with Bastien Inzaurralde


Ignore President Trump’s tweets over the weekend, and you could conclude his administration is trying to sew up the trade rifts it has opened around the globe to focus on China. 

Consider some of other battle zones in the multi-front trade fight. Closest to home, Trump negotiators are edging toward an agreement with their Mexican counterparts for overhauling key pieces of the North American Free Trade Agreement. The president’s cease-fire with the European Union, such as it is, continues to hold. And U.S. Trade Representative Robert E. Lighthizer is set to huddle Friday with Japanese Economic Minister Toshimitsu Motegi for their first bilateral talks.

But Trump’s Twitter tirade over the weekend extolling tariffs as a virtue unto themselves disturbs the picture. The president insisted over the course of six weeks that Americans will “win either way” under the new trade barriers, whether or not they yield better deals; that China and “other countries” are “spending a fortune… trying to scare our politicians to fight me on Tariffs” and that the tariffs are “already working big time.” He claimed that revenue from tariffs will pay down the national debt (debunked here by my colleague Heather Long) and force foreign manufacturers to locate in the U.S. 

Trade insiders and experts see no grand strategy at play. While there is wide agreement within the administration over the need to confront Chinese trading abuses, the consensus frays over the other fights Trump has picked. Among the leading trade hawks in the president’s inner orbit, for example, Lighthizer has advocated for months for narrowing the White House’s attention on China. Senior trade adviser Peter Navarro, on the other hand, argues for pressing ahead with tariffs even on traditional allies in a bid to fundamentally rebalance U.S. trading relationships around the world. 

“Many in the administration would like to turn their attention to China, but the.... tariffs on steel and aluminum and the investigation on autos have been distractions that have divided us from our natural allies,” says Barbara Weisel, who served as chief U.S. negotiator for the Trans-Pacific Partnership.

The president’s recent embrace of a truce with the European Union and a bailout for U.S. farmers caught in the tariff crossfire suggest to some that he is finally feeling political pressure to stop escalating tensions. But whether Trump sees tariffs as a tool to muscle trading partners into granting the U.S. more favorable terms — or as a means to force a more permanent separation of the U.S. from the global economic order  — remains an open question. “It’s not clear what the president really thinks on this,” says Rob Atkinson, president of the Information Technology and Innovation Foundation.

The weeks ahead should offer new clues. Expect more peacemaking, for example, if Lighthizer’s Friday meeting with Motegi yields common ground that Trump touts as a breakthrough with Japan. That’s because unlike the European Union, Japan has refrained from striking back on Trump’s metals tariffs with retaliatory duties, arguably putting it in a weaker negotiating position. A quick move by the administration to hand that country its own cease-fire anyway would point to a wider interest in extinguishing firefights. “We’ll know a lot more after that meeting,” one industry source said, noting that India has taken a similar approach

On NAFTA, despite the recent progress with Mexico, time is running out for the Trump team to work through a long list of thorny issues this year. As the New York Times’s Ana Swanson wrote last week, “Under current trade laws, the Trump administration must give Congress 90 days’ notice between when it concludes negotiating a trade agreement and when it is signed. For [outgoing Mexican President Enrique] Peña Nieto to sign the agreement before he leaves office on Nov. 30, the three countries must seal a final deal before Aug. 27.” But even if they don't reach a deal by then, there's nothing to stop Trump from declaring an early victory if he wants more grist for the case that his aggressive tactics and dealmaking prowess are paying dividends. 

On the other hand, Trump will have opportunities to keep ratcheting up trade hostilities if he chooses. The administration is continuing to review whether to forge ahead with tariffs on imports of foreign autos and auto imports — a decision that could come within a month. The president could do so on a limited basis, handing exemptions to the Europeans pending more negotiations, and, say, the Japanese, if the Lighthizer’s meeting bears fruit. “We are encouraged that the U.S. and Japan are meeting this week,” a spokesperson for the Association of Global Automakers said in an email. “We want more trade, not less, and talks are always a good first step in any negotiation.”



