Wanderlust

Tag: Business Finance

  • Argentina’s peso plunge incites frustation at Mauricio Macri

    The return of the pesos bears and a sharp rise in the U.S. dollar have left Argentina — and a number of developing countries including Brazil, Mexico, South Africa and Russia — reeling again, desper

    BUENOS AIRES — A shopping trip to Miami or a beach vacation in Brazil is far beyond Samuel Rivas’ budget. Nevertheless, the 57-year-old cabdriver was on a desperate hunt for foreign currency Wednesday in the Argentine capital’s financial district.

    “It’s the only way I can make my money count — by buying dollars,” Mr. Rivas explained below the red digits flashing the Maguitur exchange office’s current values. “Because the day I want to trade in my car, if I saved in pesos, it’ll be totally devalued.”

    His strategy — which has become a near-universal pastime in a country facing a 25 percent annual inflation rate and where everything including real estate and international airfare is priced in U.S. dollars — has turned into a crisis again in the past two weeks as the Argentine peso lost almost 18 percent of its value against the greenback.

    The frustration on the streets is compounded because many Argentines thought they put such indignities in the rearview mirror with the election of center-right businessman Mauricio Macri as president in late 2015.

    A 2001 government default was followed by 12 years of leftist rule that left Argentina struggling to rebuild its treasury and clean up its reputation in the global financial circle.

    But the return of the currency bears and a sharp rise in the U.S. dollar have left Argentina — and a number of developing countries including Brazil, Mexico, South Africa and Russia — reeling again, desperately trying to bolster the value of their currencies without undermining local growth.

    The issue has particular resonance here, with many Argentines talking of a “here we go again” feeling.

    The dollar, worth just short of 21 pesos at the end of April, was selling this week for about 25 pesos. The decline was so steep that it unnerved locals long accustomed to the ever-weakening currency, which was once pegged to U.S. tender. On the day Mr. Macri was elected in December 2015, the dollar was worth barely over 9 pesos.

    It also prompted a frenzied response from central bankers, who sought to prop up the peso by hiking interest rates by almost 13 points, to 40 percent, and by selling off some $9 billion in foreign currency reserves. The peso hit a historic low against the dollar on Monday, although there was faint sign it was firming up by Wednesday.

    With a booming U.S. economy and the Federal Reserve raising interest rates, investor money that flooded into emerging markets such as Argentina is heading back to the U.S., putting huge pressure on countries that failed to prepare.

    Carmen Reinhart, a Harvard economist specializing in international finance, turned heads this week when she told the Bloomberg News service that the emerging market economies are showing “more cracks now than they did five years ago and certainly at the time of the [2008] global financial crisis.”

    Mr. Macri, under increasing pressure 15 months ahead of a likely re-election bid, has acknowledged the anxiety, though he was quick to declare that the “currency turbulence” had been overcome.

    “Clearly, what happened this week is that the world has decided that the velocity at which we had committed to reducing the fiscal deficit is not enough,” Mr. Macri told reporters at the Olivos presidential residence on Wednesday. “So we’ll need to speed things up.”

    The president, a onetime business associate of Donald Trump whose acumen with money was supposed to be one of his strongest assets, has called for a grand bargain with opposition leftist lawmakers, governors and union leaders to further rein in deficit spending, which he insisted was the source of all of Argentina’s financial troubles.

    For all the efforts of Buenos Aires to set its house in order and restore its good credit, recent events have been a sharp reminder of the country’s vulnerability to trends and forces beyond its borders and beyond its control.

    Vulnerable

    “It’s a vulnerability because we depend on the world to lend us money, something we must change,” Mr. Macri said. “We Argentines have dragged along this problem, which weighs down all of society. So I believe it’s time to tell the truth: No more shortcuts, no more patches.”

    Those words may well sound ominous to many overwhelmed Argentines who, in the wake of the administration’s cuts to government subsidies, have seen their utility bills and public transport costs triple or quadruple in a matter of months.

    Mr. Macri’s May 8 decision to ask the International Monetary Fund for a $30 billion line of credit, ostensibly intended to inspire confidence, seems to have done just the opposite given Argentina’s troubled history with international lenders.

    “It’s a sensitive topic [because] it reminds us … of somewhat traumatic experiences the country lived through,” said Mariano de Vedia, a political commentator for the La Nacion daily. “That doesn’t mean the [IMF] negotiations won’t be positive. But there’s an old saying: ‘He who scalded himself with milk cries when he sees a cow.’”

