Posts Tagged ‘Mexico’

Mnuchin says U.S. will consider some waivers on Iran sanctions

July 16, 2018

The United States wants to avoid disrupting global oil markets as it reimposes sanctions against Tehran and in certain cases will consider waivers for countries which need more time to wind down their oil imports from Iran, U.S. Treasury Secretary Steven Mnuchin said.

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FILE PHOTO: U.S. Secretary of the Treasury Steven Mnuchin 

“We want people to reduce oil purchases to zero, but in certain cases if people can’t do that overnight, we’ll consider exceptions,” Mnuchin told reporters on Friday, clarifying some U.S. officials’ comments that there would be no exemptions. Mnuchin’s comments were embargoed for release on Monday.

Mnuchin was talking to reporters en route from Mexico where he was part of a high-level U.S. delegation led by Secretary of State Mike Pompeo to meet Mexico’s next president, Andres Manuel Lopez Obrador.

The Trump administration is pushing countries to cut all imports of Iranian oil from November when the United States reimposes sanctions against Tehran, after Trump withdrew from the 2015 nuclear deal agreed between Iran and six major powers, against the advice of allies in Europe and elsewhere.

Mnuchin said he would meet with counterparts from developed and developing countries on the sidelines of a G20 finance ministers’ meeting in Buenos Aires on July 19-22. U.S. sanctions against Iran are likely to be raised in his talks.

“We’ve said very specifically, there’s no blanket waivers, there’s no grandfathering,” Mnuchin said, “We want to be very careful in the wind-down around the energy markets to make sure that people have the time.”

He added: “The State Department has the ability to issue waivers around significant reductions in the oil markets, that’s something that Treasury and State will be doing.”

Mnuchin said Washington had made clear to allies that it expects them to enforce the sanctions against Iran “but if there are specific situations we’re open to listening.”

French Finance Minister Bruno Le Maire said at the weekend that Washington had rejected a French request for waivers for its companies operating in Iran, according to Le Figaro.

Paris had singled out key areas where it expected either exemptions or extended wind-down periods for French companies, including energy, banking, pharmaceuticals and automotive.

The Trump administration has said there are more than 50 foreign companies that have withdrawn their business from Iran since Trump announced the U.S. was withdrawing from the 2015 nuclear deal between Iran and the United States, Germany, France, Britain, China and Russia.

Pompeo, also speaking to reporters on Friday, said he had discussed U.S. plans to reimpose sanctions on Iran with “all but one” country. He did not name the country he had not yet consulted.

“What they’ve asked us to do is review how we get there and the timeline for that,” he said, “and so I’m very confident they understand.”

Iranian President Hassan Rouhani, speaking in remarks carried live on state television on Saturday, said Washington was more isolated than ever over sanctions against Iran, even among its allies.

His comments appeared to be trying to ease popular concerns fueled by Trump’s decision to withdraw from the deal with Iran on its nuclear program.

The likely return of U.S. economic sanctions has triggered a rapid fall of Iran’s currency and protests by bazaar traders usually loyal to the Islamist rulers.

Trump has said he asked Saudi Arabia to raise oil production if needed to ensure global oil supplies and the country has 2 million barrels per day of spare capacity.

The Organization of the Petroleum Exporting Countries agreed with Russia and other oil-producing allies on June 23 to raise output from July, with Saudi Arabia pledging a “measurable” supply boost, but giving no specific numbers.

Reporting by Lesley Wroughton; Editing by Phil Berlowitz



The Changing Face of Illegal Border Crossings

July 13, 2018

The nation of origin, and motivation, of people trying to enter the U.S. looks much different since 2000

A U.S. Border Patrol agent apprehended migrants who illegally crossed the border from Mexico near McAllen, Texas, in April.
A U.S. Border Patrol agent apprehended migrants who illegally crossed the border from Mexico near McAllen, Texas, in April. PHOTO: LOREN ELLIOTT/REUTERS
The Wall Street Journal


In the early 2000s, millions of undocumented Mexicans crossed the U.S. border in search of work.

Nearly two decades later, border crossings look remarkably different. The number of Mexicans has plummeted. Other countries are now the source of most undocumented immigrants. And their motivation for taking the risk is different.

The shift is largely related to changing demographics in Mexico and the levels of violence and, in some cases, poverty in Central America.

In fiscal 2000, the U.S. Border Patrol apprehended 1.6 million Mexicans at the southwest border, according to reports by U.S. Customs and Border Protection.

Last fiscal year, the number was 128,000, with 176,000 more coming from other countries.

“It was the lowest level of apprehensions since 1972,” said Douglas Massey, a Princeton sociologist who gathers data on the topic as co-director of the Mexican Migration Project.

It’s unclear how many undocumented immigrants manage to get into the U.S. in a given year, but in its most recent report, the Department of Homeland Security estimated that 12.1 million lived in the U.S. in 2014, including 6.6 million Mexicans.

As the number of Mexicans attempting to cross the border has declined, the number of Central Americans—most from El Salvador, Guatemala and Honduras—has increased, with the demographics of the border crossers shifting as well.

Undocumented Hondurans and Salvadorans who travel to the U.S. tend to have more money and education than their peers, and they experience more violence, said Jonathan Hiskey, who analyzes survey data collected through the Latin American Public Opinion Project.

They also tend to arrive with other family members.

Last year, the Border Patrol apprehended 24,122 people who arrived with family members from El Salvador, 22,366 from Honduras and 24,657 from Guatemala.

Only 2,217 people from Mexico arrived as part of a family.

The number of unaccompanied Mexican children has also decreased. Last year, the Border Patrol apprehended 8,877, compared with about 32,000 from El Salvador, Guatemala and Honduras.

Border CrossingsThe number of Mexicans apprehended at theborder has plummeted. The majority are nowfrom other countries.Illegal immigrant apprehensionsSource: U.S. Border PatrolNote: Fiscal years end Sept. 30.

