Trade

Japan and U.S. Sign Trade Agreement

The U.S. on Monday signed two trade deals with Japan that are intended to alleviate the hardships American farmers have encountered since President Trump imposed tariffs on U.S. agricultural exports to certain countries. The first and third largest economies in the world signed the U.S.-Japan Trade Agreement and U.S.-Japan Digital Trade Agreement, just days before U.S. trade negotiators are set to meet with senior officials from the globe’s second largest economy, China, in Washington on Thursday. The two somewhat restrained trade deals cut $7.2 billion worth of tariffs on U.S. agricultural exports. U.S. Trade Representative Robert Lighthizer and Japanese Ambassador to the U.S. Shinsuke J. Sugiyama signed the agreements at a ceremony at the White House. “This is a huge victory for America’s farmers, ranchers and growers. And that’s very important to me,” Trump said in remarks at the signing ceremony. “From day one my administration has worked tirelessly to achieve a level playing field for the American worker.” American farmers bore the brunt of Trump’s decision to pull out of the Trans-Pacific Partnership trade agreement in 2017. One of the new deals does away with $4.3 billion in tariffs on American food products including wine, cheese, nuts, berries, and grains as well as $2.9 billion in tariffs on beef and pork products. The other agreement commits Japan and the U.S. to $40 billion worth of digital trade. Republican Senator from Iowa Chuck Grassley called the agreement great news for Iowa farmers and said the new deal “strengthens” the administration’s negotiating position with China, which has battled with the U.S. on trade since Trump took office. Nevertheless, the agreements keep U.S. tariffs on Japanese automobiles at 2.5 percent, in line with what Japanese Prime Minister Shinzo Abe said Trump promised him, that tariffs on Japan-made cars would not be hiked up. The trade deficit between the U.S. and Japan was $58 billion last year, long a point of contention for Trump.

Analysis: Trump’s tough trade tariffs on China have raked in $30 billion for U.S.

President Trump’s decision to impose tariffs on Chinese products over the Asian superpower’s “unfair” trade practices has brought in tens of billions of dollars, prompting Republican lawmakers to propose ways to pass along the windfall to American taxpayers. U.S. Customs and Border Protection says special levies on China, known as Section 301 duties, have brought in more than $30 billion since they were imposed in July 2018 to combat Beijing’s “harmful industrial policies.” Special levies on steel, aluminum, solar panels and washing machines have reaped roughly $10 billion more from countries, including China, since early 2018, according to CBP data. Mr. Trump frequently points to those numbers to boast that his pressure tactics are paying dividends while White House and Chinese negotiators reach for an elusive trade deal. “We’re taking in billions and billions of dollars in tariffs. We’re taking in tremendous numbers in tariffs,” Mr. Trump said during a press conference last week at the United Nations in New York. Analysts say the sheer amount of revenue isn’t unprecedented but is an unusual turn of events in the post-World War II era. “We used to get most of our revenue from tariffs. But it’s very unusual because for the last 80 years tariffs have been a declining source of revenue, so this is the first time [in recent history] it’s been a rising source of revenue,” said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget. Tariffs are taxes on imports, largely designed to promote domestic producers by making outside goods less attractive. Mr. Trump said China is “eating” the cost of his levies, but it’s complicated. Some Chinese companies may be forced to offer discounts to U.S. importers, though American-based businesses often pay the cost of the tariffs and pass it along to consumers in the form of higher prices. The price is set to rise this fall when Mr. Trump imposes a 10% tariff on $300 billion worth of additional Chinese goods. It took partial effect on Sept. 1 but won’t be fully implemented by mid-December to avoid ripples during the Christmas shopping season. Analysts at JPMorgan Chase estimated that the average American family could face up to $1,000 more in annual costs once the levies are in place because the tariffs are starting to hit popular consumer goods. China, meanwhile, has retaliated with trade moves and tariffs of its own, hurting farmers in particular. While Mr. Trump is using some of the incoming duties to bail out the agricultural sector, some Senate Republicans say all Americans should get relief. Sen. Rick Scott, Florida Republican, has been meeting with the White House on a proposal that would pass along tariff revenue in the form of tax cuts. “Sen. Scott supports the president’s efforts to get tough on China, but any revenue brought into the federal government should be returned to the taxpayers,” Scott spokeswoman Sarah Schwirian said. Sen. Tom Cotton, Arkansas Republican, filed legislation last week that would gather tariff revenue and give it to working-class taxpayers in the form of a rebate check that arrives several months after tax-filing season. “Tariffs are an effective way to apply pressure to China and other nations in trade negotiations, but there’s no reason that tariff revenue can’t help working Americans in the process,” Mr. Cotton said. U.S. adults who are citizens or legal residents, file federal taxes and earn less than $84,200 as individual filers or $168,400 as joint filers would be eligible for rebate checks. The plan starts with a special rebate check for calendar years 2017 and 2018 — mailed within 90 days of enactment — and would establish a recurring annual rebate for eligible filers as long as money is pouring in from what are known as Section 201, 232 and 301 duties. According to Mr. Cotton’s office, the rebates would be a good way to shore up political support for the U.S. crackdown on China while protecting Americans against any price increases resulting from tariffs. The White House hasn’t weighed in yet — the bill was just released — though Mr. Trump’s chief economic adviser, Larry Kudlow, has voiced support for Mr. Scott’s push to offer tax cuts equal to the amount the U.S. collects in tariffs. Mr. Scott’s spokeswoman said the senator plans to put forward a formal proposal in the coming weeks.