— Iranian sanctions are back. The Washington Post's Carol Morello: “The Trump administration on Monday moved to reimpose the first round of Iranian trade sanctions that had been suspended under a 2015 nuclear agreement, distancing itself from every other country that signed the deal and marking another decisive moment in the accord’s unraveling... The sanctions that take effect Tuesday, 90 days after Trump withdrew the United States from the landmark 2015 nuclear deal, prohibit Iran from using U.S. dollars, the primary currency for international financial transactions and oil purchases. Trade in metals and sales of Iranian-made cars are banned, and permits allowing the import of Iranian carpets and food, such as pistachios, are revoked. So are licenses that have allowed Tehran to buy U.S. and European aircraft and parts — a restriction that comes just days after Iran acquired five new commercial planes from Europe."

Via Trump this morning: 

Rouhani responds. The Associated Press's Nasser Karimi: “Iranian President Hassan Rouhani struck a hard line Monday as the U.S. restored some sanctions that had been lifted under the 2015 nuclear deal, demanding compensation for decades of American 'intervention' in the Islamic Republic. While saying he had 'no preconditions' for talks, Rouhani in a live television interview maintained that Iran can rely on China and Russia to help its oil and banking sectors as the U.S. ramps up sanctions in the coming months. ... 'If someone has knife in the hand and seeks talks, he should first put the knife in his pocket,' Rouhani said.”

Bolton wants “unprecedented pressure.”  Politico's Rebecca Morin: “White House national security adviser John Bolton said Monday that the Trump administration is not seeking regime change in Iran even as it moves to reimpose sanctions... 'Our policy is not regime change,' Bolton said during an interview on Fox News. 'We want to put unprecedented pressure on the government of Iran to change its behavior. And, so far, they've shown no indication they're prepared to do that.'”

— China scrambles as yuan falls. AP's Joe McDonald: “China has tightened controls on trading in its yuan to discourage speculators after a decline against the dollar amid a tariff dispute with Washington fueled fears of a damaging outflow of capital from the world’s second-largest economy. Traders must post a 20 percent deposit starting Monday for contracts to buy or sell yuan on a future date. That raises the cost of betting it will drop and might help to discourage speculative trading. The tightly controlled yuan has been allowed to decline by about 8 percent against the dollar since early February. That helps Chinese exporters that face U.S. tariff hikes by lowering their prices in dollar terms. But it also encourages investors to shift money out of China, which would have a broader impact by raising financing costs for other industries.”

Chinese media cranks up Trump criticism. Reuters's Engen Tham: "Chinese state media kept up their criticism of [Trump’s] trade policies, with a newspaper on Tuesday describing as 'wishful thinking' Trump’s belief that a fall in Chinese stocks was a sign of his winning the trade war... The editorial in the official China Daily underscored an increasingly aggressive stance adopted by Chinese state media against Trump, a shift from their previous approach of tempering any direct criticism against the U.S. president. On Monday, the overseas edition of the Communist Party’s People’s Daily newspaper singled out Trump, saying he was starring in his own 'street fighter-style deceitful drama of extortion and intimidation.'"

German trade surplus holds. Bloomberg's Paul Gordon and Catherine Bosley: "Germany’s trade surplus with the U.S. is showing little sign of buckling under [Trump’s] accusations of unfair practices. The nation’s exports to the U.S. exceeded imports by 24.4 billion euros ($28.3 billion) in the first half of the year, German data showed on Tuesday. That’s barely changed from the 24.5 billion euros in the same period of 2017. The booming U.S. economy is continuing to suck in German goods from cars to chemicals, even amid repeated criticism from the Trump administration and threats of tariffs on Europe. Still, the latest figures show how tensions could flare up again, despite Trump’s agreement with European Commission President Jean-Claude Juncker to refrain from any action while the two sides negotiate."

