 729 cases of “unhealthy days for ozone and fine particle pollution.” That’s up 22% from 2014 and the worst year since 2012.
The Obama administration, in fact, set records for the fewest air polluted days, in 2016. In 2017, after Trump took office, the number of bad air days per metropolitan area went up 20%.
The State of Global Air 2019 report by the Health Effects Institute rated the U.S. as having the eighth cleanest air for particle pollution — which kills 85,000 Americans each year — behind Canada, Scandinavian countries and others.
The U.S. ranks poorly on smog pollution, which kills 24,000 Americans per year. On a scale from the cleanest to the dirtiest, the U.S. is at 123 out of 195 countries measured.
On water, Yale University’s global Environmental Performance Index finds 10 countries tied for the cleanest drinking water, the U.S. among them. On environmental quality overall, the U.S. was 27th, behind a variety of European countries, Canada, Japan, Australia and more. Switzerland was No. 1.
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GILLIBRAND ON GUN CONTROL
SEN. KIRSTEN GILLIBRAND, Democratic presidential candidate, on Trump: “Remember after the shooting in Las Vegas, he said, ‘Yeah, yeah, we are going to ban the bump stocks’? Did he ban the bump stocks? No, because the NRA came crashing down and said, ’Don’t you dare do any restrictions on our guns around this country.‴— Fox News town hall on June 2.
THE FACTS: Not true. Trump kept his promise.
A nationwide ban took effect in March on bump stocks, the attachment used by the gunman in the 2017 Las Vegas massacre to make his weapons fire rapidly like machine guns.
The Bureau of Alcohol, Tobacco, Firearms and Explosives outlawed the attachments at Trump’s direction after the shootings killed more than 50 people in the deadliest mass shooting in modern U.S. history. It is the only major gun restriction imposed by the federal government in the past few years.
The Trump administration’s move was an about-face for the bureau. In 2010, under the Obama administration, it found that the devices were legal. But under the Trump administration, officials revisited that determination and found it incorrect.
After the Las Vegas shootings, the National Rifle Association initially said “devices designed to allow semi-automatic rifles to function like fully-automatic rifles should be subject to additional regulations.” After the bureau’s ruling banning the devices, however, the gun lobby called it “disappointing” and said it should have provided amnesty for gun owners who already have bump stocks.
The government estimates that more than 500,000 bump stocks were sold after they were made legal in 2010.
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VETERANS
TRUMP, on the late Sen. John McCain: “I was not a fan. I didn’t like what he did with health care. I didn’t like how he handled the veterans. Because I got them Choice. He was always unable. He was on committees and could have done it.” — interview Tuesday with Morgan.
THE FACTS: Not so. McCain did, in fact, get the Veterans Choice program passed in Congress.
Trump repeatedly claims falsely that he was the first president in decades to get such a private-sector health program passed. But what Trump actually got done was an expansion of the Choice program achieved by McCain and Sen. Bernie Sanders, the main lawmakers who advanced the legislation signed by President Barack Obama.
McCain, an Arizona Republican, co-sponsored the legislation following a 2014 scandal at the VA medical center in Phoenix, where some veterans died while waiting months for medical appointments.
Trump signed the law expanding the program in June 2018. It is named after three veterans who were lawmakers — McCain, Daniel K. Akaka and Samuel R. Johnson.
After helping to pass the program, McCain fought to expand it even more in his last months before dying of brain cancer in August.
The original Choice program allowed veterans to see doctors outside the Department of Veterans Affairs system if they must wait more than 30 days for an appointment or drive more than 40 miles (65 kilometers) to a VA facility. Under the expansion, which took effect Thursday, veterans are to have that option for a private doctor if their VA wait is only 20 days (28 for specialty care) or their drive is only 30 minutes.
Still, the VA says it does not expect a major increase in veterans seeking care outside the VA under Trump’s expanded program, partly because wait times in the private sector are now typically longer than at VA.
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LONDON PROTESTS
TRUMP: “I kept hearing that there would be ‘massive’ rallies against me in the UK, but it was quite the opposite. The big crowds, which the Corrupt Media hates to show, were those that gathered in support of the USA and me.” — tweet Wednesday.
TRUMP: “I heard that there were protests. I said: ‘Where are the protests? I don’t see any protests.’ I did see a small protest today when I came, very small, so a lot of it is fake news, I hate to say. …And I didn’t see the protesters until just a little while ago and it was a very, very small group of people.” — news conference Tuesday with British Prime Minister Theresa May.