    Popular unease is not enough of a reason to seek financing elsewhere, Mr. Macri insisted, especially because it could mean an additional $1 billion in interest per year.

    “The [IMF] is a serious institution with which one makes good or bad deals; we’ll make a good deal,” Mr. Macri said. “We’re talking about hundreds of schools we can build, with the [savings] in interest, we’re talking about thousands of miles of freeway. … This must be a time of pragmatism.”

    But to Emilio Massucco, who owns a small electronics store a few blocks from the Maguitur office, there is nothing pragmatic about looking to international powers that be to fix Argentina’s problems.

    “I’d like for us to not depend on the dollar,” Mr. Massucco said while sitting in front of a rack adorned by a sizable Argentine flag. “I’d like for the country to be run in a way so as to not depend on the [IMF], of course, not depend on another country’s economy, especially that of the United States.”

    While Mr. Macri praised his economic advisers Wednesday, the peso meltdown was affecting the wallets of bargain hunters along Florida Street, the busting Buenos Aires shopping mile where dozens of unlicensed money changers offer their services with their trademark, high-decibel cries of “Cambio, cambio.”

    “You see it reflected in the value of a spare part of a cellphone, a tablet, whatever,” said Mr. Massucco, whose store sits inside the street’s Galeria Jardin electronics mall. “Buying from a wholesaler with a 30-day check means exacerbated dollar futures. … The dollar causes [price] hikes of all kinds.”

    A day after the government gained some breathing room by avoiding a feared sell-off of short-term Lebac bonds, the 45-year-old entrepreneur’s confidence in official assurances that the worst is over was limited at best.

    “The market has calmed down, and the Central Bank regulated things in some way,” Mr. Massucco said. “But even so, there still is latent instability and uncertainty.”

    All but certain, though, is that the government’s annual inflation target of 15 percent — already boosted from the 10 percent estimate — has become wholly illusory. Unidentified officials warned this week that 20 percent and even 25 percent were more realistic objectives.

    Amateur Milton Friedmans

    The close link to inflation — and thus the costs of everyday products — is why ordinary Argentines keep a close eye on dollar values.

    At the solidly named Sterling Cafe just five doors down from the Central Bank, Daniel Mendez Garcia sounded more like an economist than a coffee shop co-owner.

    “You know what’s happening? You spend more. You have new price tags and old salaries,” Mr. Mendez said as he chatted with one of his regulars, a retired central banker. “Money in the street contracts, so there’s less in sales. It’s math; no need to be a guru [like] Milton Friedman.”

    Unlike others, the 20-year coffee veteran insisted he won’t preemptively charge his customers more. But in a country with an $8 billion trade deficit, how much the peso is or isn’t worth will still make a difference.

    “We only change the menu prices when they raise prices for me,” Mr. Mendez said. “[But] coffee will get more expensive now because it’s imported. There’s nothing you can do about it.”

    In the meantime, halfhearted acknowledgments of errors — with Central Bank President Federico Sturzenegger conceding that markets were not “convinced” by his monetary policy and Mr. Macri faulting himself for being “too optimistic” — have done little to tame tempers.

    “The self-criticism helps if you can gain something for the future,” Mr. Mendez said. “Otherwise, you can just commit hara-kiri.”

    It’s advice Mr. Macri may want to heed if he wants to remain in office beyond October of next year, especially since voters have already shown an uncharacteristic amount of patience as they await his administration’s long-promised economic revival.

    “In a way, [he] has been weakened; it just so happens that no other sector, party or candidate has tapped into this situation,” said Mr. de Vedia, the La Nacion analyst. “The [peso crisis] further delays the recovery, and that causes frustration and dissatisfaction.”

    If any doubts remain as to just how present American legal tender is on Argentines’ minds, the president might do well do ditch his limousine and take a subway ride around Buenos Aires.

    “Just 20 pesos,” a street vendor hawking ballpoint pens yelled on Wednesday in a crowded B line wagon: “If the dollar keeps rising on me, I don’t know for how much longer I’ll be able to sell them at 20 pesos.”

  • Russia will ‘fight’ for German pipeline project despite U.S. opposition: Putin

    President Vladimir Putin on Friday vowed to oppose any actions from the Trump administration targeting Nord Stream 2, a pipeline project expected to significantly increase Russia’s natural gas exports

    President Vladimir Putin on Friday vowed to oppose any actions from the Trump administration targeting Nord Stream 2, a pipeline project expected to significantly increase Russia’s natural gas exports to Europe.

