The imminent trade war and it's tariffs on everything from soybeans to pork threatens to emerge as a critical issue in Senate battleground races the GOP needs to protect its majority this fall.
For now, Republican challengers in a handful of heartland states argue that President Trump deserves room to negotiate in his bid to yield better deals for American businesses and consumers alike. But retaliatory tariffs that countries like Canada and China are aiming squarely at Trump’s base will test their solidarity with the president in a very competitive midterm election year.
Nowhere is the squeeze between Trump and his trade policies more evident than in North Dakota, where Trump is trying to oust incumbent Democratic Sen. Heidi Heitkamp. “We're not starting a trade war, but we'll finish it,” Trump said last week at a rally in Fargo, as Heitkamp’s Republican challenger, Rep. Kevin Cramer (R-N.D.), looked on. The next day, in a local television interview, Cramer said that “people are with [Trump] and they want a better deal.” And while Cramer said he’s told the president that farmers need to see results soon, the GOP lawmaker also predicted that “you’re going to see some victories along the way that will continue to make this the right thing.”
North Dakota farmers may see it differently. The Trump administration on Friday is set to slap another $34 billion in duties on Chinese imports; Beijing says it will respond in kind, leveling the same amount in countervailing fees on U.S. goods including soybeans, North Dakota’s top export to the country. The state ships $28 million worth of the product to China annually, according to a report out this week from the U.S. Chamber of Commerce — and China consumes roughly a third of American-produced soybeans, a fact growers point to in raising alarms about the tariffs.
Heitkamp, who has highlighted her willingness to work with Trump, sharply criticizes the president's trade offensive, calling it “poorly planned” and misguided. She argues Trump, who carried her state by nearly 36 points, squandered an opportunity to confront China by also targeting friendlier trading partners. “With each passing day, the administration’s trade policies cause more concern in North Dakota and rural America, especially where farming, ranching, manufacturing, and energy production fuel the economy,” she said in a Facebook post on Tuesday. And she is co-sponsoring legislation to restrict the president’s authority to level tariffs.
“Democrats are emboldened and see tariffs as an opportunity in red states,” says Inside Elections editor and publisher Nathan Gonzales. “It’s too early to know it will play out. But if it results in hardship for farmers that’s felt by a larger share of voters, I can see it being a campaign issue.”
Republican challengers to other Senate Democratic incumbents in states caught in the tariff crossfire say Trump should get the benefit of the doubt as he presses his case -- for now.
The president “got elected in large part because people know that he’s a negotiator,” Leah Vukmir, a Wisconsin state senator vying to take on Sen. Tammy Baldwin (D-Wis.), said in a local interview last month. “I am willing to give him the opportunity to create fairer deals for our country.”
But Trump's trade policy has drawn criticism from other big Wisconsin players -- including Gov. Scott Walker (R), also up for reelection. Wisconsin-based Harley-Davidson announced last week it would ship some production abroad (drawing a Twitter lashing from Trump) in response to new levies from the European Union, and other businesses in the state, from cheese makers to cranberry growers, stand to get pinched, too.
In Missouri, Attorney General Josh Hawley, Sen. Claire McCaskill’s (D) Republican competition, has said Trump is “on the right track” and will deliver terms that justify the disruptions. McCaskill’s campaign views trade, however, as an opening, criticizing Hawley for standing by Trump as local businesses begin to bear the burden of the trade hostilities. McCaskill has highlighted the plight of Mid Continent Nail Corp, a Poplar Bluff, Mo. nail manufacturer that last month laid off 60 workers due to rising metals prices. A Brookings Institute report pegged Missouri as the state that would suffer the most from Trump's steel and aluminum tariffs.
Those tariffs, and the threat of more, may already be putting a damper on manufacturing activity that had been gaining steam. “The Trump administration’s trade policy is starting to have a noticeable effect on American manufacturers,” the Financial Times’s Ed Crooks writes. “Both the ISM and IHS surveys found many manufacturers reporting rising costs and increasing difficulties in sourcing components. Timothy Fiore of the ISM said the comments suggested respondents were ‘overwhelmingly concerned’ about the tariffs, and this was before the majority of the announced or threatened measures had hit.”
Dialing up the pressure on Republican candidates, the Koch political network and other major corporate interests opposed to Trump’s trade push are coming off of the sidelines. Candidates “need to lead with courage and conviction rather than play political games,” says James Davis, executive vice president of the Koch-aligned Freedom Partners. “Trade barriers, such as tariffs, only make us poorer.”