The reason for the decline in the number of Mexican migrants may have less to do with the U.S. economy or border security than with changes in Mexico.

Immigration—especially when it involves a treacherous border crossing—is a young person’s venture, according to the experts, and Mexico is not so young any more.

“If you haven’t done it by the time you’re 35, generally speaking, you’re not going to,” Dr. Hiskey said.

A baby boom in Mexico peaked in the 1960s and 1970s, and those generations are now older than that. In addition, the country’s economy has improved, reducing the need to migrate for income, and its fertility rate has declined to 2.2 children per woman from a peak of 6.8.

A rate of 2.1 is considered the minimum to maintain a stable population without immigration. (The U.S. fertility rate dropped to 1.76 last year.)

Experts who study immigration also believe the motivation for coming to the U.S. has changed, with a yearning for safety supplanting the search for income.

“The classic illegal migrant is a young male coming to work,” Dr. Massey said. “It’s increasingly families from Central America seeking to escape threats at home.”

For Hondurans and Salvadorans in particular, the strongest predictor of an intent to emigrate, according to Dr. Hiskey’s research, is whether they have been targeted by crime.

“When we did the Honduras analysis, gender was not a significant predictor of an intent to emigrate, age was not a significant predictor and economic situation was not a significant predictor,” Dr. Hiskey said. “Among the strongest predictors was whether someone had been victimized by crime multiple times in previous 12 months.”

On the other hand, Guatemalans, he said, do appear to be driven more by economic reasons, perhaps because drought in recent years has worsened hunger there.

Notably, the Latin American survey suggests undocumented immigrants who come to the U.S. to escape crime aren’t deterred by the risk of emigrating or by the threat of deportation once they arrive.

“Deterrence will work on some people,” Dr. Hiskey said. “Deterrence does not work on people fleeing for their lives.”

If his assessment is correct, the flood of immigrants may have been stemmed. But a desperate trickle could persist.

Write to Jo Craven McGinty at

Trump’s Trade Policy Goes From Bad to Worse

July 13, 2018

And Congress is letting it happen.

Trump and Lighthizer have usurped Congress on trade.Photographer: Andrew Harrer/Bloomberg via Getty Images


Announcing plans for additional tariffs on $200 billion of imports, the Trump administration has taken another dangerous step toward escalating its trade war on China. China’s response, so far, has been measured, and that’s encouraging. The U.S. Congress has managed only the feeblest gesture of protest, and that’s disgraceful.

The president has told U.S. Trade Representative Robert Lighthizer to draw up new 10 percent tariffs on a wide range of Chinese goods and materials. All the objections to the previous round of tariffs on $34 billion of goods apply, only more so. If the policy goes ahead after the seven weeks allowed for public comment, it will impose a hefty new tax on U.S. consumers and producers. Supply chains and investment plans will be thrown into disarray. And if China retaliates, as it might feel it must, the economic damage will be compounded.

Its reaction so far has been cautious. The Ministry of Commerce said it was shocked by the latest move and that the Trump administration was “hurting China, hurting the entire world and hurting the U.S. itself.” All of which is true. It’s come to something when the world needs China’s communist government to school the U.S. in basic economics.

There’ll be a limit to China’s forbearance, though. As this pointless fight drags on, its government will be as concerned to save face as Trump is. It can’t retaliate dollar-for-dollar with tariffs on U.S. imports, because it buys less than $200 billion from the U.S., but other methods — assorted non-tariff barriers to trade and inward investment — are available.

Trouble as far as the eye can see.

Photographer: Qilai Shen/Bloomberg


If Beijing resorts to such measures, the risk of lasting harm will be compounded, because these administrative barriers could reverse earlier moves by China toward more market-friendly economic interventions. The trade conflict that Trump is stoking is capable, in the worst case, of obstructing further liberalization and pushing China toward heavier-handed state direction of its economy — to say nothing of chilling U.S.-China relations for years if not decades to come.

Many in the U.S. Congress recognize the danger posed by this insidious trade-war logic, but their response so far has been pitiful. On Wednesday the Senate voted 88-11 to instruct itself to insert language into a funding bill “providing a role for Congress” on tariffs. The vote is non-binding, so the senators left themselves free to ignore their own instruction.

Language providing a role for Congress on tariffs can already be found in a more authoritative law — the U.S. Constitution. It provides that trade policy is the responsibility of the legislative branch. Trump’s maneuvers, which began under cover of a specious “national security” exception, violate the spirit and probably the letter of that provision. Yet all Congress has managed in reply to this dangerous usurpation of its role is a timid squawk of protest.

Trump’s trade policy is getting more reckless by the day. If worse comes to worst, a self-enfeebled Congress will be equally to blame.

—Editors: Clive Crook, Nisid Hajari, Mary Duenwald.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley .

Washington Post seemed to blame Congress ….

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US Treasury chief moves to calm lawmakers’ trade jitters

July 12, 2018


© GETTY/AFP | US Treasury Secretary Steven Mnuchin was grilled by the House Financial Services Committee by members complaining about the impact of a trade war on US industries and consumers

US Treasury Secretary Steven Mnuchin on Thursday worked to ease lawmakers’ worries about President Donald Trump’s expanding trade offensive.

Mnuchin’s appearance before a key Congressional committee came a day after the US Senate overwhelmingly voted to adopt a symbolic rebuke of the White House, endorsing legal limits on the president’s trade powers.

The Senate vote was nonbinding, but underscored the daylight separating Trump and members of his own Republican party, who have so far shrunk from actively blocking his trade policies.

With scores of billions of dollars in US imports and exports now subject to punitive import duties, higher industrial and consumer prices are beginning to feed into inflation, alarming business leaders.

Economists have repeatedly warned that the growing trade war will depress investment and economic growth.