    Mr. Putin defended the project in the wake of news outlets reporting this week that President Trump has pressured German Chancellor Angela Merkel to withdraw her support for the pipeline in lieu of possibly provoking a transatlantic trade war.

    “Donald is not just the U.S. president, he’s also a good, tough entrepreneur,” Mr. Putin said at a joint news conference held with Ms. Merkel in Sochi, The Moscow Times reported.

    “He’s promoting the interests of his business, to ensure the sales of liquefied natural gas on the European market,” Mr. Putin added. “I understand the U.S. president. He’s defending the interests of his business, he wants to push his product on the European market. But it depends on us, how we build our relations with our partners, it will depend on our partners in Europe.”

    “We believe it (the pipeline) is beneficial for us, we will fight for it,” said Mr. Putin.

    The pipeline is expected to transport upwards of 55 billion cubic meters of gas annually from Russia to Germany beginning in 2019, doubling Russia’s current exports and consequently reducing Germany’s demand for resources from competing countries.

    Mr. Trump urged Ms. Merkel in April to withdraw support for the pipeline in exchange for kickstarting a new trade deal between the U.S. European Union, The Wall Street Journal reported Thursday, citing U.S. and European officials.

    The U.S., German and their allies have been at odds with Russia particularly after Mr. Putin’s government annexed Crimea from Ukraine in 2014, though leaders in both Berlin and D.C. have advocated for being on better terms with Moscow as of late.

    “We have a strategic interest in having good relations with Russia” Ms. Merkel said Friday.

  • Rand Paul: Republicans are for a balanced budget ‘in the abstract’

    Sen. Rand Paul said Friday that part of the reason he forced a vote on his proposal to balance the budget was to show who among Republicans actually supports fiscal responsibility.

    Sen. Rand Paul said Friday that part of the reason he forced a vote on his proposal to balance the budget was to show who among Republicans actually supports fiscal responsibility.

    “Republicans are, in the abstract, for balanced budgets. But as you saw yesterday, the majority of the Republican senators are really not for the balanced budget. They’re only for it in the abstract,” Mr. Paul, Kentucky Republican, said on Fox Business.

    He said the growing debt is becoming a national security concern and added that being in debt to countries like China makes the U.S. dependent.

    “We also need to be concerned that they have a trillion of our debt. And my concern with security is that we need to be not so dependent on countries that hold so much of our debt,” Mr. Paul explained.

    The senator said the solution for this pending crisis is to have less debt, which is also why he put forward the proposal to cut spending. An overwhelming majority of the Senate voted against the measure.

  • China agrees to purchase more U.S. goods after trade talks with Trump officials

    China has agreed to “meaningful increases” in its purchase of U.S. agriculture and energy exports to help reduce the U.S. trade deficit, both countries said Saturday after wrapping up two days of high

    China has agreed to “meaningful increases” in its purchase of U.S. agriculture and energy exports to help reduce the U.S. trade deficit, both countries said Saturday after wrapping up two days of high-stakes trade talks in Washington.

    A joint statement released by the White House said negotiators from both sides found “consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China.”

    “To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services,” the statement said. “This will help support growth and employment in the United States.

    The statement said both countries, which have been locked in an escalating tariff feud, agreed to resolve trade concerns “in a proactive manner.”

    Treasury Secretary Steven T. Mnuchin, U.S. Trade Representative Robert Lighthizer and other U.S. officials concluded two days of talks Friday with a Chinese delegation led by State Council Vice Premier Liu He, a special envoy of President Xi Jinping.

    President Trump has been calling for China to end unfair trade practices that have led to a more than $375 billion trade deficit for the U.S.

    The joint statement didn’t specify how much the trade deficit is expected to be impacted. The Wall Street Journal said Chinese officials resisted a U.S. demand to cut the deficit in half by the end of 2020.

    As a result of the talks, China agreed to eliminate restrictions on sorghum imports from the U.S. in a possible deal to ease U.S. sanctions on ZTE Corp., the second-larges manufacturer of phones in China. Mr. Trump said he promised to review the sanctions after a personal request from Mr. Xi, who said the ban on doing business with ZTE had hurt its 70,000 employees.

    The U.S. will send a team to China to work out the details of increasing exports of agricultural and energy products, the statement said.

