Congressional Republicans may be nervous about President Trump’s major escalation of trade hostilities with China, but they don't seem ready to do anything about it.
In Congress, “people are in a wait-and-see mode right now,” one Senate Republican aide tells me. “That probably leaves any legislative effort to a new Congress, if it happens at all.”
Officially, Sens. Bob Corker (R-Tenn.) and Pat Toomey (R-Pa.) are still looking for an opportunity to advance their bill to require congressional approval of any tariffs imposed in the name of national security, another aide says. That would apply to the metals' tariffs and duties the administration is considering for auto imports.
Sen. Rob Portman (R-Ohio) has his own version of legislation, which hands the power to authorize those tariffs to the Department of Defense. Advocates of a congressional check on Trump agree the prospects for the proposals this year are remote, however. And neither measure touches Trump’s tariffs on Chinese imports, which rely on a different legal authority, the so-called Section 301.
Here's why Republicans seem so reticent to do anything: Over the summer, some objected to steel and aluminum tariffs being slapped on allies like Canada and the European Union. But they are currently loathe to confront Trump for taking on China, which they agree has engaged in abusive trading practices, even if they question whether the president’s escalating tariffs are the best remedy, according to several GOP aides.
The stand-down by Trump’s own party on Capitol Hill all but ensures him an unobstructed path to continue pressing his offensive against Beijing.
Senate GOPers feinted toward restricting Trump’s ability to level tariffs over the summer when the administration was waging trade battles with friends and foes alike. But the effort stalled short of passing legislation to tie his hands. Since then, the politics of the issue have shifted significantly.
As the New York Times noted earlier this week, Republican voters are siding overwhelmingly with Trump on tariffs over stalwart free-traders in the congressional GOP. In polling, the Times found that 73 percent of Republican voters support both the GOP tax overhaul and the administration's tariffs, making it harder before the midterms for lawmakers to break with their base.
The rift among Republicans is hurting business interests trying to avert a widening U.S.-China trade war. With lawmakers waving off a legislative response, lobbyists for retailers, manufacturers, farmers and others caught in the tariff crossfire are taking their case to voters, hoping grass-roots opposition will compel the administration to back down.
“Even most business groups would agree that China has been a bad actor on trade policy,” says David French, the National Retail Federation’s senior vice president for government relations. “Our disagreement isn’t over attacking Chinese abusive trade practices. Our concern is that tariffs are the wrong way to do it.”
The group is staging town-hall events this week in Chicago and Nashville and will also focus on Indiana, Ohio, and Washington state, coalition spokesman Matt McAlvanah says. “If we create a climate where it’s easier for Members to pass bills to curtail the president's authority, then great,” he says. “But the shoe-leather lobbying hasn’t been as effective as a full-fledged, organized, grass-roots effort.”
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— No way out of U.S.-China trade war? AP's Paul Wiseman: "The path to peace in a trade war between the United States and China is getting harder to find as the world’s two biggest economies pile ever more taxes on each other’s products. 'It’s more likely than not that these tariffs will be put in place for a long time,”'said Timothy Keeler, a partner at the Mayer Brown law firm and former chief of staff at the Office of the U.S. Trade Representative... The Americans and Chinese haven’t held high-level talks since June, raising doubts about whether a resolution can be reached anytime soon."
China plans to cut import taxes. Bloomberg: "China is planning to cut the average tariff rates on imports from the majority of its trading partners as soon as next month, two people familiar with the matter said, in a move that will lower costs for consumers as a trade war with the U.S. deepens. Premier Li Keqiang said Wednesday that China would further reduce the tariffs, without elaborating. By cutting duties on goods even as it retaliates against [Trump’s]trade war with higher charges on some U.S. goods, China is following through on long-stated goals to boost imports. The move comes as the nation is trying to stimulate domestic consumption to support a slowing economy, and follows similar cuts to tariffs in July on a wide range of consumer goods."
