President Trump celebrated Labor Day by alienating AFL-CIO president Richard Trumka, a key defender of his trade policy, just as talks over the North American Free Trade Agreement enter a critical stretch. 

The attack highlights how the president remains stuck in guns-blazing mode even as his trade negotiators race to wrap up challenging talks with a top trading partner. And Trump needs to keep Trumka in the fold if he hopes to fulfill his campaign pledge of reworking NAFTA.

The Trump administration is resuming negotiations with Canada on Wednesday after failing to find agreement last week. And Trumka — whose federation represents millions of blue-collar Trump supporters — has offered critical support to the president’s push for better trading terms with its nearest neighbors.  But the labor chief criticized Trump’s broader record for working people in a Fox News Sunday interview, while also insisting that a reworked NAFTA include Canada. “Our economies are integrated,” Trumka said. “It’s hard to see how that would work without Canada on the deal.”

Trump responded by lashing out in a Monday morning tweet:

The back-and-forth came after Trump threatened over the weekend to cut Canada out of the pact:

As my colleague Heather Long notes, it's not clear whether Trump has the authority to make good on that threat without approval from Congress. “Many lawmakers have said they would move to stop Trump if he attempts to withdraw from the deal, and the move would probably face legislative and legal challenges,” she writes. “The withdrawal process would require Trump to give Mexico and Canada six months' notice of his intent to leave the pact.”

With steep challenges ahead even as victory on a central campaign promise looks within grasp, a traditional president would work to keep allies in the fold. Trump’s attacks on labor and Congress — “two U.S. groups whose support he needs to enact a new Nafta,” as the Wall Street Journal’s Jacob Schlesinger and Paul Vieira write — follows this president’s practice of playing the blustery bad cop in every negotiation.  

Trump’s administration has been working to win the support of labor leaders and rank-and-file workers for its broader trade offensive, as Politico’s Adam Behsudi writes, and “by some measures, it’s working.”

From Behsudi: “Labor leaders who for decades have been firmly in the Democratic Party’s camp say they’re open-minded toward Trump and many leaders have been given White House access as the deal has been renegotiated. Behind the scenes, some union officials are lavishing praise on U.S. Trade Representative Robert Lighthizer for adopting their suggestions — a stark change from the icy relationship on trade that developed between labor unions and the Obama administration.”

Trump has repair work to do with the constituency. Trump won 43 percent of the vote from union households, according to AFL-CIO exit polls — the best performance with that group by a Republican presidential nominee since Ronald Reagan in 1984. But his standing with union workers has been sliding, falling 15 points from a high of 60 percent support last March, a Reuters-Ipsos poll in May found.

Trumka has offered crucial if qualified support for a trade push that has galvanized widespread opposition from business interests. As recently as last month, he told reporters in Washington that Trump is “going in the right direction on trade” and “understands that’s what needs to be done.” But he urged restraint with Canada. “I don't think that Canada has violated the rules,” Trumka said. 

The context for Trump’s Monday attack on Trumka — his first against the labor chief — suggests it was less than strategic. The twitter dart was just one in a hailstorm that the president unleashed over a weekend that also saw him blasting Attorney General Jeff Sessions, former FBI director James Comey, the Justice Department, the FBI, the FISA court, Barack Obama, Hillary Clinton, former Secretary of State John Kerry, the media generally, and the New York Times specifically, among others. 

Trumka on Sunday said he has operated since Trump’s election by calling “balls and strikes. When he did something that was good for workers, we'd support him.” And the breakthrough with Mexico that the administration announced last week included some good news for labor — namely, new rules requiring 40 to 45 percent of North American-built cars to be made by workers earning at least $16 an hour, in order to avoid tariffs. 

Yet as Trumka also noted, “there's still a lot of work to be done, even on the Mexican deal… because the language isn't drafted.” The administration last week formally notified Congress to start a 90-day clock for finishing the deal. The aim is to wrap up before Mexican President Enrique Peña Nieto leaves office at the end of November. But the president will need congressional sign-off for changes to NAFTA, a process that will take months if not years. And if Democrats retake control of one or both chambers of Congress, earning Trumka’s support for the final package will become all the more important for the administration, which will need backing from across the aisle.