The International Monetary Fund also has warned against the rising tide of protectionism and the potential to damage the global recovery. The IMF is due to release updated global growth projections on Monday.

But Mnuchin defended Trump’s policies before the House Financial Services Committee, while lawmakers repeatedly pleaded for US products, workers and industries vulnerable to tariffs, including Georgia pecans, Kentucky bourbon, Michigan and South Carolina autos, Missouri soy growers and nail manufacturers.

The committee chairman, outgoing Texas Republican Jeb Hensarling, said the tariffs jeopardized US energy independence by raising prices for oilfield equipment. He denounced Trump’s threats to use national security as a justification for even more tariffs on the hundreds of billions of dollars in annual auto imports.

“The 11-year-old Honda Accord I drove to work today simply does not threaten national security, nor does any other imported vehicle,” Hensarling said, urging the White House to focus on China rather than confronting traditional allies like Canada and Europe.

– Asking Harley to stay –

But Mnuchin said in annual testimony on the state of the international financial system that the president’s policies were likely to succeed for all concerned.

“I think that the end game is we’re focused on having free and fair trade for American companies,” Mnuchin said. “I’m cautiously optimistic but I think we’re going to end up in a good place.”

He also said he was paying close attention to vulnerable sectors such as soy beans.

“We have not yet seen any negative impact although… we are monitoring the impact on uncertainty in investment.”

Mnuchin said Trump had urged famed Wisconsin motorcycle maker Harley Davidson not to offshore additional production in response to retaliatory European tariffs.

But he suggested the company had seized on Trump’s tariff policies last month to deflect negative scrutiny from its off-shoring plans.

The company announced last month plans to shift some production overseas due to the 31 percent European tariffs on motorcycles imposed in retaliation for Trump’s steep duties on aluminum and steel.

“My sense is that Harley Davidson had previously planned on moving some of this manufacturing,” he said.

– Iranian oil –

Mnuchin also said Washington continued to urge US allies to cut oil imports from Iran.

Over the objections of allies, Trump in May pulled the United States from a joint deal on Iran’s nuclear program, reinstating US sanctions and effectively barring many multinational firms from doing business in that country.

New US sanctions on Iranian oil exports are set to take effect in November although US officials have floated the possibility of offering some waivers.

“I think we expect that the Iranian oil shipments will decrease significantly,” he said.



Trump trade policies draw bipartisan fire in Congress

July 12, 2018
Republicans and Democrats unite to accuse the president of endangering economic growth
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Steven Mnuchin, Treasury secretary, denied that Trump trade policies have hurt the US economy © Getty

By Sam Fleming and Courtney Weaver in Washington 

The Trump administration came under fire from both parties on Capitol Hill on Thursday as legislators expressed intensifying concern about the economic damage that could result from a trade war with America’s key partners.

In an unusual display of bipartisan harmony, senior Republicans and Democrats hammered administration officials over the risks to the US economy as Donald Trump pursues trade actions both against China and close US allies including Canada, Mexico and the European Union.

Bob Corker, the Republican chairman of the Senate Foreign Relations Committee, accused the president of having no strategy on trade and of abusing his authority as he declared: “I have not heard a single senator come back with any earthly idea — any earthly idea — cannot articulate a sentence as to why we are doing this.”

In the House financial services committee, Jeb Hensarling, the Republican chairman, told Steven Mnuchin, US Treasury secretary, that the “economic miracle” the president had fostered may well be lost if the country gets mired in a “full-fledged global trade war with no end in sight.”

Folks are confused. They are anxious and they have a concern. And you just heard it from us on a bipartisan basis

Maxine Waters, the Democratic ranking member of the committee, said the reaction of business — including Harley-Davidson’s decision to move some production overseas to avoid tariffs — promised pain ahead for US workers and consumers.

“The Trump administration appears to be flying by seat of pants with no plan for how to address the possibility of a recession, the higher prices consumers will pay, and the resulting losses of millions of American jobs,” she said.

At a separate event, Paul Ryan, the Republican House speaker, joined the chorus of criticism. “We risk having American products locked out of new markets, jobs moved overseas, and a decline in American influence. As our generals will tell you, these agreements are just as important for our national security as they are for our economy,” he told the Economic Club of Washington.

The anxiety comes after the announcement that the administration is beginning the process of imposing tariffs on a further $200bn of imports from China, on top of previous rounds of levies. Business surveys have indicated rising angst among executives and minutes from the Federal Reserve’s latest rate-setting meeting reported that some firms have put investments on hold or reduced them.

Mr Mnuchin told members of the House financial services committee that his department had not seen any negative economic impact from the policies but that it was “very much monitoring the impact on the economy of all these different issues.”

Addressing trade tensions, he said there is a planned meeting with the EU later this month and insisted the government was “very focused” on responding to retaliatory measures being imposed on US products by foreign governments. He said the administration was open to renewing talks with China if Beijing showed it wished to make “structural changes”. Talks on the North American Free Trade Agreement were a top priority now the Mexican election was out of the way, he added.

Manisha Singh, assistant secretary of state for economic and business affairs, faced a similarly hostile grilling from Republicans and Democrats on the Senate Foreign Relations Committee. The toughest line of questioning came from Mr Corker who warned at the start of the hearing that Ms Singh was about to be “cannon fodder”.

“I believe the president is abusing his authorities. I believe it is a massive abuse of his authorities,” Mr Corker said. When Ms Singh attempted to defend the administration, laying out the five pillars of the administration’s plan on trade, Mr Corker shot back: “That enlightened us in no way.”

Mr Corker and Jeff Flake — another Republican on the Senate Foreign Relations Committee — have been two of the most outspoken critics of Mr Trump’s trade policies. Both men have announced they are retiring at the end of this term, allowing them more flexibility to go after the president and his policies.