    The countries also agreed to “strengthen cooperation” on intellectual-property protections, the statement said.

    The U.S. has been threatening tariffs totaling as much as $150 billion on Chinese products, with Beijing vowing to retaliate with its own tariffs on U.S. agriculture, airplanes and other products.

  • Airplane and oil deals at risk in Trump pullout of Iran deal

    From airplanes to oilfields, billions of dollars are on the line for international corporations as President Donald Trump weighs whether to pull America out of Iran’s nuclear deal with world powers.

    DUBAI, United Arab Emirates (AP) – From airplanes to oilfields, billions of dollars are on the line for international corporations as President Donald Trump weighs whether to pull America out of Iran’s nuclear deal with world powers.

    Regardless of where they are headquartered, virtually all multinational corporations do business or banking in the U.S., meaning any return to pre-deal sanctions could torpedo deals made after the 2015 agreement came into force.

    That threat alone has been enough to scare risk-averse firms, like Boeing Co., into slow-walking deals agreed to months ago. A complete pullout by the U.S. would wreak further havoc and likely frighten off those considering making the plunge.

    “I absolutely think those on the fence will not jump in,” said Richard Nephew, a former sanctions expert at the U.S. State Department who worked on the nuclear deal and now is at New York’s Columbia University. “The only ones who will, will be those who see tremendous monetary benefit and no U.S. risk.”

    The 2015 Iran nuclear deal lifted crippling economic sanctions that had locked Iran out of international banking and the global oil trade. In return, Tehran limited its enrichment of uranium, reconfigured a heavy-water reactor so it couldn’t produce plutonium and reduced its uranium stockpile and supply of centrifuges.

    For Western businesses, the deal meant access to Iran’s largely untapped market of 80 million people. Most prominently, airplane manufacturers rushed in to replace the country’s dangerously dilapidated civilian fleet.

    In December 2016, Airbus Group signed a deal with Iran’s national carrier, IranAir, to sell it 100 airplanes for around $19 billion at list prices. Boeing later struck its own deal with IranAir for 80 aircraft with a list price of some $17 billion, promising that deliveries would begin in 2017 and run until 2025. Boeing separately struck another 30-airplane deal with Iran’s Aseman Airlines for $3 billion at list prices.

    But Boeing has yet to deliver a single aircraft to Iran. The Chicago-based company’s CEO recently stressed it understands the “risks and implications around the Iranian aircraft deal,” which would be the biggest business agreement between an American company and Iran since the 1979 Islamic Revolution and U.S. Embassy takeover.

    “We continue to follow the U.S. government’s lead here and everything is being done per that process,” Dennis Muilenburg said during a quarterly earnings conference call on April 25. “We have no Iranian deliveries that are scheduled or part of the skyline this year, so those have been deferred again in line with the U.S. government process.”

    Airbus, a European airline consortium based in Toulouse, France, likewise continues its sales at the discretion of the American government. At least 10 percent of its aircraft components are of American origin, meaning it requires permission from the U.S. Treasury for its sales to Iran. Airbus has already delivered two A330-200s and one A321 to Iran.

    Airbus declined to comment when asked by The Associated Press about its possible plans ahead of Trump’s decision.

    European airplane manufacturer ATR struck a $536-million deal with IranAir for at least 20 aircraft last year. It’s already has delivered eight of its twin-engine turboprops to Tehran after earlier winning permission from the U.S. Treasury.

    “To date, we are on track to deliver the remaining ATR aircraft in due time, before the end of the year,” ATR spokesman David Vargas told the AP.

    The speed at which Western airplane manufacturers went into Iran is contrasted by a slow start by Western energy firms despite the country’s vast oil and gas wealth. The exception is French oil giant Total SA, which in July signed a $5 billion, 20-year agreement with Iran and a Chinese oil company to develop the country’s massive South Pars offshore natural gas field. The natural gas pumped by the deal will go toward Iran’s domestic market.

    The deal marked a return to Iran for Total, which pulled out of the country in 2008 as Western sanctions over its nuclear program began to ramp up. Total did not respond to requests for comment, though its CEO Patrick Pouyanne reportedly told Trump in February to stick with the deal.

    “If the framework, the rules of the game, change, of course we will have to re-evaluate,” Pouyanne told the Financial Times.

    French carmaker PSA Peugeot Citroen reached a deal in 2016 to open a plant producing 200,000 vehicles annually in Iran. Peugeot, once a major player in Iran’s car market before sanctions, did not respond to a request for comment.