— Trump trade push sows global uncertainty. Bloomberg News's Fergal O'Brien  and Piotr Skolimowski: “Factories from Asia to Europe are staring into the unknown when it comes to trade, and it’s unnerving them. Surveys of purchasing managers from around the world showed confidence at manufacturers is continuing to weaken. ... [Trump’s] protectionist stance has upturned the world’s long-standing way of doing business, leaving export-reliant industries exposed to heightened apprehension about the future and increased costs. ... While the U.S. is the source of much of the uncertainty, its companies are not immune to the fallout from the tit-for-tat battle that’s ensued with the European Union and China. Brown-Forman Corp., the maker of Jack Daniel’s whiskey, cut its profit forecast last week, saying it assumes that EU tariffs, put in place in June, will remain in place for now.”

China has a lot to worry aboutAP's Joe McDonald: “China faces bigger economic challenges than its trade war with the U.S. Even before tit-for-tat tariffs, growth in the world’s No. 2 economy was already forecast to cool from 6.8 percent last year to a still-robust 6.5 percent this year. Communist leaders who are trying to engineer slower, more self-sustaining growth clamped down last year on a bank lending boom that encouraged businesses and families to borrow and spend beyond their means. That’s a tricky balance to strike, and some worry the economy is weakening too much.  Growth in retail sales, a bigger part of the Chinese economy than exports, was weaker than expected in July and close to a 14-year low. Factory output and other sectors also slowed...

"Trump’s advisers say the slowdown gives Washington leverage in the trade battle. ‘Their economy looks terrible,’ said Trump’s top economic adviser, Larry Kudlow, at a Cabinet meeting this month. But analysts closer to China say it is doing better than Americans might think. ‘A lot of this economic slowdown is really the result of an intended policy,’ said Tai Hui of J.P. Morgan Asset Management in Hong Kong. ‘The overall growth momentum is still relatively healthy and certainly broadly in line with the authorities’ plans.’”

— Bill aims to counter Chinese foreign investments. The Wall Street Journal's Josh Zumbrun and Siobhan Hughes: “The U.S. is finalizing plans to double funding for big infrastructure projects around the world, seeking to counter China’s growing influence. Congress is working to resolve the last barriers to passing a bill that would boost the U.S.’s role in international development. It would combine several little-known government agencies into a new body, with authority to do $60 billion in development financing — more than double the cap of the current agency that performs that function. The measure, supported by the Trump administration, easily passed the House this summer; it faces its biggest test in the Senate. ... The bill’s momentum reflects growing bipartisan concern in Washington about the scale of China’s ambitions to restructure global trade routes so that all roads lead to Beijing. Senators have become especially concerned with China’s global investment plan known as the One Belt, One Road Initiative.”

— Europe suggests settlement over beef. Reuters: “The European Commission proposed on Monday opening formal talks with the United States to address U.S. concerns that its farmers do not get a fair share of  Europe’s beef market. ... The Commission said on Monday that it was asking EU countries for a negotiating mandate to settle the long-standing World Trade Organization dispute over U.S. beef exports.”

— Iran may seek to mitigate U.S. sanctions. Bloomberg News's Ellen Milligan: “Discounts, bartering and smuggling are among the tactics Iran may lean on to keep almost 800,000 barrels a day of its oil exports flowing after U.S. sanctions resume in November. Iran’s Oil Minister Bijan Namdar Zanganeh alluded to this toolbox, which was used in the past, when he said Iran will find ‘other ways’ to keep its crude in the market. The measures won’t be enough to blunt the full impact of sanctions on oil exports, which have already slumped to the lowest level since March 2016. . . . Almost 200,000 barrels a day of the country’s post-sanctions oil sales could be undisclosed, according to Robin Mills, chief executive officer of consultancy Qamar Energy in Dubai. ‘Exports at these levels will be important in cushioning the financial blow to Iran, but will not have a major impact on the world market.’”