Despite the uproar on Capitol Hill, it is not clear what Congress will do to influence trade policy. On Wednesday, the Senate backed a measure authored by Mr Flake and Mr Corker designed to give Congress a greater say on trade policies. The provision is largely symbolic, although its sweeping passage by a vote of 88-11 underscored the extent of concerns about trade policy on Capitol Hill.

Mr Corker has authored a bill that would roll back Mr Trump’s unilateral trade authority and subject the tariffs that Mr Trump has introduced on national security grounds to congressional approval. So far, Republican leadership has refused to bring Mr Corker’s bill to a vote.

During the Senate hearing, Ms Singh faced criticism from alarmed senators who laid out the impact Mr Trump’s trade gambit was having on their states.

“Folks are confused. They are anxious and they have a concern. And you just heard it from us on a bipartisan basis,” said Chris Coons, a Democrat from Delaware. The closest US allies were “puzzled” and “offended”, he added.

“You are going to put companies in New Mexico out of business with these tariffs,” warned Tom Udall, a Democratic senator from New Mexico.


Why nothing seems to be stopping Trump’s trade war

July 12, 2018

President Trump is remaking the global trade order without significant political resistance or penalty, unchecked by a largely compliant Congress and bolstered by the loyalty of his supporters — even those likely to be hurt by his burgeoning global trade war.

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The Senate on Wednesday passed a nonbinding measure calling for a greater role in overseeing Trump’s trade decisions, an implicit criticism of new tariffs the president has levied on some of the country’s closest allies and largest trading partners. But the vote has no power to prompt a course change from the White House. And it follows failed attempts to advance measures that could have given Congress new power to restrain Trump.

By Erica Werner and Heather Long
The Washington Post

Congress’s passivity in the face of Trump’s escalating trade conflict is one of several factors that have made it easier for the president to push on. Others have included markets that haven’t melted down, business leaders who have done little beyond using rhetoric to criticize the trade spat, and Republican voters who have stood by their president. In each of these cases, critics of his trade policy had hoped Trump would find reason to be dissuaded.

The trade changes mirror Trump’s rapid and similarly unchecked efforts to reposition the United States in the global political order. During his trip to Europe this week, the president has antagonized the country’s NATO allies. He also plans to meet next week with Russian President Vladi­mir Putin, seeking to tighten ties with a traditional rival.

On trade, U.S. partners have retaliated with their own tariffs on U.S. goods, targeting GOP strongholds and paining sensitive industries and areas that depend on access to foreign markets. New polling suggests, however, that Trump supporters in those areas are standing by the president.

The parts of the country most affected by Trump’s trade war remain supportive of the president for now. Among the 15 states most affected by the tariffs, Trump’s approval rating is 57 percent, according to a recent Washington Post-Schar School poll. Trump won 52 percent of the vote in those states in 2016.

Senate Foreign Relations Committee Chairman Bob Corker (R-Tenn.) stops to field questions from reporters Wednesday on Capitol Hill. The Senate approved a nonbinding resolution calling for a greater role in overseeing President Trump’s tariff decisions. (J. Scott Applewhite/AP)

Much of the pain has centered on soybean farmers, whose crops are exported widely and who have seen prices nosedive since the trade war intensified.

“I am in Brussels, but always thinking about our farmers,” Trump wrote Wednesday on Twitter. “I am fighting for a level playing field for our farmers, and will win!”

Trump’s unimpeded trade efforts could face more resistance, however, if disputes with allies intensify and more of their economic consequences hit home.

Though Trump has been making trade threats since the start of his presidential campaign, the opening rounds of tariffs are only now taking effect. If the U.S. economy were to slow meaningfully because of the conflict, Trump could yet be forced to change course.

But despite the escalating trade spats, markets have not cratered. While U.S. stocks slid Wednesday, with the Dow Jones industrial average falling 219 points, markets have kept relatively calm in recent weeks even as the United States and China swapped punitive trade measures.

Washington investment manager Michael Farr said that after months of presidential outbursts, Trump fatigue is setting in among investors.

“Wall Street seems to be beginning to get him,” said Farr, who believes investors have largely priced in Trump’s trade actions and aggressive statements.

Senators looking to check Trump’s trade agenda saw hope for more action after Wednesday’s vote, when the Senate voted 88 to 11 to approve language asserting “a role for Congress” when Trump imposes tariffs in the name of national security, as he has done with steel and aluminum tariffs on Canada, Mexico, the European Union and others.

But one of the measure’s strongest supporters, Sen. Jeff Flake (R-Ariz.), acknowledged after the vote that if the measure had had teeth, it wouldn’t have passed.

Image result for Jeff Flake, photos

Jeff Flake

“If we had had a binding vote today, we wouldn’t have won it,” Flake, who is retiring at the end of the congressional session, said Wednesday.

He added: “Some are still giving the president some kind of license or leash here. But most of us think we know where the president wants to go. And it’s not where we want to be.”

As the Senate suggests it should have more oversight, the administration has not paused in ramping up trade disputes.

Early this week Trump identified $200 billion in Chinese imports he would hit with tariffs unless Beijing agreed to major trade concessions. The massive levies would add to the $34 billion in Chinese imports on which Trump officially imposed new tariffs earlier this month — a move that drew an immediate dollar-for-dollar retaliation from China.

Tariffs of 25 percent on steel imports and 10 percent on aluminum imports remain in place on most countries around the world, despite protests from Republican lawmakers and long-standing international allies.

Trump’s ability to unilaterally impose trade measures comes after Congress has repeatedly ceded its authority over trade through laws and fast-track agreements. That approach had worked well for congressional Republicans and other free-trade advocates, as presidents negotiated the North American Free Trade Agreement, the Trans-Pacific Partnership and other pacts. Then Trump arrived determined to ride roughshod over all of it.

Many lawmakers from both parties believe Trump abused his authority in invoking Section 232 of the Trade Expansion Act of 1962, which allowed him to unilaterally impose tariffs on steel and aluminum imports after his administration determined they posed a threat to U.S. security. He’s now threatening to do the same with automobiles, which lawmakers are warning could be even more ruinous to the economy.