WTO warns stakes could rise. Reuters: “The trade dispute between the United States and China could well expand into other areas given the significant ‘ammunition’ the two countries have, the director-general of the World Trade Organization said on Wednesday. Speaking at an event in Rio de Janeiro against the backdrop of growing trade tensions between Beijing and Washington, Roberto Azevedo said the WTO has focused on trying to increase dialogue between the two countries. ‘I’m very concerned,’ he said at the event. ‘To be honest, I don’t think it’s over. They have lots of ammunition and it can expand to other areas beyond just tariffs ... and trade.’”
— Donohue: Trade war isn't here yet. Reuters: “U.S. Chamber of Commerce President Tom Donohue said on Wednesday that the Trump administration could still avoid a full-blown global trade war that erodes business confidence if it seals a trilateral NAFTA trade deal and makes progress on European trade issues in the coming weeks. ‘The single biggest threat facing the economy right now is the potential for a real trade war. I don’t think we’re there right now,’ Donohue told a breakfast organized by the Christian Science Monitor...
"He added that trade differences with China will take longer to resolve, but he does not believe that the Trump administration wants its tariffs on Chinese goods to become permanent. ‘No, I don’t think the tariffs will be permanent,’ Donohue said, adding that this would ‘screw the economy’ in ways similar to the 1930s Smoot-Hawley Tariff, referring to a protectionist law that raised thousands of U.S. tariffs and which many economists believe exacerbated the Depression.”
Dimon: It's a trade skirmish. CNBC's Holly Ellyatt writes that JP Morgan Chase CEO Jamie Dimon played down the dispute so far. "'It's not a trade war, I call it a trade skirmish,' he told CNBC... 'The American government, our president, is right to raise the issues (about fair trade practices) with China,' he said, although he added that he 'may have used a different strategy to go about fixing it... It's unclear where we're going to get to.'"
— Alibaba chief backtracks on jobs pledge. The Post's Danielle Paquette: "Chinese technology titan Jack Ma emerged from a meeting at Trump Tower last year with a bold promise: His e-commerce giant Alibaba would help Donald Trump create a million American jobs. But now Ma has retracted the pledge, saying the escalating trade war has wrecked it. 'The promise was made on the premise of friendly U.S.-China partnership and rational trade relations,' the celebrity billionaire told Chinese state media Wednesday. 'That premise no longer exists today, so our promise cannot be fulfilled.' Analysts say this retraction would have been a loss for America’s workforce — if Ma’s offer had been serious in the first place."
— Prices of auto parts likely to rise. The Wall Street Journal's Trefor Moss and Chester Dawson: “The Trump administration’s latest tariffs will hammer Chinese auto-parts makers, likely raising prices for their U.S. customers, who have few options to buy key parts elsewhere, manufacturers and industry experts say. ... The automotive industry has become so globalized, and Chinese suppliers so dominant at certain points in the supply chain, that there are few immediate and affordable alternatives to China for some materials and parts, industry experts say. More than 1,000 Chinese companies export auto parts to the U.S., shipping axles, fog lamps, brake rotors and more to U.S. auto companies and parts stores. ... Those tariffs could increase prices for car owners looking to replace worn-out components—some of which, such as brake rotors, are built mostly in China. ”
— Still no deal with Canada. Bloomberg News's Josh Wingrove and Jenny Leonard: “Nafta talks are picking up again but a deal is unlikely to be reached this week ... increasing the odds the latest deadline will be missed amid [Trump’s] threat to freeze Canada out. Canadian Foreign Minister Chrystia Freeland, after her first in-person meeting in more than a week with U.S. Trade Representative Robert Lighthizer in Washington on Wednesday, said talks are still productive. ... The two countries remain at odds on core issues, including dairy and dispute panels. ... ‘It is growing increasingly unlikely that you can get text to the Congress by Sept. 30,’ said Jennifer Hillman, a professor of law at Georgetown University and former general counsel to the Office of the U.S. Trade Representative. It’s even more unlikely to proceed quickly with only Mexico, she said. ‘Canada does still have some leverage.’”