    Meanwhile, fellow French automobile manufacturer Groupe Renault signed a $778-million deal to build 150,000 cars a year at a factory outside of Tehran.

    “The Renault Group is closely monitoring the evolution of the diplomatic situation,” the company said in a statement to the AP, without elaborating.

    Volkswagen also began exporting cars to Iran.

    “Currently we are tracking and examining the development of the political and economic environment in the region very closely,” the German carmaker said in a statement. “In principle, Volkswagen adheres to all applicable national and international laws and export regulations.”

    Nuclear deal co-signers Britain, France and Germany, which have urged Trump to preserve the deal, may seek exemptions to protect their companies if the U.S. snaps back sanctions, said Ellie Geranmayeh, a senior policy fellow studying Iran at the European Council on Foreign Relations.

    “This should include a series of exemptions and carve-outs for European companies already involved in strategic areas of trade and investment with Iran, with the priority being to limit the immediate shock to Iranian oil exports,” she wrote Wednesday.

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    Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellap . His work can be found at http://apne.ws/2galNpz .

  • Trump team returning from China, won’t back down from trade-war threat, president says

    President Trump said Friday that he is not backing down from demands for fair trade with China, as top administration officials returned from the first round of trade talks in Beijing.

    President Trump said Friday that he is not backing down from demands for fair trade with China, as top administration officials returned from the first round of trade talks in Beijing.

    The two-day talks in Beijing did not produce major announcements, and the Trump administration is still threatening to impose tariffs on $150 billion worth of Chinese goods. But further rounds of negotiations were expected.

    “My people are coming right now from China, and we will be doing something one way or another with respect to what is happening in China,” Mr. Trump told reporters at the White House.

    He he said that he had been “nice” in the negotiations out of respect for Chinese President Xi Jinping, who has helped the U.S. apply pressure to bring North Korea to talks on giving up its nuclear weapons.

    “I have great respect for President Xi. That’s why we are being so nice, as we have a great relationship,” said Mr. Trump. “But we have to bring fairness into trade between the U.S. and China, and we will do it.”

    Beijing has said that it is open to improving access to U.S. business but also threaten to retaliate against U.S. tariffs, including targeting industries with big business in China such as agriculture and airplanes.

    The trade delegation was led by Treasury Secretary Steven T. Mnuchin and included Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer, National Economic Council Director Larry Kudlow and U.S. Ambassador to China Terry Branstad.

    The White House talks as “frank discussions” about rebalancing trade.

    A chief aim of the Trump administration is to break down barriers to U.S. business in China and reduce America’s $375 billion annual trade deficit with China.

    “The United States delegation affirmed that fair trade will lead to faster growth for the Chinese, United States, and world economies,” the White House said in a statement.

    The size and high level of the delegation illustrated the importance that the Trump Administration places on securing fair trade and investment terms for American businesses and workers, said the statement.

    “There is consensus within the Administration that immediate attention is needed to bring changes to United States–China trade and investment relationship,” it said.

  • Aimed at China, Trump’s tariffs are hitting closer to home

    President Donald Trump’s escalating dispute with China over trade and technology is threatening jobs and profits in working-class communities where his “America First” agenda hit home.

    WASHINGTON (AP) – President Donald Trump’s escalating dispute with China over trade and technology is threatening jobs and profits in working-class communities where his “America First” agenda hit home.

    The Commerce Department has received more than 2,400 applications from companies seeking waivers from the administration’s tariffs on steel and aluminum imports, which may result in duty payments of millions of dollars for larger businesses. The department has begun posting the requests online for public comment; several of the applications released so far suggest deep misgivings with Trump’s protectionist strategy, especially in areas where he won strong support during the 2016 election.

    The tariffs are aimed primarily at China for flooding the global market with cheap steel and aluminum. But they’ve also led to confusion and uncertainty, according to Associated Press interviews and a review of records. In Oklahoma, Texas and Wisconsin, for example, businesses operating in the furniture, energy and food sectors have outlined the financial difficulties they’d face if they’re not excused from the steel tariff.

    In Okmulgee, Oklahoma, dozens of jobs hang in the balance as office furniture giant Steelcase waits to hear back from the Commerce Department.