Trump’s rejection of free trade is his most pronounced break from traditional Republican Party doctrine. But by most accounts, the president cannot be dissuaded from the protectionist views he formed decades ago and made a centerpiece of his campaign for president.

“He’s very true to what he said he was going to do during the campaign for president,” said Sen. Pat Roberts (R-Kan.).

For months, Roberts and other Republicans have been sounding the alarm about retaliatory tariffs on farm country and elsewhere, and warning that a trade war threatens the strong economy that will be the GOP’s calling card in the upcoming midterm elections, in which Democrats will aim to retake control of Congress.

A majority of Americans disapprove of Trump’s handling of trade and think escalating tariffs with China will be “bad” for jobs, according to the Washington Post-Schar School poll conducted from June 27 to July 2. There’s more worry about rising prices — nearly three-fourths of Americans believe tariffs will be bad for the cost of imported goods, according to the poll.

And even though Trump’s support in the 15 states most affected by the trade war remains high, a majority of respondents in those states also said they disapproved of the president’s handling of international trade.

But when people are asked what their top issues are heading into the midterm elections, trade is low on the list, below issues such as the economy, jobs, health care, immigration, guns and taxes, according to the recent poll.

That may be in part because most Americans aren’t feeling the impacts of these higher import taxes yet. The tariffs in place so far — and the retaliatory measures from other countries — will cost the average family about $80 more a year, according to economist Mark Zandi of Moody’s Analytics. Many large companies aren’t even passing the additional costs on to consumers yet because they knew the tariffs were coming and planned ahead by buying supplies before the higher prices went into effect.

“The impact is fairly negligible for most Americans right now,” said Chris Ellis, director of the Survey Research Laboratory at Bucknell University.

Phil Ramsey, chair of the Indiana Soybean Alliance membership and policy committee, said he speaks multiple times a day with other farmers in his state.

“Most of us farmers are extremely patient,” said Ramsey, a 58-year-old soybean and corn farmer who voted for Trump and attended his inauguration. “We dump hundreds of thousands of seeds and fertilizer into these fields. Then we wait for them to grow. We know it will happen.”

But lawmakers from farm states are cautioning Trump that he is testing voters’ patience.

Sen. Charles E. Grassley (R-Iowa) said trade was a constant theme in 10 county meetings last week in his home state.

“People are very nervous, and they’d like to have me say, ‘Well, we’re going have this settled by September the 15th or November the 15th.’ I can’t give them that assurance,” Grassley said. “I can just tell them the president’s negotiating approach is the longer you negotiate, the better deal you get. And so everybody’s nervous, and it’s costing a lot.”

He warned that “as time goes on, as prices go down, there’s less patience” from the voters for the president.

Scott Clement and Tom Heath contributed to this report.

U.S., Mexico vow to reunite separated migrant families quickly

July 11, 2018

The United States and Mexico on Tuesday vowed to work with Central American nations to reunite migrant families separated at the U.S. border “as quickly as possible” as the Trump administration faced fresh criticism over the practice.

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Elsa Ortiz holds a placard with pictures of her son David Tobar, who’s currently at a shelter in Houston, Texas, after being separated, while protesting outside the hotel where U.S. Homeland Security Secretary Kirstjen Nielsen is holding a meeting with foreign ministers from Mexico and Central America, in Guatemala City, Guatemala July 10, 2018. REUTERS/Luis Echeverria

More than 2,300 children were separated from their parents after U.S. President Donald Trump’s government began a “zero tolerance” policy in early May, seeking to prosecute all adults who crossed the U.S.-Mexico border illegally.

Trump stopped separating children from their parents last month following public outrage and court challenges.

(L-R) El Salvador’s Deputy Foreign Minister Carlos Castaneda, U.S. Homeland Security Secretary Kirstjen Nielsen, Guatemala’s Foreign Minister Sandra Jovel, Honduras’ Foreign Minister Maria Dolores Aguero and Mexican Foreign Minister Luis Videgaray pose for a photo after a meeting in Guatemala City, Guatemala July 10, 2018. REUTERS/Luis Echeverria
U.S. Homeland Security Secretary Kirstjen Nielsen met with Mexico’s foreign minister, Luis Videgaray, and ministers from Central America in Guatemala City to discuss the separations and how to beat the criminal gangs profiting from migration.

“We remain very committed to re-unifying the families that have been separated as a result of illegal entry, and we will work with our colleagues here to repatriate as quickly as possible,” Nielsen told reporters at a news conference.

Videgaray, who repeated his criticism of the policy, calling it “inhumane”, made the same pledge. The ministers also vowed to do more to crack down on people smugglers preying on migrants.

Guatemalan authorities said that 11 reunited family groups comprising 131 people were flown back to the country in one of two flights carrying deportees on Tuesday.

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A Guatemalan migration official said access to the family groups was restricted. But other deportees still waiting to be reunited with families went to protest their plight outside the hotel where the ministers were meeting in Guatemala City.

Elsa Ortiz, 25, said she had not seen her 8-year-old boy Anthony since the two were detained in Del Rio, Texas, and then separated by border patrol officials in May.

“The days are passing, and I miss him, that’s why I came to ask Donald Trump that he gives me back my little boy soon,” Ortiz said, adding they had gone for a better life. “I think two months are enough punishment for mothers to learn, and for them not to set off again on journeys they shouldn’t set off on.”

The ministerial gathering came as a judge said the U.S. government must rapidly reunite 63 children under the age of five who were separated by immigration officials after crossing the U.S.-Mexico border, or face penalties.