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— China seeks to enlist Europeans against Trump. Reuters’s Robin Emmott and Noah Barkin: “China is putting pressure on the European Union to issue a strong joint statement against... Trump’s trade policies at a summit later this month but is facing resistance, European officials said. In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill. One proposal has been for China and the European Union to launch joint action against the United States at the World Trade Organization. But the European Union, the world’s largest trading bloc, has rejected the idea of allying with Beijing against Washington.”
And says it won’t strike first this week. Reuters’s Stella Qiu and Ben Blanchard: “China will ‘absolutely not’ fire the first shot in a trade war with the United States and will not be the first to levy tariffs, its finance ministry said on Wednesday... ‘The Chinese government’s position has been stated many times. We absolutely will not fire the first shot, and will not implement tariff measures ahead of the United States doing so,’ it said, without elaborating.”
But Beijing is already punishing U.S. businesses. The Washington Post’s Danielle Paquette: “Just days before the first 25 percent levy is slated to hit $34 billion in Chinese products, U.S. companies here say they’re already feeling the sting in the form of stalled product approvals, worker visas and licensing applications. In a country where regulation enforcement can vary widely by region, it’s hard for analysts to know whether these sudden administrative headaches are a coincidence or the Chinese government following through on threats to make life harder for Americans in business. But anecdotal evidence suggesting official sanction is building, according to veteran observers of the Chinese market. ‘There’s enough of a trend to say this might be related,’ said Jake Parker, vice president of China operations at the U.S.-China Business Council.”
Republicans weigh ZTE confrontation with Trump. The Post's Erica Werner and Josh Dawsey: "GOP senators, who have generally stood down rather than challenge Trump even when they disagree, have a window to take action. But it will require them not only to thumb their nose at a president who is wildly popular with GOP voters but also to reach a deal with the reluctant House. Adding to that pressure is new evidence that ZTE may be flouting the terms of the deal — sparking fresh protests from lawmakers who will have to decide in coming weeks whether to bow to White House demands and back down on punishing the company.
"The White House on Monday took concrete steps to begin helping ZTE. The Commerce Department issued a waiver allowing U.S. businesses to continue doing business with ZTE for one month without penalty as negotiations continue. That also could give the White House more time to work out a resolution with members of Congress.
— Merkel cautions against escalating trade tensions. The Hill’s Max Greenwood: “German Chancellor Angela Merkel on Wednesday warned against the looming specter of a trade war with the United States amid threats by . . . Trump to impose heavy tariffs on auto imports from Europe. . . . ‘We now have tariffs on aluminum and steel and we have a discussion that is far more serious,’ Merkel said, pointing to Trump's threats to slap tariffs on European auto exports to the U.S. ‘This has the character of a trade conflict,’ she continued. ‘I don't want to use any other word for now. It's worth every effort to try to defuse this conflict, so it doesn't turn into a war. But this obviously takes two.’”
German carmakers meet with U.S. ambassador. Bloomberg News's Oliver Sachgau, Jonathan Stearns and Christoph Rauwald: “German auto-industry leaders are making the case to the Trump administration that a trade feud with the U.S. will cause irreparable damage to global business. The chief executive officers of Volkswagen AG, Daimler AG and BMW AG met Wednesday with the U.S ambassador to Germany to discuss looming American duties on car imports from the European Union . . . Ambassador Richard Grenell told participants the U.S. government was seeking talks with the EU and German government with a proposal to reduce tariffs to zero, Handelsblatt reported later.”
As EU weighs car talks. "Brussels is considering talks on a tariff-cutting deal between the world’s big car exporters to prevent an all-out trade war with the US, say diplomats briefed on the initiative," FT's Jim Brundsen and Shawn Donnan write. "The idea is being studied by EU officials ahead of a meeting between Jean-Claude Juncker, president of the European Commission, and President Donald Trump in Washington this month, amid concern that time is running out to convince the US not to impose punitive duties on the motor sector. Three diplomats said the European Commission was studying whether it would be feasible to negotiate a deal with other big car exporters such as the US, South Korea and Japan. Such a move could address Mr Trump’s complaint that the US sector is unfairly treated, while reducing export costs for other participating countries’ auto sectors."