The Kushner family real estate firm has amassed over half a million dollars in unpaid fines for various New York City sanitation and building violations, with much
The Associated Press

GOP scrambles to avoid shutdown.  Politico's Rachael Bade and John Bresnahan: "Congressional Republicans return to Washington on Tuesday with a singular goal for September: avoid a government shutdown. But with [Trump] in the Oval Office, that’s easier said than done.  For months, GOP leaders have been laying the groundwork to avoid a shutdown on Sept. 30, the end of the fiscal year and just five weeks before Election Day. Speaker Paul Ryan (R-Wis.), Senate Majority Leader Mitch McConnell (R-Ky.), House Majority Leader Kevin McCarthy (R-Calif.) and even Vice President Mike Pence are already quietly lobbying Trump to postpone a shutdown fight over his border wall with Mexico until after the election...

"But any carefully laid plans could be for naught, as Trump receives contradictory advice from rival factions in the West Wing. Some White House officials are confident that Trump will sign spending bills keeping the government open. A smaller subset of immigration hard-liners inside the White House, however, are encouraging Trump to fight on the border wall issue now, while Republicans still control Congress. These officials think the House majority is already gone — and they have encouraged Trump to hold the line for his border wall and secure a win while he can."

House Republicans weigh dropping Tax Cuts 2.0. Bloomberg's Laura Davison and Kaustuv Basu: "House Republicans had planned to use a second phase of tax cuts to force Democrats into a difficult vote ahead of mid-term elections. Now, party leaders may drop the effort, fearing it could backfire by antagonizing voters in some hotly-contested Congressional districts. The proposal would make the individual changes in last year’s overhaul permanent -- including the $10,000 annual cap for state and local tax deductions, one of the law’s most disputed provisions. That would put Republican lawmakers in high-tax states like New York, New Jersey and California in the tricky position of either supporting the cap, or voting against tax cuts backed by their party. Largely because of the SALT cap dilemma, House Republicans are hitting the pause button on 'Tax Reform 2.0' legislation, according to three GOP aides who requested anonymity to speak about the matter. The lawmakers want to weigh the political benefits and risks of a vote on the bill in the coming weeks, and assess if they have enough support to pass it."

Tech CEOs face Hill grilling. The Post's Tony Romm: "Facebook and Twitter will dispatch top executives to Capitol Hill this week to try to assuage lawmakers who fear that Russian propaganda and political censorship continue to plague the world’s most popular social media sites. The back-to-back House and Senate hearings scheduled for Wednesday illustrate the new political reality for Silicon Valley, as Democrats and Republicans alike increasingly seem willing to regulate the industry for the way it moderates content online -- and eager to subject its once-untouchable executives to intense public scrutiny. The political gauntlet begins in the Senate, where the Intelligence Committee will host Sheryl Sandberg, the chief operating officer of Facebook, and Jack Dorsey, the chief executive of Twitter. They'll testify -- their first time ever on Capitol Hill -- at a hearing on foreign governments that spread misinformation over social media."

Uneven growth complicates Republican map.  WSJ’s Siobhan Hughes and Dante Chinni: "Data assembled for The Wall Street Journal by the Institute of International Finance shows that the economy is booming in some GOP-held battleground districts. At the same time, a sizable number of competitive districts—almost all currently Republican—are vulnerable to new tariffs, a new cap on deductions for state and local income taxes, or a jobs picture worse than the national average...

An economic-health index created by IIF to measure how districts are doing overall found that 172 of the 435 House districts are doing as well or better than the nation at large. Those districts account for only about one-third of the 65 districts that are on the GOP’s endangered list, according to Cook Political Report... The IIF data shows about two-thirds of the 65 endangered Republican seats have seen employment growth slow. In these places it may feel like times are good—but winding down."