Additional reporting by Noe Torres in Mexico City; Editing by Jacqueline Wong

U.S. Exporters Will Be a Surprise Loser From Tariff Fight

July 9, 2018

Economics and trade history show that as a country shuts out its partners’ products, it also deprives those partners of money to buy its exports

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U.S. exports grew relatively strongly in the spring, in part due to soybeans, but that increase may have been temporary, as foreign buyers rushed to beat the imposition of Chinese tariffs on soybeans. PHOTO: DANIEL ACKER/REUTERS

Who’s the biggest loser when tariffs are imposed on imports? The surprising answer: exporters.

Though completely counterintuitive, theory and evidence show that taxes on imports act just like a tax on exports.

Though it’s early, the Trump administration’s recent round of tariffs is already rippling out to exporters: Soybean farmers face plunging prices as China raises tariffs, Harley-Davidson will move production of motorcycles destined for the European Union out of the U.S., and BMW says foreign retaliation may hit exports from its South Carolina plant.

Economists credit Abba Lerner, then a graduate student at the London School of Economics, for proving theoretically in 1936 that an import tariff was equivalent to a tax on exports. The Lerner Symmetry Theorem is considered a key principle of trade economics, like 18th century economist David Ricardo’s theory of comparative advantage.

The practical link was obvious to protectionists and free traders alike as far back as the 1600s, says Douglas A. Irwin, an economist and trade historian at Dartmouth College. They understood that a country that shuts out imports deprives its trading partners of money to buy exports.

This, Mr. Irwin notes in his book “Clashing Over Commerce: A History of U.S. Trade Policy,” is why Americans were so divided over tariff policy in the 1800s. When northern states succeeded in raising tariffs to protect their manufacturers, they angered southern states who paid more for manufactured goods and suffered falling prices for their exports such as cotton and tobacco. Mr. Irwin’s data show that while exports and imports have varied between 3% and 25% of gross domestic product since 1790, the two tend to move together.

The link was especially strong under the gold standard because trade imbalances were financed by gold flows. If the U.S. ran a trade surplus, gold would flow in, depriving foreigners of the means to purchase U.S. goods. Now that exchange rates float, the effect is less direct, and a country can pay for imports by borrowing in the capital markets, as the U.S. has since the late 1970s.

Yet even now, exports and imports tend to rise and fall together, proof that the underlying relationship still holds. If the U.S., for any reason, cuts its imports from a trading partner, that country’s economy and currency both weaken, so it buys less from U.S. companies.

If a tariff generated significant new demand for the protected American sector, the resulting boost to prices and jobs would put upward pressure on inflation, interest rates and the dollar, further hurting exports.

In a recent National Bureau of Economic Research study, Alessandro Barattieri, Matteo Cacciatore and Fabio Ghironi examined the effect of changes in tariffs in 21 countries (though not the U.S.) and found they tended to reduce both imports and exports. On net, imports fell more, so the trade balance improved, but overall growth suffered because higher prices reduced consumers’ purchasing power, and the higher cost of imported capital goods undermined investment.

Over time, tariffs also reshape the economy. Newly protected industries draw workers and investment away from exporting industries whose inputs are now more expensive. That effect is compounded when exports are also targeted by foreign retaliatory tariffs. Heavily protected industries, like U.S. sugar farmers, don’t export much because prices abroad are much lower than at home. Protectionist countries like India and Brazil have lower imports and lower exports relative to GDP than open economies like South Korea and Chile, Mr. Irwin notes.

Since the U.S. began to raise tariffs only a few months ago, it’s too early to evaluate the impact. Exports grew relatively strongly in April and May, mostly due to aircraft and soybeans, according to Ian Shepherdson of Pantheon Macroeconomics. The rise in soybean exports may have been temporary, as foreign buyers rushed to beat the imposition of Chinese tariffs.

There are other signs of trouble for exporters. The dollar has risen sharply this year, mostly because of rising U.S. interest rates but also because U.S. tariffs have weighed on the currencies of Canada, Mexico, and China. That will tend to damp their purchases of U.S. products, even those unaffected by tariffs. The Texas Alliance of Energy Producers says higher costs and shortages of tubular steel due to the tariffs will hurt drilling and production of oil, the biggest U.S. export success story of recent years.

Like Harley-Davidson, many manufacturers who export from the U.S. may have to shift that activity abroad. “We export to more than 100 countries,” one manufacturer in the food, beverage and tobacco industry told the Institute for Supply Management in its latest monthly survey. “We are preparing to shift some customer responsibilities among manufacturing plants and business units due to trade issues (for example, we’ll shift production for China market from the U.S. to our Canadian plant to avoid higher tariffs).”

The end result of Mr. Trump’s efforts to make Americans spend more on American made products is that foreigners will spend less.

Write to Greg Ip at

After Day 1 of Trade War: So Much Trade Losing — Where’s the deal-making?

July 7, 2018

The tariff shooting begins with China, and where’s the deal-making?

Soybeans are loaded into a truck after being harvested at the Santa Cruz farm near Atibaia, Brazil.
Soybeans are loaded into a truck after being harvested at the Santa Cruz farm near Atibaia, Brazil. PHOTO: PATRICIA MONTEIRO/BLOOMBERG NEWS


The shooting has begun in the U.S.-China trade war, and let’s hope it’s not Fort Sumter. The South figured the Civil War would last a few weeks, but things happened. That’s the nature of trade wars as well, and while no one is likely to win this confrontation, both sides could certainly lose.

Early Friday the U.S. followed through on President Trump’s threats by imposing tariffs of 25% on $34 billion of Chinese imports, and Beijing retaliated on an equal value of U.S. goods. Those amounts are too small to tank either economy, but trade talks have stalled, meaning more tariffs could come as soon as next month.

The damage is already serious for American soybean farmers whose biggest customer is China. They now face a 28% tariff while competitors in Brazil and elsewhere pay no duty. The cash price for U.S. soybeans recently fell to its lowest level in about a decade. Producers of beef, pork, chicken and seafood will also take a hit. U.S. automakers, which will now pay a 40% tariff after it had recently fallen to 15%, will lose sales of highly profitable SUVs that are increasingly popular with Chinese consumers.