— Pork producers brace. CNBC’s Jeff Daniels: “U.S. pork producers are about to be bitten by a second batch of hefty retaliatory tariffs from China and Mexico — and that has some large producers predicting they could lose big money and be forced to invest overseas. Executives say the pork industry has been expanding in recent years, in part on the expectation of export opportunities that would continue to support growth. However, the threat of a trade war is adding uncertainty and driving fear. One in 4 hogs raised in the U.S. is sold overseas, and the Chinese are the world's top consumers of pork.”
— How the Trump charity probe could reveal his tax returns. David Cay Johnston, in the NYT: "A state or county criminal investigation that begins with abuse of the Donald J. Trump Foundation need not be limited to violations of charity and election law. It can also examine his personal and business tax filings and, in the process, lawfully put his tax returns in the public record. Mr. Trump reportedly used hundreds of thousands of foundation dollars to settle legal cases and buy portraits of himself that hang at Trump properties, among other egregious examples of self-dealing. Those foundation expenditures were income, and unless Mr. Trump reported that income, he could be prosecuted for criminal tax fraud."
— Markets steady ahead of tariffs. WSJ's Georgi Kantchev: "Stocks in Europe and U.S. futures rebounded Thursday as investors looked beyond a looming deadline for tariffs between the U.S. and China to healthy economic data and a potential de-escalation of some trade tensions. Futures pointed to opening gains of 0.5% for the S&P 500. The Stoxx Europe 600 was up 0.7%. European car makers leapt up the index after a German press report that the U.S. proposed to stop threatening to impose tariffs on cars imported from the European Union if the EU lifts duties on U.S.- car imports."
— Trump hits OPEC. The president called out the oil producers in a Wednesday tweet:
The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!— Donald J. Trump (@realDonaldTrump) July 4, 2018
"The statement is one of several Mr. Trump has made recently in an attempt to sway the cartel to ramp up production," WSJ's Neanda Salvaterra writes. "Oil prices have risen 0.58% in the last seven days due to supply outages in countries such as Venezuela, Libya and Canada. Still, analysts say that Mr. Trump should look closer to home for the reason behind the escalating price of fuel. The U.S. move to reimpose sanctions on Iran, coupled with mixed messages on when Washington expects countries to eliminate their purchases of Iranian oil, have put a premium on crude. Analysts estimate the U.S. sanctions would strip about 2.5 million barrels a day from the market."
— A hedge fund star dims. WSJ's Gregory Zuckerman: "For years, David Einhorn’s investors didn’t seem to mind his unusual ways—the aloofness toward clients, midday naps, unpopular stock picks, late nights on the town. Until the billionaire hedge-fund manager fell into a slump. After more than a decade of winning on Wall Street, Mr. Einhorn’s Greenlight Capital Inc. has shrunk to about $5.5 billion in assets under management, his investors estimate, from a reported $12 billion in 2014, and his investments are struggling...
"Mr. Einhorn, 49, hasn’t clearly explained the losses, sometimes pointing to the market’s shift away from the less expensive value stocks he favors— those considered inexpensive relative to earnings and other metrics... People familiar with the fund attribute Mr. Einhorn’s troubles in part to his unconventional ways—sticking to value stocks, for example, and keeping clients at a distance—which he hasn’t changed even as investors bolt."
— Walmart faces the wrath of Trump’s supporters. The Post’s Deanna Paul: “Walmart became the target of Trump supporters outraged by a T-shirt sold on the company’s website, leading to calls for a boycott Tuesday. The shirt, which was available in adult sizes and in baby onesies, bore the words ‘Impeach 45,’ in reference to Trump, the 45th president of the United States. It is unclear how long the shirts were available on Walmart’s website, but Ryan Fournier, a political commentator and chairman of Students for Trump, was among the first to ignite the social media frenzy Monday night after he discovered the listing, tweeting ‘what kind of message are you trying to send?’ The shirt was not sold directly by Walmart but through its open marketplace by a third-party seller, Walmart said in a tweet to Fournier Tuesday afternoon. 'We’re removing these types of items pending review of our marketplace policies,' Walmart said.”
