Category: Trade

Trump: Now Ford can build Focus in U.S.; Ford: That makes no sense

Auto analysts groaned on Sunday in response to tweets sent by President Trump that touted his tariffs on Chinese imports and his claim that the trade war would inspire Ford Motor Co. to build its Ford Active crossover in the U.S. rather than overseas.

Wrong, Ford said.

The Dearborn-based company issued a statement in response to the president’s tweet:

“It would not be profitable to build the Focus Active in the U.S. given an expected annual sales volume of fewer than 50,000 units and its competitive segment. Ford is proud to employ more U.S. hourly workers and build more vehicles in the U.S. than any other automaker.”

Jon Gabrielsen, a market economist who advises automakers and auto suppliers, said, “This is further evidence that neither the president nor his trade representatives have any clue of the complexities of global supply chains.”

A trade war actually hurts one of America’s most iconic companies, Gabrielsen said. “This forces Ford to forfeit the sales they would have had if they could continue to import that low-volume niche vehicle.”

Ford on Aug. 31 canceled plans to import the Focus Active crossover from China to the United States because of costs from the escalating trade war.

“Given the negative financial impact of the new tariffs, we’ve decided to not import this vehicle from China,” Kumar Galhotra, president of Ford North America, told reporters.

The Focus Active was meant to take the place of the Ford Focus in the U.S. because Ford is phasing out the entry-level car as it shifts its production to pickups and SUVs. Focus Active was scheduled to go on sale in the late summer of 2019.

“Basically, this boils down to how we deploy our resources. Any program that we’re working on requires resources — engineering resources, capital resources,” Galhotra said. “Our resources could be better deployed at this stage.”

Tariffs imposed by President Donald Trump on Chinese products and the threat of more had a direct impact on the Aug. 31 decision, according to Ford officials. The United States already has imposed tariffs on steel and aluminum from China and, as of July, put a 25 percent tax on autos imported from China.

“Ford was pretty clear in its statement: Focus production will not shift in part or in whole back to the U.S.,” said Stephanie Brinley, a senior analyst at London-based IHS Markit.

Trump didn’t tweet about the Ford announcement at the time. On Sunday, he quoted the CNBC TV network and tweeted, “‘Ford has abruptly killed a plan to sell a Chinese-made small vehicle in the U.S. because of the prospect of higher U.S. Tariffs.'” CNBC. This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs.”

“Ford is one of the companies that has the highest U.S. content and the most U.S. autoworkers of any company,” said Kristin Dziczek, vice president of the Industry, Labor & Economics Group at the Center for Automotive Research in Ann Arbor.

“You know, their statement was very clear. It’s too costly to build that car here and they weren’t planning to. They don’t make business decisions based on tweets. They make decisions based on whether there’s a demand here for the vehicle and if it can be done profitably. Demand for small cars is waning, so they thought they would build some for the rest of the world and bring a few for folks here who want one,” Dziczek said.

Building the car may still be the plan, but not in the U.S., she emphasized, along with other analysts. At issue is finding low-wage production sites to maintain profit margins, and that doesn’t include the U.S. or Canada.

“This trade thing turns into Whac-A-Mole,” Dziczek said. “You can shut off China and things will come from India, Thailand, Taiwan, Poland, Slovenia. There are loads of low-cost countries for parts and vehicles.”

After touting his tariff plan, the president also cited tariff data that alarmed analysts.

“If the U.S. sells a car into China, there is a tax of 25%. If China sells a car into the U.S., there is a tax of 2%. Does anybody think that is FAIR? The days of the U.S. being ripped-off by other nations is OVER!”

Wrong again, Dziczek said. “China lowered the tariff rate from 25 percent to 15 percent for most-favored nation status — which is offered to World Trade Organization members — but raised it to 40 percent for the U.S. in retaliation to the tariffs we put on Chinese goods.”

She continued, “And the tariffs we charge for goods coming into the U.S. is 2.5 percent, not 2 percent. And then we put an additional 25 percent on cars coming from China into the U.S. So now they’re paying 27.5 percent. This is why Ford had to re-evaluate.”

American automakers ship about 250,000 vehicles a year from the U.S. to China, while China ships about 50,000 vehicles to the U.S. annually, Dziczek noted.

