USMCA vote late Nov.? | Biofuel tax incentives | Sessions to enter Ala. Senate race
In today's updates:
* China, U.S. agreed to remove additional tariffs in phases
Markets: The Bank of England today announces its latest interest rate decision and releases new economic forecasts — the first it's made since the departure date from the EU was delayed. Many expect the bank to cut its outlook for growth and inflation. The BOE will then enter a pre-election quiet period, but will re-emerge after the Dec. 12 vote with the question of who will replace Governor Mark Carney.
— U.S./China trade policy update:
- China, U.S. agreed to remove additional tariffs in phases, with both sides working to wrap up an interim trade agreement, the Chinese Ministry of Commerce said today. Ministry spokesman Gao Feng said China and the U.S. had extensive and serious discussions over the past two weeks to try to end their trade war, and the agreement would help stabilize the world economy. “In the past two weeks, top negotiators have had serious and constructive discussions on resolving issues of core concern. Both sides agreed to remove the additional tariffs imposed in phases as progress is made on the agreement,” Gao said. “If China and the U.S. reach a Phase 1 deal, both sides should roll back existing additional tariffs in the same proportion simultaneously.” He said that both sides could decide how much would be scrapped in the first phase based on the content of the agreement. “Economic and trade teams from both sides have been in constant communication. We hope to resolve our issues of core concern in an equal and mutually respectful manner,” he said.
- China is considering the removal of restrictions on poultry imports from the U.S., state-owned Xinhua News Agency reported today. This echoes other reports about the topics over the past few weeks.
- Gao had no information about where or when an agreement would be signed. Some market commentary on Wednesday noted a negative market impact when the talks may have been delayed until December, but most dismissed that has idle trader commentary because no official date had been previously detailed for talks between President Donald Trump and Chinese leader Xi Jinping. Chinese President Xi Jinping will visit Greece and Brazil from Nov. 10 to 15, and his itinerary does not at this date include a stop in the U.S. Xi will attend an emerging markets summit in Brazil and hold talks in Greece about a “development regarding the [Chinese-owned] Port of Piraeus”, according to vice foreign minister Qin Gang. “Besides the Port of Piraeus, the two sides will also talk about how to better build the Belt and Road Initiative,” Qin said. Trump and other U.S. officials have since suggested that a meeting could be held in Iowa, Hawaii or Alaska. A senior Chinese diplomat recently said a presidential meeting appeared “extremely important” for Trump but Beijing did not see it as critical, according to a source who attended the event. The Chinese diplomat also said Beijing felt that Trump was fixated on a “phase one” deal for domestic political purposes, according a source cited by the South China Morning Post.
- China and the U.S. announce an anti-opioid partnership. The collaborative effort to crack down on a fentanyl-smuggling operation based in China potentially paves the way for progress in resolving their trade war. Meanwhile, China sentenced nine fentanyl traffickers in an apparent demonstration that it is serious about holding up its part of a bargain with Washington.
- U.S. hardwood lumber industry presses for end to trade war. The hardwood lumber industry is the latest sector to press President Donald Trump to end the ongoing trade war with China. Members of the Hardwood Federation delivered that message to political leaders during their recent legislative fly-in, arguing trade disruptions are having a devastating impact on the hardwood industry. “We’ve seen about a 43% decline in volume being shipped to China,” Hardwood Federation Executive Director Dana Lee Cole told The Hill. The lower demand has pushed prices so low “it doesn’t even financially make any sense for a lot of mills now to process the logs they get in because it would cost them more to process them than they can sell them for,” Cole added."
— Tally from tariffs is reaching record levels, at least for the U.S. Treasury. The U.S. collected $7 billion in import tariffs in September, the Wall Street Journal reports (link), the most the U.S. has ever brought in as new duties kicked in on consumer goods from China. Tariff revenue jumped 9% from August and was up more than 59% from a year earlier. Critics say the bounty for the government is also a measure of the financial hit importers and their customers are taking from the U.S./China trade war, the article noted. The new figures are based on an analysis of official Commerce Department data compiled by Trade Partnership, an economic consulting firm, and released by Tariffs Hurt the Heartland, a coalition of business and agricultural groups who oppose the tariffs. Last month’s sharp rise was driven by a new 15% levy on consumer goods that went into effect Sept. 1.