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Trump: U.S., China to resume trade talks ‘where we left off’

The U.S. will not impose new tariffs on China as the mega-powers restart trade talks that fell apart in May, President Trump said Saturday, signaling a freeze in an economic war that’s rattled investors, farmers and consumers alike. Mr. Trump said Chinese President Xi Jinping agreed to resume talks “where we left off,” with guardrails in place. “We’re holding on tariffs and they’re going to buy farm products. They would like to make a deal, I can tell you that,” Mr. Trump said in a lengthy press conference at the end of the G-20 summit in Osaka, Japan. Tariffs that Mr. Trump already slapped on China will remain in place for now. What to do about Huawei, a Chinese tech company effectively blacklisted by the U.S., will wait until the end of talks, though Mr. Trump said they agreed to let American companies sell components to the controversial firm. “Huawei is a very complicated situation,” Mr. Trump said. “We agreed to leave that.” It’s unclear if American and Chinese negotiators will be able to strike an accord, given complex hurdles, though both sides agreed not to heighten tensions. “China and the United States both benefit from cooperation, and lose in a confrontation,” Mr. Xi said. “Cooperation and dialogue are better than friction and confrontation.” Mr. Trump discussed the way forward after a two-day summit that focused on trade, climate change and women’s empowerment in the economy. Mr. Trump took questions from reporters for over an hour at a closing press conference. He then hopped on Air Force One for Osan Air Force Base in South Korea..

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John Lott: Media exaggerate impact of US-Mexico border closure

Let’s hope that President Trump’s “one-year warning” issued to Mexico Thursday to halt the flood of illegal drugs and migrants entering the U.S. – or face a border closure and new tariffs – will influence Mexico to make some real changes. Unfortunately, the media’s continual exaggerations of the dangers of closing the border may give Mexico the idea that the U.S. lacks the willpower to carry through on the president’s threat. If Mexican leaders conclude Trump is bluffing, there will be little reason for them to change their behavior. Take the headline this week in the Washington Post, sternly warning: “U.S. would run out of avocados in 3 weeks if border is closed.” USA Today, NBC News, CBS News, CNN, and many other media outlets have run virtually identical headlines. The stories all paint a simple picture: we would soon have no avocados to eat unless we keep getting them from Mexico. After all, avocados can’t be stored for more than three weeks, and nearly 90 percent of our current imports come from Mexico. No more guacamole. No more avocado toast. The news media are hyping avocados the most because they think that will strike close to home with people. But despite the certainty of these news stories, avocados wouldn’t disappear even if the border was closed for months. The economics are straightforward. Mexico grows about 34 percent of the world’s avocados, and they account for almost half the exports. But other major producers include the Dominican Republic, Peru, Colombia and Chile. The United States imports fewer avocados than the European Union, Canada and Japan combined. If the U.S.-Mexico border is closed, avocados that would have shipped to these other countries would be shipped to the U.S., while the avocados that Mexico normally sends to the U.S. would now go to other countries. The price of avocados could go up a little, since it’s more costly to ship from South America. But we wouldn’t run out of avocados or any other foods. The U.S. imports about $26 billion in food from Mexico each year. That’s just a small fraction of the $1.62 trillion that Americans spent on food and beverages in 2017. The No. 1 food and beverage import from Mexico is beer, with a value of $3.3 billion annually. But plenty of substitutes are brewed in the U.S., which annually spends $35 billion on beer. There are places along the border with Mexico that would bear a disproportionate burden from a shutdown. But the news media are exaggerating the costs to the U.S. What about the costs of continuing to have a porous border through which illegal immigrants can cross? Take just the costs of education. The average per-pupil cost of public schooling (including the costs of facilities) is over $13,200 per year. Conservatively, approximately 540,000 school-age illegal immigrants (ages 5 to 17) live in the U.S., along with another 2.54 million U.S.-born children of illegal immigrants. Their schooling costs taxpayers at least $41 billion a year. That figure increases if these students go on to public colleges. President Trump is rightly concerned that a porous border is hazardous to national safety. The Crime Prevention Research Center, of which I am president, recently found that illegal immigrants in Arizona are at least 142 percent more likely to be convicted of a crime than other Arizonans. These crimes tend to be more serious, and illegal immigrants are 45 percent more likely to be gang members than prison inmates who are American citizens. If illegal immigrants in the rest of the U.S. commit crimes at the same rate as illegal immigrants in Arizona, a nationwide population of 11.3 million illegal immigrants would mean an additional 1,647 murders each year. That means the murder count would be 11 percent higher than it otherwise would be. There would also be 8,900 more rapes, 20,000 more robberies, and 53,000 more aggravated assaults. Should President Trump eventually decide to close the border, his economic advisers want to keep the freight lanes open so commerce would continue unabated. If the president does so and closes the border to people, the economic costs of a shutdown would be much smaller. Still, it might not ever be necessary to close the border at all. The threat alone has already started moving Mexico in the right direction to stop the throngs of Central Americans who travel through the country up to the U.S. It is not obvious what Mexico stands to gain from Central Americans traveling to our country. After all, these aren’t Mexican citizens. The problem of illegal drugs is much more difficult to solve. Trade benefits both the United States and Mexico. There would be real costs from closing the border, but the news media’s dire predictions wouldn’t come true.