Mnuchin's right-hand man. Bloomberg's Saleha Mohsin: "Seven years ago, Eli Miller was an unpaid intern giving tours on Capitol Hill. Now, he’s in the middle of an effort to avert a full-blown trade war between the world’s two largest economies. As chief of staff and right-hand man to Treasury Secretary Steven Mnuchin, Miller’s helping to work back-channels with Beijing in an effort to restart trade talks, two people familiar with the matter said. The China talks are a test for Miller, 35, a political insider who channels [Trump’s] instincts but lacks experience in diplomacy, business and the inner workings of Treasury... In addition to a trade war, Miller must help Mnuchin navigate a slew of other challenges that could rattle markets -- a rising federal deficit; sanctions against North Korea, Venezuela and Iran; a possible Democratic victory in midterm congressional elections. But Miller is seen less as a Wall Street liaison than consigliere to Mnuchin, helping ensure his boss’s political survival in a White House full of adversaries vying for influence."



— Stock buybacks skyrocket. CNBC's Jeff Cox: “Amid the fanfare of Apple reaching $1 trillion in market valuation, investors may be missing another more important milestone of the same dollar level. Namely, U.S. companies appear poised to eclipse the $1 trillion mark in share buybacks this year, a pivotal record that will keep the stock market going even as many retail investors are beginning to fear equities, according to a Goldman Sachs analysis for clients. Wall Street already had been expecting a potentially history-making year for repurchases, but Goldman anticipates that the corporate appetite will be even stronger than anticipated particularly with August being the biggest month traditionally for buybacks.”

China lifts world shares. Reuters: "World shares edged toward a six-month high on Tuesday, as the biggest jump in Chinese stocks for over two years and an upbeat start for Europe followed Wall Street’s best close since January... The mood lifted overnight as Chinese stocks rebounded 2.7 percent on hopes of fresh government spending, following a four-day selloff that had knocked them down about 6 percent."


— Indra Nooyi steps down. The Post's Rachel Siegel and Jena McGregor: “Indra Nooyi, PepsiCo’s first female chief executive, is stepping down after 12 years at the helm of the food-and-beverage giant. Nooyi will stay on as chairman until early 2019. When Nooyi took the reins, she was Pepsi’s first foreign-born chief executive. She is also one of the few minority female leaders of a major corporation, and her departure focuses attention on the absence of women — particularly women of color — in some of the United States' most high-profile corporate roles.​​​​​​​ Nooyi, 62, will be succeeded Oct. 3 by Ramon Laguarta, who has been Pepsi’s president since last year and has been with the company 22 years. Born in Chennai in southern India, Nooyi joined Pepsi 24 years ago.”

— Icahn against Express Scripts deal. WSJ's Cara Lombardo: “Carl Icahn is going public with his campaign to scuttle Cigna Corp.’s $54 billion plan to buy Express Scripts Holding Co. The billionaire activist investor plans to send an open letter Tuesday urging fellow Cigna shareholders to vote against the deal, which he calls a '$60 billion folly' carrying a 'ridiculous' price tag, according to a draft seen by The Wall Street Journal. 'Cigna is dramatically overpaying for a highly challenged Express Scripts that is facing existential risks on several fronts,' Mr. Icahn writes.”

— Facebook seeks financial data. WSJ's Emily Glazer, Deepa Seetharaman and AnnaMaria Andriotis: “Facebook Inc. wants your financial data. The social-media giant has asked large U.S. banks to share detailed financial information about their customers, including card transactions and checking-account balances, as part of an effort to offer new services to users. Facebook increasingly wants to be a platform where people buy and sell goods and services, besides connecting with friends. The company over the past year asked JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and U.S. Bancorp to discuss potential offerings it could host for bank customers on Facebook Messenger, said people familiar with the matter. Facebook has talked about a feature that would show its users their checking-account balances, the people said. It has also pitched fraud alerts, some of the people said.”