Meanwhile, American consumers will pay more for cars and health care due to U.S. tariffs on Chinese-made auto parts and medical instruments. Other prices will rise as companies rearrange supply chains to avoid disruption from future tariffs. For example, world-leading semiconductor companies are upset that chips made in the U.S. and sent to China for assembly or testing will face a high tariff on their total value when they return. Some firms may cut China out of their supply chain, but in other cases it will make economic sense to move U.S. production overseas.

Mr. Trump says this pain is necessary to force China to change its trade behavior. That may be his goal, but it isn’t clear what he or his trade advisers want from Beijing. Some U.S. officials fixate on the $375 billion bilateral trade deficit, and early on Beijing offered to buy more American goods. But Mr. Trump rejected that offer, without offering an alternative.

Other U.S. officials justify the tariffs as leverage to force China to change its Made in China 2025 industrial policy that includes forcing American companies to transfer intellectual property. But talks broke down as the Trump cabinet bickered, and the U.S. isn’t offering a clear set of demands.

China is guilty of abusing the trading system, including the use of nontariff barriers and arbitrary enforcement to put foreign companies at a disadvantage. Working out a new trading arrangement that stopped this misbehavior would be constructive. But to succeed the U.S. would need a united front with allies and trading partners to press China to obey World Trade Organization rules, or establish some new ones.

Instead the Trump Administration is picking tariff brawls at the same time with Europe, Japan, Canada and Mexico, and it is also attacking global trade rules. Far from being isolated, Beijing is trying to form an alliance with the European Union to punish Washington’s misbehavior. On trade at least, America First may soon mean America alone.

Mr. Trump also insists that the U.S. can weather this fight better than China can, and if the damage is so great why is the stock market not falling? One answer is that the U.S. economy has significant momentum from tax reform and deregulation. The other is that the tariffs have only begun, and the new costs will take time to affect investment.

But anecdotal evidence is growing of tariff-related investment delays and layoffs. The U.S. Chamber of Commerce this week released state-by-state data of the damage coming from tariffs, and 17 of the 20 worst hit states voted for Mr. Trump in 2016. This isn’t the “winning” those voters had in mind.

As for China, the Shanghai stock market’s 23% decline since January lends credence to the view that the economy is dependent on exports. Analysts estimate China’s economic growth slowed slightly to 6.7% in the second quarter and manufacturers struggled with slow export orders. But China’s market headwinds are largely of the government’s own making. The central bank has cracked down on banks making risky loans, which has dried up credit. Chinese leaders are sacrificing some growth for a healthier financial system.

China is also much less dependent on trade than it used to be. Exports as a percentage of GDP declined to 18.5% in 2017 from 36% in 2007. Beijing has cultivated trade with developing countries to reduce dependence on the U.S. and European markets. So while a trade war with the U.S. will do some damage, Beijing is not as vulnerable as many think.

The best way out of this showdown is for the two sides to call a truce and negotiate a new trade understanding. Yet neither Donald Trump nor Xi Jinping wants to look like the one standing down, so escalation is more likely than retreat. As the tariff casualties mount, even many Trump voters are going to ask: When is the master negotiator actually going to negotiate a better trade deal?

Appeared in the July 7, 2018, print edition.

Trump Starts a Trade War, but the Path to Success Remains Unclear

July 7, 2018

The United States and China hit each other with punishing tariffs on Friday as the two nations tipped into a long-feared trade war that is only expected to escalate.

President Trump has said that trade wars are “easy to win.” Now, as he opens a global skirmish with allies and adversaries alike, the question is whether he has a plan to achieve the results he wants or whether he is heading into a costly and futile clash without resolution.

The president appears to be betting that threatening trading partners like China, the European Union, Mexico and Canada with tariffs will eventually force them to bend to the United States.

His strategy is being buoyed by a strong economy that is giving Mr. Trump more latitude to impose tariffs that might otherwise pose too much risk. Job growth was strong in June, according to a new government report, as employers added 213,000 net new jobs and the unemployment rate rose as more people entered the labor market and began looking for work. Manufacturing job growth was particularly robust.

By  Ana Swanson and Neil Irwin
The New York Times

President Trump has said that trade wars are “easy to win.” Now that he has started one with China, it remains to be seen what his strategy is. Credit Gabriella Demczuk for The New York Times

Those numbers are backward-looking, but there is little reason to think that the initial batch of tariffs will knock the entire economy off course. The $34 billion worth of Chinese goods subject to tariffs, and an equivalent retaliation by China, is tiny compared to the $20 trillion United States economy. Global stock markets largely shrugged off the trade war on Friday.

But the tariffs are still inflicting pain on some industries in particular, including farmers and small manufacturers who have long supported Mr. Trump. And with little sign of a negotiated resolution between the United States and China — or any other trading partner — the conflict threatens to escalate, eventually affecting hundreds of billions of dollars of additional products.

“Trump’s soundest argument in his election campaign was that he would not waste American lives and treasure in pointless wars of choice,” Adam Posen, the president of the Peterson Institute for International Economics, wrote in March in an op-ed article. “His launching a trade war would prove, however, to be his economic Afghanistan — costly, open-ended, and fruitless.”

On Friday, the Trump administration took its most aggressive step yet as it imposed tariffs on $34 billion worth of Chinese goods, including medical devices and airplane parts, and threatened billions of dollars more in the coming months. The Chinese immediately responded with tariffs on an equal volume of American soybeans, pork, automobiles and other products.

Mexico, Canada and the European Union have similarly retaliated against Mr. Trump’s steel and aluminum tariffs and have threatened to push back if the president moves ahead with his threat to place a 20 percent tariff on imported cars and car parts.