Of course they wouldn’t..  Thanks to John R. Lott, Jr. for that outstanding analysis, and calling the “fake news” media out for their ridiculous lies and exaggerations.  John is an economist and was formerly chief economist at the United States Sentencing Commission. Lott is also a leading expert on guns and op-eds on that issue are done in conjunction with the Crime Prevention Research Center. He is the author of nine books including “More Guns, Less Crime.” His latest book is “The War on Guns: Arming Yourself Against Gun Control Lies (August 1, 2016). Follow him on Twitter @johnrlottjr.

Canada, US confirm new deal with Mexico updating NAFTA

The United States and Canada confirmed Sunday they had reached a deal on a “new, modernized trade agreement,” which is designed to replace the 1994 NAFTA pact. In a joint statement the two nations said the new deal would be called the United States-Mexico-Canada Agreement (USMCA). Canadian Prime Minister Justin Trudeau said following a cabinet meeting, “It’s a good day for Canada.” Trudeau plans to address the media on the deal on Monday. President Trump tweeted about the deal on Monday morning, calling it a “great deal for all three countries” and that it will open markets to farmers and manufacturers. “Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico,” Trump tweeted. “The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduce Trade Barriers to the U.S. and will bring all three Great Nations closer together in competition with the rest of the world. The USMCA is a historic transaction!” The agreements reportedly will boost U.S. access to Canada’s dairy market and protect Canada from possible U.S. autos tariffs. Trump’s administration has said Canada must sign on to the text of the updated NAFTA by a midnight Sunday deadline or face exclusion from the pact. Washington has already reached a bilateral deal with Mexico, the third NAFTA member. If Canada did not sign a new deal, Trump had threatened to impose steep tariffs on all automotive imports. In late August, the U.S. and Mexico negotiated a new pact to replace NAFTA, snubbing Canada in the process. President Trump has also repeatedly suggested that he might leave Canada out of the new agreement — which would be called the “United States-Mexico Trade Agreement.” Trump blames NAFTA for the loss of American manufacturing jobs and wants major changes to the pact, which underpins $1.2 trillion in annual trade. Markets fear its demise would cause major economic disruption. Negotiators from both sides spent two days talking by phone as they tried to settle a range of difficult issues such as access to Canada’s dairy market and U.S. tariffs. As part of any agreement, Canada looks set to offer increased access to its highly protected dairy market, as it did in separate pacts with the European Union and Pacific nations. Officials have blown through several deadlines since the talks started in August 2017.