THE FACTS: The protests over Trump’s visit were more than just “very, very small,” and some were hard to miss.
Thousands of protesters crowded London’s government district, chanting as he met May nearby. While police erected barricades to stop protesters from marching past the gates of Downing Street, they could be heard as Trump and May emerged from the prime minister’s official residence to pose for photos before their news conference.
The protests included a giant Trump baby balloon and a robotic likeness of Trump sitting on a golden toilet, reciting familiar Trump phrases like “No collusion” and “You are fake news.”
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BREXIT
TRUMP, referring to how he stood at his Scottish golf resort, Turnberry, on the eve of the Brexit referendum and predicted the British would vote to leave the European Union: “I really predicted what was going to happen. Some of you remember that prediction. It was a strong prediction, made at a certain location, on a development we were opening the day before it happened.” — news conference Tuesday.
THE FACTS: He often tells this false story.
Trump did not predict Brexit the day before the vote.
Three months before the vote, he did predict accurately that Britain would vote to leave the EU. The day after the 2016 vote — not the day before — he predicted from his Scottish resort that the EU would collapse because of Britain’s withdrawal. That remains to be seen.
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TRANSGENDER TROOPS
TRUMP, explaining his ban on transgender troops in the military: “In the military, you’re not allowed to take any drugs …People were going in and then asking for the operation, and the operation is $200,000, $250,000, and getting the operation, the recovery period is long, and they have to take large amounts of drugs after that …You can’t do that.” — interview Tuesday with Morgan.
THE FACTS: Trump has offered no substantiation for the assertion that transgender military members represent tremendous medical costs and disruption. A Rand Corp. study found otherwise. Nor does the military bar troops from using prescription drugs.
Rand estimates that out of about 1.3 million active-duty military personnel, 2,450 are transgender. Only a subset would seek transition-related care, such as hormone therapy and sex-reassignment surgery. Based on private insurance data, the study estimates a minimal increase in costs from such care for the active-duty armed forces — no more than 0.13%, or $8.4 million annually.
As for disruption, members representing less than 0.1% of the total force would seek transition-related care that could affect their deployments, the study says.
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Associated Press writers Peter Orsi and Christopher Sherman in Mexico City, Seth Borenstein, Andrew Taylor, Matthew Perrone and Darlene Superville in Washington, Lisa Marie Pane in Boise, Idaho, Nicky Forster in New York, and Jill Lawless and Kevin Freking in London contributed to this report.
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Find AP Fact Checks at http://apne.ws/2kbx8bd
Follow @APFactCheck on Twitter: https://twitter.com/APFactCheck
Tim Bardole plants a field near Perry, Iowa. (Zach Boyden-Holmes/The Des Moines Register via AP)
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.”
President Donald Trump arrives to speak on energy infrastructure at the Cameron LNG export facility, Tuesday, May 14, 2019, in Hackberry, La. (AP Photo/Evan Vucci)
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.”
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Lemire reported from New York. Associated Press writer Catherine Lucey contributed to this report.
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Follow Lemire on Twitter at http://twitter.com/@JonLemire and Rugaber at http://twitter.com/@ChrisRugaber
President Donald Trump and Chinese President Xi Jinping. (AP Photo/Andrew Harnik)
President Donald Trump’s trade battle with China will exacerbate relations with Beijing that are already fraying on several fronts as the U.S. takes a more confrontational stance and an increasingly powerful China stands its ground.
The gloves came off Friday as the world’s two largest economies imposed tariffs on billions of dollars of each other’s goods amid a spiraling dispute over technology. It comes at a time when Washington needs China’s help in ending its nuclear standoff with North Korea.
Trump’s much-vaunted personal rapport with Chinese President Xi Jinping, whom he hosted at his Mar-a-Lago resort three months after taking office, won’t help patch up differences, experts and former officials say.
“The notion that there’s a personal relationship which will somehow supersede China’s strategic interests and the well-being of the Communist Party — including its ability to manage its own economy consistent with its political interests — is absurd,” said Daniel Russel, top U.S. diplomat for East Asia under President Barack Obama.
“There’s no scenario in which an affectionate relationship, real or imagined, is going to stay Xi’s hand,” Russel said.