For example, every Buick Envision sold in the U.S. is made in China. General Motors has petitioned that the car be excluded from tariffs on Chinese-built products.

Ford spokesman Mark Truby emphasized Sunday that the company plans to build many new vehicles in America. “For example, we are starting production soon of the Ford Ranger in the factory just outside of Detroit where the Focus was previously built. We’re not defensive about building in America. Nobody does more than us. We also have to make a business case that works.”

[Detroit Free Press]

Trump threatens to pull out of WTO ‘if they don’t shape up’

President Trump on Thursday threatened to pull the U.S. out of the World Trade Organization (WTO) “if they don’t shape up,” a stance he has reportedly discussed in private but has denied publicly.

“If they don’t shape up, I would withdraw from the WTO,” the president told Bloomberg News in an interview.

Trump has long criticized the international body, saying in late June that the U.S. has been “treated very badly” by the group, describing it as an “unfair situation.”

At the time, the president insisted he was not considering pulling out of the WTO despite his frustrations, though Axios reported he had discussed with advisers his intentions to exit.

Leaving the WTO would upend the decades-old international trade system, which the U.S. helped establish, and roil markets around the globe.

The U.S. on Monday told the WTO that it plans to block the reappointment of one of the its four remaining judges, a move that would significantly hinder the organization’s ability to function.

If the U.S. successfully blocks the appointment of Judge Shree Baboo Chekitan Servansing, the WTO would only have three judges, the bare minimum to continue operations.

Two of the WTO judges’ terms expire in December of next year.

Trump and European Commission President Jean-Claude Juncker recently agreed to work towards a trade agreement that would involve reforming the WTO.

Multiple nations have filed complaints about Trump’s escalating tariffs with the WTO, including China. Trump is reportedly planning to impose $200 billion tariffs on Chinese imports as soon as next week, on top of the billions of dollars of tariffs he has already implemented.

[The Hill]

Donald Trump: ‘Our country was built on Tariffs’

U.S. President Donald Trump on Wednesday morning took to Twitter, as he often does, to lambaste some of his favourite targets: the U.S. Justice Department, the “rigged Russian witch hunt” (a.k.a. the Robert Mueller investigation), and of course, undocumented immigrants.

He also brought up one of his past greatest hits, tariffs, writing that the United States was “built on Tariffs, and Tariffs are now leading us to great new Trade Deals” (capitalization his, not ours).

Of course, tariffs have been a mainstay in Canadian headlines for the past several months, with Trump levying duties on U.S. imports of Canadian steel and aluminum. The U.S. president has recently threatened more tariffs on Canada’s auto industry.

He’s also slapped massive duties on goods from China, Mexico and, most recently, Turkey. Those nations, along with Canada, have come back with retaliatory tariffs of their own.

Many users on Twitter are pointing out the holes in Trump’s latest tweet. Like the fact that no new trade deals have actually been signed:

Or that many of the people Trump claims his tariffs will help aren’t really happy with them at all:

The Wall Street Journal points out that Trump’s action against Turkey actually goes against longstanding U.S. policy of minimizing foreign crises:

[Yahoo]

Trump doubles tariffs on Turkey

President Trump said Friday that the U.S. will double tariffs on steel and aluminum imported from Turkey, as relations between the NATO allies worsen.

Trump tweeted Friday that he authorized raising tariffs on Turkish steel to 50 percent and on aluminum to 20 percent as the country’s currency falls rapidly against the U.S. dollar.

“I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!,” Trump tweeted.

“As he stated, the president has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey,” said White House spokesperson Lindsay Walters in a statement.

“Section 232 tariffs are imposed on imports from particular countries whose exports threaten to impair national security as defined in Section 232, independent of negotiations on trade or any other matter.”

The lira dropped 11 percent against the U.S. dollar Friday as Turkish President Recep Erdogan warned of a global economic war against his country. Trump’s tweet brought the lira down another 3 percentage points, according to CNBC.

Turkish financial markets have panicked over concerns about the country’s fiscal health, the souring of U.S.-Turkey relations, and Erdogan’s economic policy, according to the Associated Press.

Erdogan said the currency drop was the result of a “campaign” to injure Turkey and called on citizens to convert their U.S. dollars, euros and gold into lira, according to the AP.