Trudeau says he won't be rushed. Reuters's David Lawder and David Ljunggren: “Canadian Prime Minister Justin Trudeau said on Wednesday he wanted to see flexibility from the United States if the two sides are to reach a deal on renewing NAFTA, which Washington insists must be finished by the end of the month. ... ‘We’re interested in what could be a good deal for Canada but we’re going to need to see a certain amount of movement in order to get there and that’s certainly what we’re hoping for,’ Trudeau told reporters in Ottawa.”
Canadian dairy farmers warn Trudeau. Bloomberg News's Greg Quinn: “As Nafta talks intensify in Washington, Canada’s dairy farmers implored [Trudeau] not to trade access to the country’s protected milk market for a deal with the U.S. Pierre Lampron, president of the Dairy Farmers of Canada, says the industry has already lost $193 million in annual business from concessions in past trade agreements and won’t accept further losses. ‘The whole work of our lives seems to have been reduced to a bargaining chip,’ Lampron told reporters Wednesday in Ottawa. ‘The dairy sector can’t once again be negatively impacted by another trade deal. Enough is enough.’”
— U.S. current-account deficit narrows. WJS's Sharon Nunn: “The U.S. current-account deficit, a measure of the nation’s trade and financial flows with other countries, narrowed in the second quarter on ramped-up goods and services exports. The trade gap narrowed to $101.46 billion in the second quarter from $121.71 billion in the first quarter, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a wider $103.2 billion deficit.”
- “‘I don’t have an attorney general’: Trump escalates his attacks on Jeff Sessions.” The Post's John Wagner and Matt Zapotosky.
- “Trump on Manafort: ‘I believe that he will tell the truth.’” Politico's Ramsen Shamon.
“Trump feels angry, unprotected amid mounting crises.” The Post’s Ashley Parker and Phil Rucker.
“Michael Flynn to be sentenced Dec. 18.” Politico’s Brent Griffiths.
— Wells Fargo tried to hire Gary Cohn. NY Post's Kevin Dugan: "Gary Cohn rebuffed overtures from Wells Fargo directors to be its next chief executive earlier this year, The Post has learned. Board members at the scandal-ridden bank had been pursuing the Wall street banker — who stepped down as [Trump’s] top economic adviser in March — as they explored options to replace CEO Tim Sloan, four sources familiar with the talks told The Post. Cohn, a former president of Goldman Sachs who was long seen as the heir apparent to Goldman CEO Lloyd Blankfein, met with Wells Fargo board members at least once around March or April this year — just weeks after he submitted his resignation as director of the National Economic Council, one source told The Post. 'They approached him,' the source said. 'He turned them down.'"
— Trump picks Nellie Liang for the Fed. The Post's Heather Long: "Trump nominated economist Nellie Liang to fill the final open seat at the Federal Reserve on Thursday evening after he returned from a trip to survey the damage from Hurricane Florence. Liang will need Senate confirmation to become a Fed governor, a process that could take months. Liang is a senior fellow at the Brookings Institution and is no stranger to the Fed, having spent three decades there as a research economist and then director of the Fed’s Office of Financial Stability, which was created after the 2008-2009 financial crisis to help the central bank better monitor risks of another major crisis. She worked closely with the Obama administration on stabilizing the financial system and helped administer the first bank 'stress tests' in 2009 to test whether large banks could handle another severe downturn."
The nod earned wide praise.
From the WSJ's Greg Ip:
This is another inspired choice by Trump for the Fed. Nellie Liang's skillset, which is in financial stability, is especially valuable, and intriguing, given chairman Powell's interest in that part of the Fed's mandate. https://t.co/HXqpP9r7w6— Greg Ip (@greg_ip) September 19, 2018
From University of Michigan economist Justin Wolfers:
Yet more evidence that Trump is making smart, sober, serious picks for the Federal Reserve Board. All of his appointments suggest he understands the importance of putting good economists in charge of monetary policy. (If only he applied the same approach to trade policy!) https://t.co/kYExagvyMA— Justin Wolfers (@JustinWolfers) September 19, 2018
From the NYT's Neil Irwin:
The Trump administration track record of appointing qualified, pragmatic people to the Fed board of governors continues. https://t.co/y5NlU0THS3— Neil Irwin (@Neil_Irwin) September 19, 2018
— Jay Powell at a crossroads. The new Bloomberg Businessweek cover explores how the Fed chair is parrying Trump's barbs in part by courting support from Congress. From Rich Miller and Craig Torres: "This is a crucial juncture for the 104-year-old central bank and its new chair. Not only is Powell having to manage the end of a decade of easy moneythrough a series of rate hikes—a delicate maneuver that, if done poorly, could tip the country into recession or risk unleashing rampant inflation—but he’s also dealing with a mercurial president who is riding a hot economy and has repeatedly gone public with his distaste for high rates. The next scuffle could come on Sept. 26, when the Fed is expected to raise rates again, the sixth hike since Trump became president but the first hike since he started grousing.