Troubles in the bilateral relationship go beyond trade. China has chafed about the scope of U.S. relations with Taiwan; U.S. complaints about its construction of military outposts on islands in the South China Sea; tougher screening of Chinese investment in the U.S.; visa restrictions; and accusations that it’s the main source of opioids.
If not new, these are now deepening sources of tension between Washington and Beijing. Even as Trump has sought to cultivate his relationship with the increasingly dominant Chinese leader, his administration has chosen to confront an increasingly defiant China on pretty much all them. It also identified China, along with Russia, as a threat in the most recent U.S. National Security Strategy.
In response, Beijing is hanging tough.
“China has made it abundantly clear that it will never surrender to blackmail or coercion,” Chinese state news agency Xinhua said Friday.
To what extent the trade tensions bleed into other aspects of the U.S.-China relationship, which has retained a mostly upward trajectory since the normalization of ties four decades ago, remains to be seen.
But Mike Pillsbury, director of the Center for Chinese Strategy at the Hudson Institute, said U.S.-China relations are headed into “uncharted waters.”
Recently returned from a visit to China, Pillsbury said he was told by government officials and businessmen that they were confused about what the Trump administration wanted them to do to get the U.S. to ease the trade tensions. They threatened to back off assisting the U.S. nuclear talks with North Korea.
“They explicitly said that,” according to Pillsbury, who has written three books on China and has advised the Trump administration. “They said we will help you (the U.S.) less with North Korea if you start a trade war with us on July 6. Pretty clear, huh?”
China has, in fact, already distanced itself somewhat from its significant cooperation with the U.S. on North Korea. After supporting tough U.N. sanctions and scaling back trade with the North after it ramped up nuclear and missile tests last year, Beijing has eased restrictions on its neighbor. That shift began after Trump in March abruptly decided to hold a summit with Kim Jong Un. Once again, China has again focused on rekindling its traditional alliance with Pyongyang — Xi has met Kim three times this year.
Abraham Denmark, a former senior U.S. defense official on Asia, said China has welcomed Trump’s sudden shift from confrontation to diplomacy with North Korea and also his decision to halt large-scale military exercises with close U.S. ally South Korea.
Yet China also views what happens with North Korea through the lens of the geopolitical rivalry between the U.S. and China, he said. North Korea long served as a buffer against America’s expanding its reach in Northeast Asia to China’s border.
“If the U.S. is going to engage in a trade war, which is very troubling for China, politically, it’s going to reduce their willingness to cooperate on North Korea,” he said.
Denmark, who is now director of the Asia program at the Wilson Center think tank, warned of a broader deterioration in relations, as Trump pursues more aggressive policies toward Beijing, and China stakes out a position as world player unwilling to be pushed around.
“China under Xi Jinping has been more aggressive in its pursuit of its interests. I expect we’re going to see more tensions across the board: in trade, the South China Sea, Taiwan, Korea,” Denmark said. “These are all part of the same story, which is that China is feeling more confident and powerful, and more willing to accept friction and tension in the pursuit of its interests.”
On recent trip to China, Defense Secretary Jim Mattis did some damage mitigation, talking up the importance of military cooperation despite his earlier decision to withdraw an invite for China to participate in a U.S.-led multinational naval exercise over its activities in the disputed South China Sea. Xi struck a similar note, calling military ties a “model component of our overall bilateral relations.”
That may help to ward off the possibilities of unintended conflict between the two militaries, but it will not prevent a growing rift on other issues.
The United States accuses China of using predatory tactics in a push to supplant American technological dominance. The tactics include forcing U.S. companies to hand over technology in exchange for access to the Chinese market, as well as outright cyber-theft. Trump’s tariffs are meant to pressure Beijing to reform its trade policies.
On Friday, the Trump administration imposed tariffs on $34 billion worth of Chinese products. Within hours, China retaliated with taxes on an equal amount of U.S. products, including soybeans, pork and electric cars.
Russel said that ultimately the Trump administration’s issuing of demands of China on trade and other issues could harden attitudes inside the country, weakening the hands of reformers and strengthening nationalists who vilify the United States.
“The net effect of the Trump administration’s policies is that it will create an entire generation of Chinese who believe the worst about the United States,” Russel said.
U.S. President Donald Trump shakes hands with Canadian Prime Minister Justin Trudeau during a meeting at the G-7 summit, Friday, June 8, 2018, in Charlevoix, Canada. (AP Photo/Evan Vucci)
President Donald Trump charged into the Group of Seven summit at odds with key allies over U.S. tariffs, then set out to defuse tension with friendly banter and offered vague claims of progress in trade talks. But details were scant and clear differences remained at the summit’s midpoint.
