Oil tankers attacked again in Gulf of Oman, fueling crude oil prices
— Update on U.S./Mexico:
- Mexico’s foreign minister announced that troops would “rapidly” start to be deployed to the country’s southern border. Last week Mexico signed a deal with the U.S. to bolster its border with Central America. The deal averted a threatened 5% tariff on Mexican goods. The sale of the Mexican presidential plane and other aircraft will fund the tighter migration control.
- President Trump said Wednesday that Mexico is doing what they need to do to stop the flow of Central American migrants to the U.S. “If Mexico does a great job, then you’re not going to have very many people coming up,” Trump told reporters. “If they don’t, then we have phase two. Phase two is very tough. But I think they’re going to do a good job.”
- Sen. Tammy Baldwin (D-Wis.) is calling on Trump to release details of his promised ag trade deal with Mexico. She sent a letter to the White House noting that Mexico has denied any such side-deal to buy more U.S. farm goods and that Trump’s top agricultural trade officials said they have no knowledge of an agreement. Baldwin said farmers and food processors in her state “need to know the truth about this supposed, secret agricultural deal in order to run their businesses.” Link to letter.
- USDA Sec. Sonny Perdue, when asked about Trump’s tweet that Mexico agreed to significantly boost imports of U.S. farm products, said: “Those discussions were at a very high level. I don’t have the details of that.”
— U.S./China trade policy update:
- Trump upbeat on deal with China. President Trump again expressed confidence Wednesday that the U.S. and China will be able to reach a trade deal, primarily because Beijing is suffering under the weight of his 25% tariffs and will soon be desperate to find a way out. “I have a feeling that we’re going to make a deal with China, because I really don’t believe that China wants to continue the problem that they really caused themselves,” the U.S. president told reporters at the White House. He also said “the United States is making more money than they’ve ever made ever, ever before from China,” and “our people are not paying for it.” That Trump assessment has been repeatedly called off the mark by many observers.
- Trump says no deadline on boosting tariffs on China. President Trump is hoping for worthwhile discussions with Chinese President Xi Jinping at the G20 meeting later this month to stave off the possibility of new penalties against another $300 to $325 billion in Chinese goods. Asked Wednesday whether he had any deadline in mind for moving forward with those duties — which he threatened after talks stalled a month ago — he said there was none. "No, I have no deadline. My deadline is what's up here," Trump said, pointing to his head. "We'll figure out the deadline. Nobody can quite figure it out."
- U.S./China agree on timeframe for implementing WTO ruling on Chinese ag subsidies. China and the U.S. notified the World Trade Organization (WTO) they have agreed on a March 31, 2020 deadline for China to bring its ag subsidies for wheat and rice into compliance with a ruling by WTO's dispute settlement body (DSB). The decision, formally adopted in late April, found China provides "market price support" in excess of its WTO commitments for domestic production of the two ag commodities. The case dates to December 2016 when the U.S. initially requested a panel be established to adjudicate the issue. It was one of two high profile ag-related disputes with China that the U.S. has recently prevailed on — the second concerned China's administration of import tariff-rate quotas (TRQ) for corn, wheat and rice. China declined to appeal the rulings in both disputes, and is currently in consultations with the U.S. to determine a compliance timeframe for the TRQ ruling.
— Perdue to unveil new site for research agencies today. USDA Sec. Sonny Perdue will announce today where the new location will be for moving the Economic Research Service and the National Institute of Food and Agriculture outside of their current D.C.-based buildings. The site could be leaked as Perdue will officially announce the site after he briefs employees of the agencies. The pending sites: Kansas City, the Raleigh-Durham area, and sites in Indiana, including Indianapolis or West Lafayette.
— Other items of note:
President Trump said that he would be open to hearing information about his political opponents for the 2020 presidential bid from foreign sources, and would not necessarily take that information to the FBI. “There’s nothing wrong with listening,” he told ABC News. “It’s called oppo research,” he added later, claiming it is a widespread practice.
Canadian Prime Minister Justin Trudeau is planning to travel to the White House June 20 to visit with Trump and discuss China and trade, two Canadian officials told Politico. The visit will likely include discussions of the upcoming G20 leaders summit.
U.S. Trade Representative Bob Lighthizer will testify next Wednesday at a House Ways and Means hearing on Trump’s trade agenda, following his appearance before the Senate Finance Committee on Tuesday on the same topic.
White House withdraws Commerce nominee. The White House announced Wednesday afternoon it has withdrawn Jeffrey Nadaner’s nomination to serve as assistant Commerce secretary for export enforcement. He was first nominated to fill the position to help lead the agency’s Bureau of Industry and Security early last year.
Trans-Pacific trade tensions are starting to land heavily at U.S. ports. Combined loaded container shipments through Southern California’s big port complex fell sharply last month, the Wall Street Journal reports (link), suggesting an abrupt end to the rush by shippers to import goods ahead of escalating tariffs flying between the U.S. and China. The neighboring Los Angeles and Long Beach ports are a key sign of the direction of seaborne trade because they make up the largest U.S. gateway for container imports, particularly goods from Asia. “The steep year-over-year decline signals that importers are pausing orders after pulling shipments forward in a pre-tariff push that has swamped warehouses and distribution channels in the region,” the article noted. The timing just ahead of the traditional peak shipping season “suggests weak prospects for growth this summer, and one forecast has already pared back projections for container imports in coming months.”
Uber announced that it is testing food delivery by drones in San Diego. At the moment the service is at a test phase with McDonald’s; later this year, it hopes to make it more widely available. It is not only Uber looking to the less-congested skies: Amazon wants to deliver packages by drones within months.
— Markets. The Dow on Wednesday closed down 43.68 points, 0.17%, at 26,004.83. The Nasdaq lost 29.85 points, 0.30%, at 7,792.72. The S&P 500 declined 5.88 points, 0.20%, at 2,879.84.
U.S. responds to suspected attack on oil tankers in Mideast. The U.S. Navy said it is assisting two oil tankers in the Gulf of Oman, after a suspected attack that sent oil prices higher. Tensions remain high between the U.S. and Iran just weeks after four oil tankers were attacked off the coast of the United Arab Emirates, for which America blamed Iran. Iran described the latest incident as an “accident,” as it evacuated crew from the stricken vessels. Reports of the attacks sent oil prices climbing on world markets.
Trump upped his criticism of Germany on Wednesday, threatening sanctions over Angela Merkel’s continued support for a gas pipeline from Russia and warned that he could shift troops away from America’s NATO ally over its defense spending.