"Trump can’t fire Powell under the law, but he could try to remove him for cause—a very high bar that scholars say would have to go way beyond a mere policy disagreement. A bigger risk is that Trump’s relentless attacks could erode the Fed’s support in Congress and spur legislative efforts to hem it in by hardcore conservatives and populist liberals already suspicious of its power. It all amounts to a stress test for Powell, not only as a central banker but as a politician."
— Bank of America: “Great Bull” is over. CNBC's Jeff Cox: “The ‘Great Bull’ market that came after the financial crisis is dead due to slowing economic growth, rising interest rates and too much debt, according to a Bank of America Merrill Lynch analysis. In its place will be one that features lower returns, the bulk of which will be concentrated in assets that suffered during the recovery, Michael Hartnett, BofAML's chief investment strategist, said in a wide-ranging note looking at markets 10 years after the collapse of Lehman Brothers.”
— Profit repatriation slows. WSJ's Theo Francis: "U.S. companies repatriated $169.5 billion in foreign profits in the second quarter—more than in most recent periods, but underscoring a cautious approach to shifting huge sums across borders. The figure marks a decline from a revised $294.9 billion in the first quarter, the three months immediately after Congress passed sweeping tax legislation... Policy makers backing the December tax overhaul predicted it would lead companies to bring to the U.S. much of the estimated $2.7 trillion they had stockpiled offshore at least in part to avoid U.S. taxes. In turn, they argued, companies would invest much of the money in U.S. operations and jobs."
— Thiel-backed fund makes a killing from pot stock. Bloomberg News's Brandon Kochkodin, Jen Skerritt and Craig Giammona: “The massive surge in pot stock Tilray Inc. has delivered a multi billion dollar windfall for a little-known private equity fund backed by investor Peter Thiel. Privateer Holdings Inc., a Seattle-based fund started seven years ago to focus on the marijuana business, holds 76 percent of Tilray, a stake now worth more than $12 billion after the stock soared more than 10-fold from its July public offering. Tilray, a Canadian company with just $20 million in revenue last year, has benefited from the surge in demand for pot stocks as Canada gears up to legalize the drug next month, and companies including Coca-Cola Co. and Diageo Plc show interest in the sector.”
Tilray took plenty of other investors on a wild ride Wednesday, Bloomberg notes: "Almost $6.5 billion worth of Tilray shares traded hands on U.S. exchanges Wednesday, second only to Amazon.com’s $7.6 billion -- a stock almost 47 times the size of Tilray’s $20 billion market valuation. The weed company finished the day bigger than 40 percent of the companies in the S&P 500."
— Largest public pension fund considers hiring from China. WSJ's Dawn Lim and Heather Gillers: “An official with China’s foreign-exchange regulator is the lead candidate to become next investment chief of the largest U.S. public pension fund... The California Public Employees’ Retirement System has offered the job to Ben Meng of China’s State Administration of Foreign Exchange... Mr. Meng previously worked for the California pension fund earlier this decade. ... The selection of Mr. Meng would place a familiar face in charge of $360 billion in assets managed for police officers, firefighters and other public workers across the state of California. Mr. Meng spent seven years at the system, known by its abbreviation Calpers, in investment roles. He left in late 2015 and joined the Chinese government agency.”