After days of verbal sparring over new U.S. tariffs on steel and aluminum imports, Trump joined the leaders of major industrialized nations in an idyllic Canadian resort town Friday. On his way to the annual gathering, Trump laid out his fundamental grievance, saying that other countries “have been taking advantage of the United States on trade.”
He injected additional controversy by suggesting that the G-7 offer a seat at the table to Russia, which was ousted from the group after it annexed Crimea.
On Saturday, Trump was set to attend a breakfast focused on gender equality and a ceremonial scroll signing, before leaving the meeting several hours early, heading to Singapore for his summit with North Korea’s Kim Jong Un, missing sessions on climate change, clean energy and ocean protection.
Trump’s recent moves, building on 18 months of nationalist policy-making, leave him out of step with the globally-minded organization and have prompted speculation that the group could fracture into something more like the “G-6 plus one.”
But in meetings with Canadian Prime Minister Justin Trudeau and French President Emmanuel Macron, Trump stressed his friendships with the allies while continuing to insist he wanted to see changes on trade.
Trump bantered easily with Trudeau, joking that the neighboring leader had “agreed to cut all tariffs and all trade barriers.” And he emphasized a “good relationship” with Macron, saying they sometimes have a “little test” on trade, but predicting a positive outcome.
Still, the fundamental differences remained clear. Trump again railed against trade deficits with other countries and repeated that he may pursue separate trade deals with Canada and Mexico to replace the North American Free Trade Agreement, while Canada would prefer to renegotiate the three-way deal
Asked if Trudeau was upset that Trump would be leaving the summit in Canada early on Saturday, Trump joked, “He’s happy.”
Macron said he and Trump held “open and direct” discussions, adding that he thought there was a way to get a “win-win” outcome on trade, though details remained unclear.
Both sides suggested some progress in NAFTA talks. White House spokeswoman Sarah Huckabee Sanders said they were “close to a deal,” but added that there was also discussion of shifting to a bilateral deal. A Canadian official said the leaders discussed accelerating the pace of the talks.
Trump spent Friday participating in the rituals of the G-7, including the formal greeting by host Trudeau, a group photo in front of the sparkling St. Lawrence River and a working lunch of Arctic char and buckwheat salad.
Other members of the Group of Seven are Canada, France, Italy, Japan, Germany and Britain. The European Union also attends.
Trump’s relations with the others have hit such a low point that a key question was whether the seven countries can agree on a joint statement of priorities at the conclusion of the meeting. Macron said Thursday on Twitter, “The American President may not mind being isolated, but neither do we mind signing a 6 country agreement if need be.”
Trump said Friday he thinks the group will produce a joint statement.
Before arriving at the Quebec summit, Trump injected fresh drama by asking why Russia wasn’t included in the group.
“They should let Russia come back in because we should have Russia at the negotiating table,” he said.
Russia was ousted from the elite group in 2014 as punishment for President Vladimir Putin’s annexation of Crimea and support for pro-Russian separatists in Ukraine. In the U.S., special counsel Robert Mueller is investigating whether Trump’s campaign colluded with Russia in a bid to sway the 2016 presidential election in his favor.
The comments drew a mixed response.
Canadian Foreign Minister Chrystia Freeland said the issue “hasn’t been raised around the G-7 table,” though she said there have been “some direct conversations in bilateral meetings.” She added “there are no grounds whatsoever for bringing Russia with its current behavior back into the G-7.”
In Paris, Macron’s office said such a move wouldn’t make sense and pointed out that the latest country to impose economic sanctions on Russia was the U.S. Italy’s new premier, Giuseppe Conte, tweeted that he agreed with Trump, saying: “Russia should go back into the G-8. In the interest of all.”
Russia seemed unconcerned. State news agencies quoted Kremlin spokesman Dmitry Peskov as saying, “We are putting the emphasis on other formats.”
Over the course of his presidency, Trump has inflamed allies with his isolationist policies, including withdrawing the U.S. from the Paris climate accord and the international Iran-nuclear agreement.
“The rules-based international order is being challenged, not by the usual suspects but by its main architect and guarantor: the United States,” said European Council President Donald Tusk.