— HNA exec dies in France. NYT’s Alexandra Stevenson and Cao Li: “The co-chairman and co-founder of HNA Group, a Chinese conglomerate that spent heavily in recent years to build a global profile but that has since grappled with high debt, died from an accidental fall in France, the company said on Wednesday. The death of Wang Jian, a former civil aviation official who became one of China’s richest men, comes as the company has been trying to tame its debt of more than $90 billion. It could also cast further doubt on HNA’s murky ownership, which has prompted some Wall Street banks to stop doing business with it. Mr. Wang owned a 15 percent stake of the company. Mr. Wang, 57, was on a business trip to France, but had taken a detour on Tuesday to go sightseeing when the fall happened, according to HNA and the French police. The police said they were treating his death as an accident.”
— Barnes & Noble's CEO is fired. WSJ's Maria Armental and Jeffrey A. Trachtenberg: “Barnes & Noble Inc. . . . has fired Chief Executive Demos Parneros, citing company policy violations. The bookseller said Tuesday that Mr. Parneros won’t receive any severance pay and that he is no longer a board member. Barnes & Noble didn’t disclose what rules Mr. Parneros may have violated, but said the decision wasn’t tied to any disagreement over financial reporting or any potential fraud.”
— Two pilots sued LaCroix chief executive. WSJ's Jennifer Maloney and Mark Maremont: “Two pilots have filed lawsuits alleging sexual harassment by the billionaire behind LaCroix sparkling water, claiming 82-year-old Nick A. Caporella inappropriately touched them on multiple trips while they were flying with him in the cockpit of his business jet. The allegations by the former employees, both men, were made in lawsuits filed in the past two years in Florida and name both the chief executive and National Beverage Corp. . . . as defendants. Mr. Caporella is the chairman, chief executive and controlling shareholder of National Beverage, which has a market value of $5 billion, thanks to surging LaCroix sales.”
— A report highlights the shortcomings of the U.S. labor market. The Post’s Andrew Van Dam: “The U.S. labor market is hot. Unemployment is at 3.8 percent, a level it’s hit only once since the 1960s, and many industries report deep labor shortages. Old theories of what’s wrong with the labor market — such as a lack of people with necessary skills — are dying fast. Earnings are beginning to pick up, and the Federal Reserve envisions a steady regimen of rate hikes. So why does a large subset of workers continue to feel left behind? We can find some clues in a new 296-page report from the Organization for Economic Cooperation and Development (OECD), a club of advanced and advancing nations that has long been a top source for international economic data and research. Most of the figures are from 2016 or before, but they reflect underlying features of the economies analyzed that continue today. In particular, the report shows the United States’s unemployed and at-risk workers are getting very little support from the government, and their employed peers are set back by a particularly weak collective-bargaining system.”
— Tech firms invest in Cambridge: NYT’s Cade Metz and Adam Satariano: “For years, journalists, city planners and other government officials have called this ‘Silicon Fen,’ envisioning the once sleepy outskirts of Cambridge as Britain’s answer to Silicon Valley. The name — a nod to the coastal plain, or Fenlands, that surrounds Cambridge — never quite stuck. But the concept certainly did, so much so that the world’s tech powers have moved in, snapping up engineers and researchers, particularly in the burgeoning field of artificial intelligence. Their arrival provides a welcome fillip for the British economy that’s expected to be bruised by its departure from the European Union. Apple, Amazon and Google established research and engineering hubs in Britain by acquiring companies that emerged from local universities, spending millions or even hundreds of millions of dollars.”
— What Facebook can expect from the SEC probe. The Post's Renae Merle and Elizabeth Dwoskin: “A Securities and Exchange Commission investigation into Facebook’s sharing of data with political consultancy Cambridge Analytica could put every public utterance on the issue by company executives, including chief executive Mark Zuckerberg, under close examination, securities law experts say. The SEC is likely to examine whether the company and its executives fully disclosed to shareholders the risks posed by its relationship with Cambridge Analytica, the experts said. That would include reviewing years of documents Facebook has submitted to the SEC describing its financial conditions and the business risks it faced. It would also include any public statements its executives have made to the media or Congress, they said.”
From Bloomberg News:
- Panel discussion on globalization at the American Enterprise Institute on July 11.
- Senate Banking Committee hearing on “credit bureaus and the Fair Credit Reporting Act” on July 12.
- Conference on manufacturing at the Brookings Institution on July 12.
- Panel discussion on “what corporate America can do for employees” at the American Enterprise Institute on July 13.
A New Yorker cartoon by Kim Warp:
Trump pays tribute to the Armed Forces for the Fourth of July:
Trapped Thai soccer team receives dive lessons:
NBA free agency, surprises and upsets: