Trump: Trade talks with China have 'already begun' | More U.S. sanctions on EU proposed
The U.S. Trade Representative released a $4 billion list of additional EU goods that may be targeted with retaliatory tariffs as part of a long-running battle at the WTO over subsidies given to Airbus and Boeing. The list, which includes Italian cheese, Scotch whisky, meats, chemicals and metals, and adds to products valued at $21 billion that the USTR had identified in April as facing possible tariffs.
— The U.S. proposed another $4 billion in tariffs against EU goods. Cheese, whiskey, and pork are among the products that may be hit with duties in retaliation against EU aircraft subsidies. The dispute stretches back 14 years, with Washington and Brussels accusing each other of unfairly subsidizing Boeing and Airbus, respectively. The Office of the U.S. Trade Representative (USTR) said yesterday that it would consider tariffs on a further 89 European items with an annual trade value of $4 billion. That is an expansion of earlier tariff threats, which would affect another $21 billion worth of goods. The EU has also threatened tariffs on the U.S. They may go into effect this year, because the WTO could decide in the coming months whether the tariffs can be introduced and how large they can be.
Link to the additional retaliation targets. The public will have a chance to weigh in on the newly added products at a hearing on Aug. 5.
— U.S./China trade policy update:
- U.S., China officials are meeting. President Trump told reporters at the White House on Monday evening that trade talks with China had "already begun," explaining that U.S. and Chinese officials "are speaking very much on the phone but they're also meeting." Trump said Saturday after meeting with Xi that, "We're going to work with China on where we left off, to see if we can make a deal.”
- Li Keqiang, China’s premier, said the government is bringing forward by a year a plan to scrap foreign ownership limits on some financial-services firms. Overseas investors will now be allowed majority shares in Chinese securities, futures and life-insurance companies from 2020. China, under international pressure, wants to prove it is opening its markets up to foreign firms. China’s Li says will use RRR cuts, other tools to help businesses. China will use reserve requirement ratio (RRR) cuts and other financing efforts to support small and private firms in a bid to address downward pressure on the Chinese economy, Li said at the World Economic Forum in Dalian. China is aiming for a one percentage point reduction in RRR for small firms in order to lower their real financing costs, Li said. The country so far has not relied on its money supply despite downward pressure on the economy, he observed. He also said that China will make its financial sector more open and make its regulations in that area more effective.
- Reuters: Locked out of China, U.S. pork producers sniff out new buyers. U.S. hog farmers lost hundreds of millions of dollars in export sales to China and Mexico after President Donald Trump launched his trade wars last year. But the sector has largely offset those massive losses by garnering new customers in smaller markets from Colombia to Vietnam, according a Reuters analysis of data from the U.S. Meat Export Federation and USDA. Link for details.
— USDA: Prevent-plant claims could exceed $1 billion. Farmers unable to plant commodities this year could file more than $1 billion in insurance claims, according to USDA Undersecretary for Farm Production and Conservation Bill Northey during a call with reporters on Monday.
This year, prevent-plant acres could climb above 10 million acres, Northey said. Prevent-plant acres have reached as high as 10 million in the past and claims this year "could easily exceed that high range,” Northey predicted.
USDA already has paid out $151 million to farmers with prevented planting claims, most of which cited flooding and excess moisture. A complete tally won’t be known until later this month.
Farmers hoping for additional forage should not plan on USDA moving up the harvest date for cover crops a second time this year to before Sept. 1, Northey stressed.
Meanwhile, there will be special sign-up periods for USDA’s Environmental Quality Incentives Program (EQIP) in eight states to assist farmers with cover crops. This includes Michigan, Minnesota, Missouri, Nebraska, Ohio, South Dakota, Kansas, and Oklahoma.
Cover crops will be eligible for trade mitigation payments, and USDA expanded the window to harvest them while still being eligible for prevented planting insurance. Keith Gray, chief of staff at the Risk Management Agency, said officials are considering making that change permanent.
Leeway on cover crops begins in 2020. USDA, carrying out instructions from the 2018 Farm Bill, has developed new guidelines that will give producers more flexibility, beginning with the 2020 crop year, on when to terminate cover crops while keeping crop insurance coverage.
— Other items of note:
Chinese leader Xi Jinping asked Trump to ease North Korea sanctions. China’s president made the request during the G20 summit last week, the country’s foreign minister said today. A day later, Trump met Kim Jong Un at the Demilitarized Zone, becoming first sitting U.S. president to step across into North Korea.
Sens. Kamala Harris (up 9 points) and Elizabeth Warren (up 8 points) made steep gains after the debate, a new CNN poll by SSRS shows, with Joe Biden's lead shrinking to 5 points. Link for details.
Armyworms continue to invade China, India, Taiwan, and the Philippines. Since the inch-long worm made it to Africa in 2016, it’s done billions of dollars in damage to crops. Now it’s near the North China Plain, the country’s top grain-producing region.
Environmental groups sued the U.S. Army Corps of Engineers Monday to rescind permits the agency has granted for the Keystone XL pipeline.The plaintiffs said the government violated water and procedural laws in approving the Canadian oil-sands project.
The White House is not doing enough to ensure billions of dollars in disaster aid aren’t being misspent, according to a recent GAO report (link). Departments including USDA weren’t given enough time or direction to develop plans for preventing improper payments.
— Markets. The Dow on Monday gained 117.47 points, 0.44%, at 26,717.43. The Nasdaq rose 84.92 points, 1.06%, at 8,091.16. The S&P 500 finished up 22.57 points, 0.77%, at a record 2,964.32.
An economist and adviser to President Trump said Federal Reserve Board Chairman Jerome Powell should work with the White House and lower interest rates, arguing that the board should not be independent of the White House. Link for details.
OPEC+ extends cuts. Oil prices are higher today, rising modestly in early European trading before worries set in that demand could ease amid hints of a slowdown in the global economy. It follows yesterday's agreement between OPEC members, Russia and other producers, an alliance known as OPEC+, that will extend the group's production cuts of 1.2 million barrels per day until March 2020. "I have no doubt in my mind that U.S. shale will peak, plateau and then decline like every other basin in history," Saudi Oil Minister Khalid Al-Falih told reporters. "Until it does, I think it's prudent... to keep adjusting to it."
U.S. suburbs swell again as a new generation escapes the city. Rising housing costs have slowed the growth of the nation’s most popular urban centers. That is speeding an exodus of residents to suburban communities, which now account for 14 of the 15 fastest-growing cities in the U.S. with populations over 50,000, causing strains along the way. Millennials priced out of popular big cities are flocking to Frisco, Texas, Nolensville, Tenn., Lakewood Ranch, Fla., and Scottdale, Ga. Link to WSJ article.
Australia’s central bank cut interest rates by a quarter-point, to a record low of 1%. The bank also cut rates in June. It is concerned about an economic slowdown in China, which is Australia’s biggest trading partner, and a weak housing market and low consumer spending. The government added a fiscal stimulus to the monetary boost, with planned income-tax cuts.