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Associated Press writers Ken Thomas, Jill Colvin and Darlene Superville in Washington, Sylvie Corbet in Paris and Jim Heintz in Moscow contributed to this report.
A salesperson stands at counters selling mobile phones produced by ZTE Corp. at an appliance store in Wuhan in central China’s Hubei province. (Chinatopix Via AP)
In a surprising overture to China, President Donald Trump says he would help a Chinese telecommunications company get “back into business,” saying too many jobs in China are at stake after the U.S. government cut off access to its American suppliers.
At issue is the Commerce Department’s move last month to block the ZTE Corp., a major supplier of telecom networks and smartphones based in southern China, from importing American components for seven years. The U.S. accused ZTE of misleading American regulators after it settled charges of violating sanctions against North Korea and Iran.
The case dates to before Trump took office in January 2007 but the Commerce Department’s decision came amid worsening trade tensions between the U.S. and China centered on technology-related intellectual property.
Trump’s unexpected announcement Sunday came as the two countries prepared to continue trade talks in Washington this week. Given his past vows to stop the flow of U.S. jobs to China and crack down on what he says are unfair trade practices, Trump’s tweet of concern about Chinese jobs was something of a backflip.
“A reversal of the ZTE decision could temporarily tamp down trade tensions by allowing the Chinese to make concessions to the U.S. without losing face,” said Eswar Prasad, a professor of trade policy at Cornell University. “Trump may have recognized that backing off on ZTE clears the path for him to claim at least a partial victory in the US-China trade dispute based on the concessions the Chinese seem prepared to offer.”
ZTE, which has more than 70,000 employees and has supplied networks or equipment to some of the world’s biggest telecoms companies, said in early May that it had halted its main operations as a result of the department’s “denial order.”
Trump, who has taken a hard line on trade and technology issues with Beijing, tweeted that he and Chinese leader Xi Jinping “are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”
Expanding on Trump’s message, White House deputy press secretary Lindsay Walters said in a statement, “The President’s tweet underscores the importance of a free, fair, balanced, and mutually beneficial economic, trade and investment relationship between the United States and China.”
It was not exactly clear what Trump was proposing for ZTE, or whether it would involve rolling back the Commerce Department’s decision. The White House deferred to the Commerce Department on any specific questions relating to ongoing regulator action.
In a later tweet, Trump suggested the U.S. and China were moving forward on the trade negotiations, but it was not clear how the ZTE case would fit into the bigger picture.
“I’ve never seen a president step in and reverse an agency decision like this. It’s not clear, of course, if he’s planning to really reverse it or think of a solution in a larger context, but it is something that is just out of the norm,” said Amanda DeBusk, the chair of the international trade department at the New York City-based law firm Hughes Hubbard & Reed.
DeBusk, a former Commerce Department assistant secretary for export enforcement, said Trump’s announcement indicates “he is looking to accomplish his objectives on trade with China on a much larger level.”
The widening trade dispute between the world’s two biggest economies has taken a toll on both sides. U.S. companies that export to China have seen their goods held up at China’s ports amid tougher inspections. The block on ZTE was a heavy blow for the company but also hurt the U.S. companies it buys from. According to IDC data, ZTE sources more than 40 percent of its components from the U.S., creating a multibillion-dollar revenue stream for suppliers like Qualcomm and Intel.
Chinese officials raised their objections to ZTE’s punishment at trade talk in Beijing earlier this month, and the American delegation agreed to report them to Trump. ZTE has asked the department to suspend the seven-year ban on doing business with U.S. technology exporters. By cutting off access to U.S. suppliers of essential components such as microchips, the ban threatens ZTE’s existence, the company has said.
At the Beijing talks, the Trump administration handed China a list of hard-line demands that trade experts said could make it even more difficult to resolve the trade disputes. Both sides had been expected to dig in for a fight over their trade imbalance at this week’s talks.
But Trump set a more reassuring tone in a separate tweet Sunday, saying the two economic giants were “working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries. But be cool, it will all work out!”
Trump is seeking to cut the chronic U.S. trade deficit by $100 billion and gain concessions over the policies that foreign companies say force them to share technology in order to gain market access.
The U.S. imposed the penalty on Shenzhen-based ZTE after discovering that the company, which had paid a $1.2 billion fine in the case, had failed to discipline employees involved and paid them bonuses instead.
Commerce Secretary Wilbur Ross last month accused ZTE of misleading the department and warned, “This egregious behavior cannot be ignored.”