— USMCA Update:
- Late-November House vote? Some key Republicans are signaling the Democrat-controlled House in late November will take up the U.S.-Mexico-Canada Agreement (USMCA). Other congressional sources say the timeline could move into December.
- House Democrats met Wednesday with Canadian Prime Minister Justin Trudeau, Foreign Affairs Minister Chrystia Freeland and Labor Minister Patty Hadju. “I particularly stressed the importance of meaningful enforcement mechanisms that ensure the protection of workers in all three nations and of our shared environment,” said House Ways and Means Committee Chairman Richard Neal (D-Mass.), who led the delegation. “I’m pleased that our neighbors to the north also have a strong desire for an agreement that benefits our economies while also lifting up our people.” Canadian media reported that Trudeau said he has been working with U.S. lawmakers to reach a “good place where we have the right deal for Canada, the United States and for Mexico. It is a pleasure to see the positive momentum that seems to be happening on this renewal of this very important trade deal.”
- Heads of 12 leading labor groups are warning House lawmakers that the USMCA as written does not meet the needs of working people — and that without changes, they will oppose the pact. The letter (link) urges lawmakers not to “waste this rare opportunity” to fix issues in U.S. trade policy, adding: “The workers and communities that have suffered the disastrous consequences of NAFTA will not accept half measures.”
— House Democrats urge leaders to renew biofuel tax incentives. Democratic House leadership should move to extend several alternative fuel tax credits to boost the biofuel industry and combat climate change, 40 House Democrats said in a letter yesterday. The letter calls for the renewal of the biodiesel, alternative fuel vehicle refueling property, and second generation biofuel producer tax credits.
Background. House Ways and Means Democrats are working on a clean energy tax package, which could be released sometime in November. That package, intended to be part of year-end negotiations on a omnibus budget package, is also expected to include tax benefits for the solar, wind, energy storage, and electric vehicle industries.
— Malmstrom hopes U.S. car-duty threat lifted next week. The European Union’s trade chief said a U.S. threat to impose tariffs on EU automotive goods later this month persists while sounding upbeat that levies will be avoided. European Trade Commissioner Cecilia Malmstrom repeated that the EU would retaliate with duties on a range of American products should the Trump administration hit imported cars and auto parts with tariffs based on national-security grounds. The U.S. faces a self-imposed deadline in mid-November for a decision. “We do not know what the Americans — or the American president — will decide next week,” Malmstrom told a European Parliament committee yesterday in Brussels. “We do note that there seems to be very few people defending the idea of tariffs in the car sector.”
Senate Finance Chairman Chuck Grassley (R-Iowa) downplayed the possibility of auto duties, telling reporters: “I’ve just got a gut feeling that it’s gonna be delayed again.” Grassley said part of the reason he feels that way is because the Trump administration has failed to send over a copy of the Commerce Department’s Section 232 autos investigation report — which found that automotive imports impair U.S. national security — despite his requests. “I think they’re embarrassed to make public what the report actually said. That’s my assumption,” he told reporters. “But based upon how the deep state works around here, that’s the conclusion I come to.”
— Other items of note:
Kentucky governor refuses to concede. Republican Gov. Matt Bevin, who ran for re-election, called for a formal review of vote totals and refused to concede the race to Democrat Andy Beshear. Trailing his Democratic opponent by about 5,000 votes, Bevin requested a recanvass of ballots.
Jeff Sessions plans to enter Alabama Senate race. The former attorney general, who was forced out by President Trump last year, today plans to announce a run for his old seat.
Trump confirmed Turkish President Recep Tayyip Erdogan will visit the White House next week, with Syria expected to be high on the agenda.
- Stephen Hahn, the nominee to lead the Food and Drug Administration, will have a confirmation hearing before the Senate's health panel on Nov. 20. Chairman Lamar Alexander (R-Tenn.) said he would support the nomination after meeting with Hahn on Wednesday.
Trump will give a speech on trade and economic policy next Tuesday in New York City at the Economic Club of New York.
— Markets. The Dow on Wednesday eased 0.07 point, 0.00%, at 27,492.56. The Nasdaq declined 24.05 points, 0.29%, at 8,410.63. The S&P 500 was up 2.16 points, 0.07%, at 3,076.78.