Trump, at UN General Assembly, signs major trade deal with South Korea, reveals possible Kim Jong Un meeting ‘soon’

President Trump and South Korean President Moon Jae-in signed a major agreement of Trump’s trade agenda Monday, on a busy day at the U.N. General Assembly during which Trump also revealed he’d meet again with North Korean leader Kim Jong Un “quite soon.” The U.S. and South Korean presidents signed an update to an existing U.S.-South Korea free-trade agreement. Trump called it a “very big deal” and said the new agreement would make significant improvements to reduce the trade deficit between the countries and create new opportunities to export American products to South Korea. “This agreement will reduce bureaucracy and increase prosperity in both of our countries. Workers in South Korea and America will find new customers and new opportunities to expand and grow,” Trump said. “Our teams will be working hard to ensure that the terms of the deal are fully implemented.” He said U.S. automobiles, pharmaceuticals and agricultural products will gain better access to Korean markets. “I think our farmers are going to be extremely happy. It was very limited as to what they could do and what they could send, and now it’s an open market,” Trump added. “That makes me feel very good. I love our farmers.” Moon said companies from both countries will be able to do business under more stable conditions. The South Korean leader also said he hopes the revised agreement with the U.S. will help solidify their cooperation in other areas. Moon said: “I’m hopeful that this will provide us with a platform, upon which our bilateral economic ties will be elevated to a higher level, in a freer, fairer and more mutually beneficial direction.” During his appearance with Moon, Trump also raised hopes at the United Nations on Monday that a second meeting with North Korea’s Kim Jong Un could happen soon, striking a conciliatory tone one year after he used his debut at the U.N. to deride the autocrat as “Little Rocket Man” and threaten to “totally destroy North Korea.” Trump praised Kim as “very open” and “terrific,” despite the glacial pace of progress toward denuclearization on the Korean Peninsula. The softer tone toward the erstwhile pariah state of North Korea — once threatened with “fire and fury” — has been replaced by rosy optimism, with Trump reserving tough rhetoric for another potential nuclear aspirant and strategic foe: Iran. “It was a different world,” Trump said Monday of his one-time moniker for the North Korean leader. “That was a dangerous time. This is one year later, a much different time.” Trump also praised Egypt for doing an “outstanding job” in the fight against terrorism. Trump told Egypt’s President Abdel-Fattah el-Sissi on Monday that the fight is “not easy,” but his country is “at the forefront.” El-Sissi replied that Egypt will be able to eliminate terrorism with Trump’s support. El-Sissi said it’s an obligation Trump has made clear. Trump told el-Sissi, “We will work with you, and we will go all the way.”

Trump makes trade agreement with Mexico to replace NAFTA, puts pressure on Canada to deal

President Trump announced a tentative trade deal Monday with Mexico to replace the three-way North American Free Trade Agreement, which he called a big win for U.S. workers and his get-tough trade agenda. Mr. Trump said the new deal was better for the U.S. and rendered obsolete the 24-year old agreement between the U.S., Mexico and Canada. “It’s a big day for trade. It’s a big day for our country,” said Mr. Trump, speaking in the Oval Office. “A lot of people thought we would never get here because we all negotiate tough. We do. So does Mexico.” He wanted to get rid of the name NAFTA because it had “a bad connotation because the United States was hurt very badly by NAFTA for many years,” he said. The breakthrough increases pressure on Canada, which has been on the sidelines, to rejoin negotiations with the U.S. and Mexico. It also puts other countries on notice that Mr. Trump isn’t backing down from his America-first trade policies and his use of tariffs to force concessions from major trading partners such as China and the European Union. Wall Street celebrated the news, pushing the Dow Jones Industrial Average up more than 250 points to above 26,000. The deal set higher “Made in America” standards for vehicles, boosted wages for Mexican workers, kept agricultural products tariff-free, increased environmental standards in Mexico and overhauled rules to protect copyrights and intellectual property. The agreement would last 16 years, with an opportunity to review it and adjust the terms after six years. Mr. Trump said he wanted to terminate NAFTA and get the new deal signed with Mexico, and maybe Canada too, as soon as possible. U.S. Trade Representative Robert Lighthizer said the U.S.-Mexico deal would be submitted to Congress for a required 90-day holdover, setting up a signing ceremony in November. However, scrapping NAFTA and creating a new bilateral deal could run afoul of the negotiating authority that Congress granted the president. If Congress has to ratify a new trade pact, it could turn into an arduous debate. Rep. Kevin Brady, chairman of the House Ways and Means Committee, commended Mr. Trump on forging a deal for the benefit of American workers, farmers and local businesses. “I look forward to carefully analyzing the details and consulting in the weeks ahead with my colleagues and constituents to determine whether the new proposal meets the trade priorities set out by Congress under Trade Promotion Authority,” said the Texas Republican.

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