California Rep. Adam Schiff, the top Democrat on the intelligence committee, criticized Trump for softening his stance on ZTE.
“Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat. You should care more about our national security than Chinese jobs,” Schiff said in a tweet directed at Trump.
A steel worker builds a structure in Ottawa, Ontario. President Donald Trump insisted Monday that he’s “not backing down” on his plan to impose stiff tariffs on imported steel and aluminum despite anxious warnings from House Speaker Paul Ryan and other congressional Republicans of a possible trade war. (Sean Kilpatrick/The Canadian Press via AP)
President Donald Trump offers an incomplete picture of American trade in making his case for penalties on foreign goods. Here’s a look at his recent comments as he prepares to impose big tariffs on imported steel and aluminum and threatens action on a broader trade front:
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TRUMP: “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!” — tweet Saturday.
THE FACTS: He’s wrong that automakers find it impossible to sell U.S.-made cars in Europe and that European cars come into the U.S. “freely.” He’s right about a big imbalance, but his impulse to exaggerate is on display here.
The U.S. Census Bureau shows $13.8 billion in U.S. auto and parts exports last year to four countries in Europe: Germany, Britain, Belgium and France.
It shows $51.3 billion in U.S. imports of autos and parts from five countries in Europe: Germany, Britain, Sweden, Italy and Austria.
The EU applies a 10 percent duty on cars made in the U.S. The U.S. applies a 2.5 percent duty on cars made in Europe.
In addition, Ford and Fiat Chrysler make vehicles in Europe, while Mercedes, Volkswagen and BMW have factories in the U.S. — operations that could also become part of a trade war.
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TRUMP: “The United States has an $800 Billion Dollar Yearly Trade Deficit because of our ‘very stupid’ trade deals and policies. Our jobs and wealth are being given to other countries that have taken advantage of us for years. They laugh at what fools our leaders have been. No more!” — tweet Saturday.
THE FACTS: No, the trade deficit is not $800 billion. It’s $566 billion. The U.S. in 2017 bought $810 billion more in foreign goods than other countries bought from the U.S., says the Census Bureau. That deficit in goods was offset by a $244 billion trade surplus in services, like transportation, computer and financial services, royalties and military and government contracts.
Similarly, Trump has complained about a trade deficit with Canada even though the U.S. runs an overall surplus with that country — thanks to the value of services.
The president said in December that he corrected Canadian Prime Minister Justin Trudeau on this matter when they spoke. But the U.S. Trade Representative’s Office said the U.S. enjoyed a $12.5 billion trade surplus with Canada in 2016. A $12.1 billion U.S. deficit in goods was overcome by a $24.6 billion surplus in services.
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TRUMP: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” — a tweet on Friday in support of his announcement that he will impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports.
THE FACTS: Trade wars have not been easy to win.
The president’s argument, in essence, is that high tariffs will force other countries to relent quickly on what he sees as unfair trading practices, and that will wipe out the trade gap and create factory jobs. But the record shows that tariffs, while they may help certain domestic manufacturers, can come at a broad cost. They can raise prices for consumers and businesses because companies pass on at least some of the higher costs of imports and imported materials to their customers. A trade war is also bound to mean that other countries will erect higher barriers of their own against U.S. goods and services, thereby punishing American exporters.
The United States first became a net importer of steel in 1959, when steelworkers staged a 116-day strike, according to research by Michael O. Moore, a George Washington University economist. After that, U.S. administrations imposed protectionist policies, only to see global competitors adapt and the U.S. share of global steel production decline.
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Associated Press writers Tom Krisher in Detroit and Christopher Rugaber in Washington contributed to this report.
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Auto trade: https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
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President Donald Trump speaks during the Women’s Entrepreneurship Finance event at the G20 Summit in Hamburg. (AP Photo/Evan Vucci)
Fresh from his lengthy head-to-head encounter with Russian President Vladimir Putin, U.S. President Donald Trump on Saturday dove into discussions on trade and North Korea in a packed agenda with world leaders at an international summit.
Wrapping up his second trip overseas, Trump was meeting later in the day with President Xi Jinping of China as the U.S. sought to forge a consensus on how to counter North Korea’s push to develop its ballistic missile and nuclear program. The White House has tried to pressure Beijing to rein in North Korea but Trump has expressed frustration with the process.