— BMW apologizes. AP's Youkyung Lee: “BMW AG’s Korean unit apologized Monday over engine fires that prompted recalls and a probe, seeking to allay concerns over images of cars engulfed in flames. BMW Korea Chairman Kim Hyo-joon said the German carmaker will fully cooperate with the transport ministry’s investigation and complete emergency safety inspections of its vehicles by next week. More than 20 cases of BMW fires have been reported in South Korea, mostly in July.”

— Goldman veteran shakes up mining. WSJ's Jacquie McNish: “Mining is famously boom and bust. Money and patience are mandatory. In bad times, companies sell assets and close mines. In booms they buy up all they can. John Thornton threw that rulebook out when he took over struggling Barrick Gold Corp., the world’s largest gold producer. The former Goldman Sachs Group Inc. president was an industry amateur, as were most of his top hires. He followed Goldman as a model for company compensation. Instead of buying when prices recovered, he cut costs and sold assets. Mr. Thornton, 64 years old, spends only two or three days a month at Barrick’s Toronto headquarters. ... The former banker’s turnaround plan has succeeded in reining in Barrick’s debt. It has also eroded the company’s gold production and reserves. Investor uncertainty about the miner’s plans has contributed to a 33% share price decline in the past 12 months.”


Vulnerable Dems join Warren. The Hill's Sylvan Lane: "Some of the Senate's most vulnerable Democrats are siding with Sen. Elizabeth Warren (D-Mass.) in a fight with President Trump over his pick to lead the controversial Consumer Financial Protection Bureau (CFPB). Democratic Sens. Heidi Heitkamp (N.D.) and Jon Tester (Mont.), both big GOP targets this November in states won easily by Trump in 2016, say they are opposed to supporting Kathy Kraninger’s nomination to lead the CFPB, joining forces with Warren and other liberal colleagues... [The move] suggests that moderate Democrats, after battling Warren over legislation rolling back parts of the 2010 Dodd-Frank Wall Street reform law earlier this year, are wary of another fight with the powerful senator and her allies on one of her signature issues."

Jobs boom favors Dem counties. AP's Josh Boak: "The United States is on pace to add about 2.6 million jobs this year under [Trump’s] watch. Yet the bulk of the hiring has occurred in bastions of Democratic voters rather than in the Republican counties that put Trump in the White House. On average for the year-ended this May, 58.5 percent of the job gains were in counties that backed Democrat Hillary Clinton in 2016, according to an Associated Press analysis of monthly government jobs data by county. Despite an otherwise robust national economy, the analysis shows that a striking number of Trump counties are losing jobs. The AP found that 35.4 percent of Trump counties have shed jobs in the past year, compared with just 19.2 percent of Clinton counties... Job growth in Trump’s economy is still concentrated in the same general places as it was toward the end of Barack Obama’s presidency — when roughly 58.7 percent of the average annual job gains were in Democratic counties."


McWilliams ready to roll back bank capital rule. WSJ's Ryan Tracy: "Washington’s newest senior bank regulator is turning her agency’s agenda in the direction of policies being proposed by other Trump-appointed officials, adding momentum to a push to revisit rules adopted after the 2008 financial crisis. Federal Deposit Insurance Corp. Chairman Jelena McWilliams, in her first interview since being sworn in June 5, said she is ready to re-evaluate rules on bank capital, small-dollar loans and investments in low-income areas... Ms. McWilliams said Friday that her top priorities are examining the regulatory burden on small banks, speeding up her agency’s review of bank-charter applications and helping banks introduce new financial products for underserved communities.

Allison Lee in line for SEC. Bloomberg: "Allison Lee, a former enforcement attorney at the U.S. Securities and Exchange Commission, is the Trump administration’s likely choice to replace her former boss in a Democratic seat at the Wall Street regulator, according to people familiar with the matter. Lee, a former aide to Commissioner Kara Stein, would replace her former boss on the five-member panel... Picking a replacement for Stein, whose term expired last year, has caused a split among Democrats, with the party’s progressive wing pushing for someone seen as being willing to be tough on Wall Street. The SEC has been down to four members since Republican Michael Piwowar stepped down last month.


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