— Nike sales surge. Reuters: “Nike Inc has sold out 61 percent more merchandise since the controversial ad campaign featuring former NFL player Colin Kaepernick appeared earlier this month... Kaepernick, who sparked a national controversy by kneeling during the national anthem, first tweeted the ad on the Labor Day weekend, which immediately sparked demands for a boycott of the company’s products. ... But [Thomson Reutersresearch shows] the world's largest sportswear maker sold out far more items between Sept. 3 and Sept. 13 than in the 10-day period before the ad came out.”
— Issa tapped to head trade agency. Politico's Rachael Bade: "Trump on Wednesday named retiring Rep. Darrell Issa to head the U.S. Trade and Development Agency, setting up what could be a contentious confirmation battle in the Senate. As former House Oversight Committee chairman, the nine-term congressman built a name for himself by dogging the Obama Administration for years. He turned the IRS upside-down by accusing top officials of targeting conservative groups for political purposes, led the charge to hold former Attorney General Eric Holder in contempt, and accused President Barack Obama and Hillary Clinton of trying to covering up the Benghazi, Libya, terrorist attacks in 2012. That’s left him virtually friendless on the left, which could be problematic for his confirmation in a chamber with a very slim GOP majority.
— Warren questions Mulvaney meeting with donors . American Banker's Kate Berry: "Sen. Elizabeth Warren, D-Mass., has raised ethical questions about a recent private meeting where acting Consumer Financial Protection Bureau Director Mick Mulvaney reportedly discussed the midterm elections with Republican donors and party officials. Warren said Mulvaney's appearance at the closed-door event in New York City on Sept. 8 could violate the Hatch Act, which prohibits executive-branch officials — with some exceptions — from engaging in certain forms of political activity.
"At the event, Mulvaney and Republican National Committee Chairwoman Ronna McDaniel reportedly discussed GOP challenges in the midterms, including voter antagonism toward [Trump], and mentioned the prospect of Sen, Ted Cruz, R-Texas, possibly losing his re-election bid... Warren asked Mulvaney to respond by Sept. 29 to a list of 17 questions."
— European antitrust regulators probe Amazon. The Post's Tony Romm and Abha Bhattarai: "Europe’s antitrust regulators have opened a preliminary probe of Amazon.com to see whether the e-commerce giant has stifled smaller competitors who sell clothing, toys and other goods through its website, marking the region’s latest inquiry into the business practices of a U.S. tech giant. The concern at hand is whether Amazon’s use of sales data from third-party merchants gives it a leg up in selling its own products, said Margrethe Vestager, the European Union’s competition chief, on Wednesday. "
— Three charged in $364 million Ponzi scheme. Reuters: "Federal prosecutors have accused three men of portraying themselves as investment professionals and using a phony portfolio of consumer debt to defraud hundreds of unwary investors out of tens of millions of dollars as part of a $364 million Ponzi scheme... The indictment says that from 2013 onward, the men offered individuals, family offices and funds an opportunity to invest in consumer debt portfolios that they claimed generated profits by collecting debt payments or by selling the debt to third parties. Instead of deploying the investments as promised, the defendants made payments to earlier investors while funding their own lavish lifestyle, prosecutors said."
— Bank of America hit with $30 million manipulation penalty. Reuters: "U.S. regulators ordered Bank of America on Wednesday to pay a $30 million civil penalty for what it called attempted manipulation of the swaps and derivatives benchmark. The Commodity Futures Trading Commission said in a statement that Bank of America from January 2007 through December 2012 made false reports and attempted to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix, a leading global benchmark."
- The Heritage Foundation hosts an event on “free market fairness.”
- The Tax Policy Center organizes a discussion on “costs and benefits of tax regulations.”
- The Securities and Exchange Commission organizes an investor roundtable in Baltimore.
From The Post's Ann Telnaes: “Senators haven’t learned anything from the Thomas-Hill hearings.”
After days of flooding and power outages, North Carolina residents look for help:
Pyongyang holds mass games spectacle with South Korean leader as special guest:
Chevy Chase: “I'm proud to be who I am.”