“If they have their dollar, we have the people, we have Allah,” Erdogan said.

The U.S.-Turkey alliance has become increasingly strained since 2017, reaching new lows this month over the imprisonment of an American pastor.

The Treasury Department imposed financial sanctions on the Turkish interior and justice ministers after the government refused to let detained Christian pastor Andrew Brunson return to the U.S.

Brunson had spent 23 years as a pastor in Turkey before he was detained more than a year ago. The Turkish government alleged that he was involved in a failed coup against Erdogan in 2016, and Fethullah Gülen, an Islamic cleric Erdogan blames for the failed revolt.

The Turkish government transferred Brunson from prison to house arrest in July, but refused his and the U.S. government’s requests to return to America.

Tensions also flared in May 2017 after Erdogan’s personal security forces attacked demonstratorsprotesting his visit to the U.S. at the Turkish embassy in Washington, D.C.

Trump imposed tariffs of 25 percent and 10 percent on imported steel and aluminum respectively in March. The White House issued those tariffs under Section 232 of the Trade Expansion Act, which empowers the president to impose duties on imports to protect U.S. national security.

Key U.S. allies such as Canada, Mexico, and the European Union, which includes Turkey, were exempted from the tariffs until May. Those nations have responded with retaliatory tariffs on U.S. exports.

[The Hill]

Trump Insists Tariffs Will Make Our Country ‘Much Richer’: ‘Only Fools Would Disagree’

On Saturday, President Donald Trump praised his tariff plan and insisted, “steelworkers are working again, and big dollars are flowing into our Treasury.”

“Tariffs are working far better than anyone ever anticipated,” Trump tweeted out. “China market has dropped 27% in last 4 months, and they are talking to us. Our market is stronger than ever, and will go up dramatically when these horrible Trade Deals are successfully renegotiated. America First.”

Then in the first follow-up tweet, he added: “Tariffs have had a tremendous positive impact on our Steel Industry. Plants are opening all over the U.S., Steelworkers are working again, and big dollars are flowing into our Treasury. Other countries use Tariffs against, but when we use them, foolish people scream!”

He was not done yet.

A few minutes later, he tweeted again, writing, ” Tariffs will make our country much richer than it is today. Only fools would disagree. We are using them to negotiate fair trade deals and, if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs. We win either way.”

Trump then concluded: “China, which is for the first time doing poorly against us, is spending a fortune on ads and P.R. trying to convince and scare our politicians to fight me on Tariffs- because they are really hurting their economy. Likewise other countries. We are Winning, but must be strong!”

[Mediaite]

The EU reportedly used colorful flash cards to explain trade policy to Trump

European Commission President Jean-Claude Juncker reportedly used colorful cue cards to explain issues of global-trade policy to President Donald Trump during their meeting earlier this week.

According to a report from the Wall Street Journal on Thursday evening, Juncker and his team used the cards to simplify complex issues for the president as a means of getting their points across as effectively as possible.

The Journal’s report says Juncker “flipped through” more than a dozen cards, which had minimal information on them, and all focused on a single issue. These included the automotive trade, and regulatory standards for medicines, the report added, saying that there were a maximum of three figures per card.

“We knew this wasn’t an academic seminar,” a senior EU official who was at the meeting told the Wall Street Journal. “It had to be very simple.”

Trump and Juncker on Wednesday agreed to the beginnings of a deal that would end the previously growing trade tensions between the US and the EU.

During the meeting, the EU agreed to import more American soybeans and liquefied natural gas. Both sides agreed to work to decrease industrial tariffs and adjust regulations to allow US medical devices to be traded more easily in European markets.

“This was a very big day for free and fair trade,” Trump said at a press conference after the pair’s meeting.

The EU’s use of flash cards is not without precedent. Trump is well-known for his distaste for lengthy documents, and is said to prefer single-page memos when deciding on policy.

In May 2017, a report from Reuters said that Trump likes “single-page memos and visual aids like maps, charts, graphs and photos.” A source quoted by Reuters said aides also strategically put Trump’s name into “as many paragraphs as we can because he keeps reading if he’s mentioned.”