Trump said he had a “tremendous meeting” with Putin as he sat alongside British Prime Minister Theresa May on the sidelines of an international summit in Germany. It marked Trump’s first comments on his high-profile talks with Putin in which he raised the issue of Russia’s meddling in the 2016 elections and discussed plans for a cease-fire agreement in Syria.
It was the president’s final day of meetings at the annual Group of 20 summit, which have been marked by violent riots in the city between anti-globalization activists and police.
Noting his “special relationship” with the British prime minister, the president said he and May were working on a trade agreement that he described as a “very, very big deal, very powerful, great deal for both countries.”
May was the first foreign leader to visit Trump at the White House and he told her he would soon “be going to London” once details were worked out. Independent trade negotiations between the two countries are a possibility as Britain exists the European Union — a move Trump has supported.
Trade was also on Trump’s mind as he met President Joko Widodo of Indonesia. The president said he planned to do “lots of deals” with Indonesia and expressed hope of bolstering their trade ties.
Trump’s meeting with Xi, meanwhile, was coming at a delicate time in the relationship between the two global powers.
The Trump administration is investigating the possibility of putting new barriers on steel imports based on national security considerations, a move that could target China, which has flooded international markets with cheap steel exports.
Trump has pressed Xi to help stop the U.S. stop North Korea’s development of nuclear weapons before they have the ability to threaten the U.S. homeland. The administration wants China to fully enforce international sanctions intended to starve Pyongyang of revenue for its nuclear and missile programs.
The stakes have become more significant after North Korea’s recent test-launch of an intercontinental ballistic missile. The successful test launch is a major milestone in the North’s long-term effort to build a missile that could carry a nuclear warhead to attack the United States.
Earlier in the week, Trump vented on Twitter that trade between China and North Korea had grown nearly 40 percent at the start of 2017. “So much for China working with us – but we had to give it a try!” Trump officials said later that the president hadn’t given up on the relationship.
Trump’s long list of meetings with world leaders on Saturday also included Japanese Prime Minister Shinzo Abe and Prime Minister Lee Hsien Loong of Singapore. He also joined a women’s entrepreneurial finance event, a project spearheaded by his daughter and senior adviser Ivanka Trump.
Ivanka Trump and the World Bank rolled out a new fund that aims to help female entrepreneurs access capital, financing and other support. World Bank President Jim Yong Kim said the Women Entrepreneurs Finance Initiative fund had so far raised $325 million from various governments.
During his brief remarks, Trump lauded his daughter’s efforts to help female entrepreneurs, joking that “if she weren’t my daughter, it would be so much easier for her.”
Trump planned to return to Washington on Saturday evening after the conclusion of the annual Group of 20 meetings. He won’t be stateside for long. The president is scheduled to return to Europe next week to attend Bastille Day celebrations in Paris.
The European trip to Poland and Germany has centered around the exchange with Putin, Trump’s first in-person meeting as president. But both sides offered differing explanations of what took place.
U.S. Secretary of State Rex Tillerson said Trump and Putin had a “robust and lengthy” discussion about the election interference but Putin denied any involvement. His Russian counterpart, Foreign Minister Sergey Lavrov, said Trump had accepted Putin’s assurances that Russia didn’t meddle in the U.S. election — a characterization that the U.S. disputed.
“I think the president is rightly focused on how do we move forward from something that may be an intractable disagreement at this point,” said Tillerson, who took part in the meeting along with Lavrov.
Russian officials sought to address the conflicting accounts. Asked about the discrepancies on Saturday, Putin spokesman Dmitry Peskov joked, “Trust Lavrov. I don’t work for Tillerson.”
Democrats seized upon Tillerson’s remarks, saying that it was wrong to suggest the issue of Russia’s role in the election meddling was unresolved. Senate Democratic leader Chuck Schumer of New York said it was “disgraceful” and said it was a “grave dereliction of duty” to give “equal credence to the findings of the American Intelligence Community and the assertion by Mr. Putin.”
U.S. officials have said Russia tried to hack election systems in 21 states and sway the election for Trump, representing a level of interference in the U.S. political system that security experts said represents a top-level threat.
Trump’s meeting with Putin, which was originally scheduled for 35 minutes, wrapped up after more than 2 hours, and focused heavily on a just-announced cease-fire deal for southwestern Syria that was reached by Russia and the United States.
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Associated Press writers Jill Colvin and Vivian Salama in Washington contributed to this report.