— Worries over developing countries' debt. The Washington Post's David J. Lynch: “The loss of investor confidence in the Turkish lira, which has surrendered more than 40 percent of its value this year, is only a preview of debt problems that could engulf countries such as Brazil, South Africa, Russia and Indonesia, some economists say. ... For now, few experts think that a broader crisis is imminent, though Argentina last week asked the International Monetary Fund to accelerate a planned $50 billion rescue as the peso crashed to a historic low. But the danger of a financial contagion that could hit Americans by crushing U.S. exports and sending the stock market plunging should be taken more seriously in light of a massive increase in global debt since the 2008 downturn, the economists said. ... Last week, Moody’s cut its credit ratings on 20 Turkish financial institutions. The ratings agency cited ‘a substantial increase in the risk’ that banks would struggle to finance normal operations. The prospect of a new debt crisis is striking because the world has already seen two in the past 10 years.”

— A rocky fall for stocks? WSJ's Akane Otani: “U.S. stocks are back at all-time highs after a dizzying August rally, prompting some investors to fear a reckoning heading into what historically has been a weak stretch for markets. ... Global-fund managers are holding higher-than-average levels of cash in their portfolios. Shares of utilities and real-estate firms, considered bond-like because of their dividend payouts, have started to rebound over the past couple of months. And firms including Morgan Stanley and RBC Capital Markets have recommended unloading technology stocks, the best-performing S&P 500 sector in 2018. ... ‘Traditionally this is a season of a lot of volatility and uncertainty to begin with, and we certainly have the ingredients to experience that,’ said Katie Nixon, chief investment officer of Northern Trust’s wealth management business. ‘Things are getting a little bit tougher from a relative perspective as we get into 2019.’”

The dollar consolidated near a one-week high against a basket of currencies on Monday as tensions around global trade and a continued selloff in emerging markets fueled demand for the greenback.

— Top banker arrested in Britain. Bloomberg News's Franz Wild: “A top official from a U.K. crime agency dropped a potential bombshell during a speech Monday, telling a crowd of lawyers that the head of the London unit of a foreign bank had been arrested on suspicion of bribery. Nigel Kirby, the deputy director of the National Crime Agency’s economic crime unit, said in a speech to a conference in Cambridge that the case has been referred to the prosecution services after a seven-month investigation found possible corruption. The bank’s customer relations manager in London was also arrested, Kirby said. Kirby’s comments, during a speech on white-collar crime, didn’t identify the bankers or when they were arrested and there are literally hundreds of finance professionals in London who might fit the description.”

— WPP has a new CEO. WSJ's Nick Kostov: “WPP PLC named Mark Read as chief executive Monday, tapping a company veteran in a push for continuity at the world’s largest ad firm following the departure of founder Martin Sorrell. In an interview, Mr. Read said he doesn’t plan to merge or sell any of WPP’s marquee creative agencies, like Young & Rubicam and J. Walter Thompson, focusing instead on how to make them work more closely with the company’s stable of digital advertising and data science firms. ... WPP is under pressure from investors and big clients — such as Ford Motor Co., and Unilever PLC — to make the process of buying, creating and measuring the effectiveness of ads more simple and transparent. That is difficult for a holding company like WPP that has based its business model on pitting agencies against each other to win clients.”

— Chinese billionaire leaves U.S. after arrest. The Post's Danielle Paquette: “Chinese billionaire and tech mogul Richard Qiangdong Liu returned to China on Monday, three days after Minneapolis police arrested him on suspicion of sexual assault. Liu, the 45-year-old chief executive and founder of e-commerce giant, was released Saturday from the Hennepin County Jail, with booking records showing no posted bail. . . . The Minneapolis Police Department had not yet decided Sunday if it would bring charges against Liu, spokesman John Elder said. The alleged assault would be a felony, authorities said, declining to provide further detail. Liu was in the United States on business when he faced questions about an ‘unsubstantiated accusation,’ according to a statement posted Sunday to the Chinese social network Weibo.”

Early Lead
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