[Business Insider]

Trump Touts U.S. Being ‘Back on Track’ With the EU After Meeting With Juncker: We ‘Love Each Other’

President Donald Trump said during a White House event today the U.S. will be working with the EU to address the current trade dispute, and tonight he touted how things are “back on track.”

Trump met with European Commission President Jean-Claude Juncker today and he’s tweeting that it was a big success:

Trump also shared a picture of himself and Juncker:

[Mediaite]

Reality

Trump claimed the EU promised to purchase more soybeans and that made it all worth it, but the EU doesn’t buy goods such as produce, individual European countries do.

EU officials confirmed the Trump/Juncker agreement is nothing more than a political pledge by the EU not to do anything that affects the market conditions responsible for European countries buying more beans.

We alienated friends, trashed our reliability in front of the world, made us all pay more with his taxes on us, cost American jobs, all so soybean farmers could sell a few more barrels they were already going to sell to the EU anyway.

Got it.

Trump says ‘vicious’ China targeting U.S. farmers on trade, urges critics to ‘be cool’

President Donald Trump on Wednesday blamed China for targeting U.S. farmers in an effort to undermine trade negotiations with Beijing, and he urged critics of his escalating trade war to “be cool.”

“China is targeting our farmers, who they know I love & respect, as a way of getting me to continue allowing them to take advantage of the U.S.” Trump posted in one of a series of tweets on Wednesday. “They are being vicious in what will be their failed attempt. We were being nice – until now!”

The tweets come as Trump’s trade policy is increasingly under fire from Republicans on Capitol Hill, especially those representing farm states where China’s retaliatory tariffs are affecting crop prices. The Trump administration rolled out a $12 billion subsidy plan on Tuesday to help farmers, but the measures were widely criticized by Republicans.

“When you have people snipping at your heels during a negotiation, it will only take longer to make a deal, and the deal will never be as good as it could have been with unity,” Trump wrote Wednesday. “Negotiations are going really well, be cool. The end result will be worth it!”

Trump is set to meet Wednesday with European Commission President Jean-Claude Juncker after months of criticism directed at European tariffs. The two leaders are expected to discuss Trump’s threat to impose tariffs on European cars.

There is also a domestic political component to Trump’s trade and tariff policies.

Trump political advisers are clearly worried about how tariffs are affecting farmers, key sources of votes throughout the Midwest. They could be decisive as Republicans face tough election battles in November to keep control of the House and Senate.

The president himself expressed a rare note of anxiety in a speech to veterans Tuesday in Kansas City, Mo., a key agricultural state.

“The farmers will be the biggest beneficiary” of his trade policies, Trump said. “Watch. We’re opening up markets. You watch what’s going to happen … Just be a little patient.”

Trump travels Thursday to two more agriculture states, Iowa and Illinois.

[USA Today]

Trump-Created European Trade Crisis Averted by Fake Deal

Last night, the Trump administration announced with maximum fanfare that the trade war with the European Union was over. “This was a big day for free and fair trade!,” tweeted an excited President Trump. For all the hype and surprisingly credulous press the announcement attracted, it amounts to little more than a face-saving truce. If you’re looking for any details as to how this will work, too bad, they don’t exist.

The trade “deal” follows the script of the ballyhooed North Korean nuclear “deal” from last month. The cycle begins with bellicose Trumpian threats designed to increase American leverage. This leads to negotiations, which produce an impossibly ambitious and thoroughly vague “solution” that allows Trump to boast that he has averted a crisis of his own making.

In North Korea’s case, the “agreement” involves a nonverifiable promise to denuclearize the Korean peninsula at some future date. The trade “deal” is a promise to eliminate tariffs between the United States and the European Union. In theory, it would be possible to eliminate all tariffs between the E.U. and the U.S., but the process would take many years to complete — the European Union has 28 member states, all of which have internal political dynamics and constituent business interests to navigate.

In the meantime, the practical meaning of Trump’s deal is that both sides will halt the cycle of retaliatory tariffs. Despite Trump’s belief that his methods had produced valuable leverage for his own position, the spat had imposed acute pain on his own constituents — especially farmers, who have suffered dire costs from retaliatory tariffs. The president had taken to pleading with his supporters to stop complaining and let him sue for peace:

He was begging his allies to stop complaining about the tariffs. Like a dog!