The president and his advisers insist that history is on their side and that Mr. Trump’s approach will yield better results than years of diplomatic niceties, including bilateral talks with the Chinese, that have produced bad deals for the United States.

Workers moving aluminum at a factory in China. Credit Agence France-Presse — Getty Images

“We have the worst trade deals in the world. We lose money with everybody,” Mr. Trump said last week. “Every country is calling every day, saying, let’s make a deal, let’s make a deal. It’s going to all work out.”

His approach has garnered support from certain corners of American industry, particularly sectors that have seen significant job losses connected to China’s rise.

“These aren’t the first shots of a new ‘trade war,’” Scott Paul, the president of the Alliance for American Manufacturing, which represents steelworkers and manufacturers, said Thursday in a Twitter post. “China’s been conducting a highly effective war on American workers,” he said, adding that the “difference now is that we are systematically pushing back.”

But many of Mr. Trump’s supporters say they are unsure, exactly, how the trade war will work out, given the escalating threats emanating from the White House and the lack of a clear strategy toward resolving the president’s differences with the United States’ trading partners.

Mr. Trump’s steel and aluminum tariffs had barely gone into effect before he upped the ante and threatened auto tariffs on those same allies, pushing trade relations with Europe and Canada to their rockiest point in decades. With China, the president’s advisers have vacillated between asking Beijing to purchase more American products to lower the United States’ trade deficit and pushing for more substantive economic reforms. And talks to revise the North American Free Trade Agreement with Canada and Mexico remain stalled over deep differences with the United States.

If the conflict with China is not resolved soon, Mr. Trump has threatened to place tariffs on nearly everything China exports to the United States, in addition to tightening Chinese investments in the United States and limiting visas for Chinese citizens. While many supporters describe the president’s bold statements as a negotiating tactic, talks between the Chinese and the United States have faltered for now, with no additional discussions in sight.

“There is no apparent plan,” said Daniel Price, a managing director of Rock Creek Global Advisors, an advisory firm, and a former trade official in the George W. Bush administration. “The administration has given no indication what the off-ramp is or what their objectives are.”

“Trump is treating trade policy as though it were a real estate deal, where the goal is to beat your opponent, step on his throat and humiliate him,” said Daniel Ikenson, the director of trade policy studies at the Cato Institute.

Even if it works and nations like China blink, Mr. Ikenson said, “the cost to that will be trust in the U.S., and it will encourage other governments to behave this way when their backs are against the wall.”

Many farmers and manufacturers remain staunch supporters of Mr. Trump. But their faith is starting to waver as tariffs take effect and they feel the impact of reduced market access and higher costs.

“I would just like the administration to be clear, at least with us, on the goal,” said Jay Hollowell, the mayor of Helena-West Helena, Ark., an area that produces soybeans, which are now being heavily taxed by China. “Is it to lower trade deficits with other countries like China, or is it to protect American industries?”

“People’s livelihoods are on the line here,” Mr. Hollowell added.

For now, the current trade measures affect a small portion of the economy and come at a time of economic strength, giving Mr. Trump more latitude to take the type of aggressive measures that, in weaker economic times, would provide a drag on the economy much more quickly.

Chinese investors monitoring stock prices on Friday. CreditMark Schiefelbein/Associated Press

Businesses have been warning for months that tariffs will cause them to scale back on hiring and investment, and pass higher prices on to consumers. But those effects are not evident in the data, so far.

Oxford Economics, for example, calculated that the tariffs with China would shave only 0.1 percent off both American and Chinese gross domestic product in the next two years, though that would rise to 0.3 percent if the Trump administration follows through on threats to expand the tariffs to $200 billion worth of goods.

But tariffs could still cause plenty of trouble in specific sectors and industries, even if the levies do not provide a significant drag on overall economic growth.

For example, soybean futures prices have fallen 15 percent since May 25 in anticipation of the Chinese retaliatory tariffs. With a stiff tax on soybean imports, American farmers will face lower demand from overseas and a hit to their incomes. Those farmers, in turn, would spend less on equipment and materials, which could eventually trickle through to the broader economy.

John Heisdorffer, a soybean grower from Keota, Iowa, and the president of the American Soybean Association, said he and others in the industry had spent years trying to develop markets in China that were now being closed with the stroke of a pen. “My son, who farms with me, is going to spend the rest of his lifetime trying to get that back, and that scares the hell out of me,” Mr. Heisdorffer said.

The United States trade representative said Friday that it would allow American companies to apply for exclusions to the tariffs if the product they need to import is not available outside China, or if the tariffs on it would cause “severe economic harm.”

Some of the products involved in earlier phases of the Trump administration’s trade battles offer evidence of how American consumers may eventually be affected.

In January, the president announced new tariffs on imported washing machines. Since then, the price of laundry equipment is up 10 percent, according to the Bureau of Labor Statistics.

And the administration has either entered or threatened to enter trade wars on multiple fronts at the same time, compounding the risks. A tariff on automobile imports that is in the works, for example, could expand the dollar value of goods the United States places tariffs on by tenfold and set off a new wave of retaliation that endangers companies that export to Europe, Japan, South Korea and elsewhere.

Leaders of the Federal Reserve appear concerned that this overlay of risk in the economy could dampen investment spending, according to minutes of a June policy meeting released Thursday. Fed officials “noted that uncertainty and risks associated with trade policy had intensified and were concerned that such uncertainty and risks eventually could have negative effects on business sentiment and investment spending.”

The economy appears strong enough to withstand the relatively moderate tariffs that have already been put in place. The question is what will happen if things continue to escalate to eventually encompass hundreds of billions or even trillions of dollars worth of goods.

“If we get up to a trillion dollars in the cross hairs, then that means we’re talking about 25 percent of trade in goods,” Mr. Ikenson said. “People will begin to notice that.”

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A version of this article appears in print on , on Page A1 of the New York edition with the headline: Trade War Rises, and Trump Plan Remains a Puzzle.