Trump’s campaign adviser Stephen Moore told the Washington Post yesterday, “The one thing I do know about Trump is that he’s not going to back down.” Characteristically, the one thing Moore knows turned out to be completely false.

But it is easy to see how Trump plans to turn this shambolic retreat into another famous victory. Begin with the assumption that the European Union has been screwing the Great Companies of the United States with one-sided and very, very unfair tariffs for decades. (This is not true.) Then proceed to the assumption that Trump has produced a deal to eliminate all these tariffs. (Completely unrealistic.) By stacking the two fantasies atop each other, you arrive at a reality in which Trump has made a Great Deal to make Americans win again.

http://nymag.com/daily/intelligencer/2018/07/trump-created-european-trade-crisis-averted-by-fake-deal.html

“I think the European Union is a foe,” Trump says ahead of Putin meeting in Helsinki

Coming off a contentious NATO summit and a trip to the U.K. in which he seemed to undercut the government of America’s closest ally, President Trump took aim at another Western institution just days before his high-stakes meeting with Russian President Vladimir Putin.

In an interview with “CBS Evening News” anchor Jeff Glor in Scotland on Saturday, President Trump named the European Union — comprising some of America’s oldest allies — when asked to identify his “biggest foe globally right now.”

“Well, I think we have a lot of foes. I think the European Union is a foe, what they do to us in trade. Now, you wouldn’t think of the European Union, but they’re a foe. Russia is foe in certain respects. China is a foe economically, certainly they are a foe. But that doesn’t mean they are bad. It doesn’t mean anything. It means that they are competitive,” Mr. Trump said at his golf club in Turnberry, Scotland.

“I respect the leaders of those countries. But, in a trade sense, they’ve really taken advantage of us and many of those countries are in NATO and they weren’t paying their bills,” he added.

On Sunday, British Prime Minister Theresa May told the BBC that Mr. Trump had encouraged her to “sue the EU” rather than negotiate over the U.K.’s departure from the bloc. May’s conservative government is deeply split over her handling of Brexit, and her hold on power was further weakened by Mr. Trump’s comments to a British tabloid that her approach had likely “killed” any chance of a new trade deal with the U.S. once Brexit is complete. (Mr. Trump tried to walk back his criticism in a joint press conference on Friday.)

At the summit of NATO allies in Brussels last week, Mr. Trump took a hard line toward member nations for failing to meet targeted defense spending goals. He claimed his tough stance had paid off in getting allies to spend more on defense, telling reporters on Thursday that members had “upped their commitments and I am very happy.”

The president kicked off the NATO summit by blasting Germany as “totally controlled” and “captive by Russia” over a natural gas pipeline project, known as the Nord Stream 2. The U.S. fears the deal could give Moscow greater leverage over Western Europe. In Saturday’s interview, the president reiterated the criticisms he made in Brussels.

“Germany made a pipeline deal with Russia. Where they’re going to be paying Russia billions and billions of dollars a year for energy, and I say that’s not good, that’s not fair. You’re supposed to be fighting for someone and then that someone gives billions of dollars to the one you’re, you know, guarding against. I think it’s ridiculous, so I let that be known also this time,” Mr. Trump told Glor. “I’ll tell you what, there’s a lot of anger at the fact that Germany is paying Russia billions of dollars. There’s a lot of anger. I also think it’s a very bad thing for Germany. Because it’s like, what, are they waving a white flag?”

German Chancellor Angela Merkel, who grew up in communist East Germany, told reporters after the president’s comments in Brussels that she had “experienced myself how a part of Germany was controlled by the Soviet Union” and said her country today made “independent policies” and “independent decisions.

In the CBS News interview, Mr. Trump also continued to criticize the special counsel’s Russia investigation, saying it is having an impact on America’s standing in the world. “I think we’re greatly hampered by this whole witch hunt that’s going on in the United States,” the president said. “I think it hurts our relationship with Russia. I actually think it hurts our relationship with a lot of countries. I think it’s a disgrace what’s going on.”

Mr. Trump heads to Helsinki on Sunday ahead of his meeting with Putin on Monday. He told Glor he has “low expectations” for the summit. “Nothing bad is going to come out of it, and maybe some good will come out,” he said.

[CBS News]

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