    A Steelcase subsidiary, PolyVision, operates a plant in Okmulgee that uses a special type of steel from Japan to manufacture a durable glass-like surface for whiteboards and architectural purposes. PolyVision “cannot and will not be able to procure” from U.S. companies the cold-rolled steel it requires “in a sufficient and reasonably available amount or of a satisfactory quality,” Steelcase said.

    Trump won most of the votes cast for president in Okmulgee County. Without a waiver, Steelcase warned, the “economic viability of PolyVision (and) the small town of Okmulgee” would be jeopardized.

    The waiver request also indicates that a $15 million plant expansion may be at risk. Steelcase and PolyVision are on the verge of making the investment, which would create new construction and manufacturing jobs, according to the request.

    Roger Ballenger, Okmulgee’s city manager, said he and other local officials are “very concerned about the situation with PolyVision.”

    The tariffs – 25 percent on imported steel and 10 percent on imported aluminum – are designed to protect and rebuild the U.S. companies that manufacture the metals. The U.S. temporarily exempted several major trading partners, including the European Union, Mexico and Canada.

    China, which was left on the target list, retaliated by imposing tariffs on $3 billion in U.S. products, including apples, pork and ginseng.

    Trump responded by adding more protectionist measures as punishment for Chinese theft of U.S. intellectual property. And Beijing punched back by proposing tariffs on $50 billion in U.S. products including small aircraft and soybeans – a direct threat to rural areas that were key to Trump’s victory.

    John Hritz, CEO of JSW Steel USA in Baytown, Texas, said his company is in lockstep with Trump’s approach. “We’re in favor of growing the steel industry in this country,” Hritz said. JSW Steel, owned by Indian conglomerate JSW Group, is embarking on a $500 million overhaul of the plant that it says will create hundreds of jobs.

    The growth would be welcomed in Baytown, where unemployment is 9.8 percent, more than double the national rate. Baytown is located partly in Harris County, which Democrat Hillary Clinton won, and partly in Chambers County, which Trump handily won.

    The future is much murkier for another Baytown steel business, Borusan Mannesmann Pipe. Without a waiver, Borusan may face tariffs of $25 million to $30 million annually if it imports steel tubing and casing from its parent company in Turkey, according to information the company provided to the AP.

    Borusan said the Baytown production line would no longer be competitive and “jobs would be threatened” if it cannot import 135,000 metric tons of steel annually over the next two years. The pipes Borusan produces are used primarily as casing for oil and natural gas wells.

    But if Commerce says yes, Borusan will be able to unlock a $25 million investment in the Baytown facility as it seeks to become a “100 percent domestic supplier,” according to the waiver request. An additional $50 million expansion in pipe fabrication capacity would follow, the company said, leading to as many as 170 new jobs.

    Seneca Foods Corporation, the nation’s largest vegetable canner, said in its waiver application that it’s unclear, at best, if U.S. suppliers have the ability or willingness to expand their production in the long term to meet the company’s annual demand for tinplated steel.

    But “clearly they cannot meet demand in the short term,” Seneca told Commerce officials. That means Seneca has to buy a portion of what it needs from overseas.

    A person with knowledge of Seneca’s situation said the company would face a $2.25 million duty if the Commerce Department doesn’t approve its waiver request for 11,000 metric tons of tinplate it already agreed to purchase from China. The material is to be delivered this year and next, according to the waiver request. The person was not authorized to speak publicly and spoke to the AP on condition of anonymity.

    Seneca said it employs more than 400 people at can-making facilities in Wisconsin and Idaho and near its headquarters in New York’s Wayne County, where Trump bested Clinton. The company doesn’t warn layoffs are imminent if the waiver isn’t approved. Instead, the tariffs would likely come out of Seneca’s bottom line, the person said.

    ___

    Contact Richard Lardner on Twitter at http://twitter.com/rplardner

  • Linda McMahon: Tax cuts providing optimism to small businesses

    Small Business Administrator Linda McMahon said Monday that the tax cuts are providing optimism throughout the country.

    Small Business Administrator Linda McMahon said Monday that the tax cuts are providing optimism throughout the country.

    “What is continuing is this optimism, is businesses that are growing throughout the country, starting, getting access to capital. And that’s what SBA does,” Mrs. McMahon said on Fox News.

    She said the agency is launching a virtual series for National Small Business Week that will provide guidance for those looking to get their businesses started and how to continue growing.

    National Small Business Week is set to start next week.

  • Donald Trump hits China with $60 billion in tariffs

    President Trump signed an order Thursday that cracked down on China’s unfair trade practices and theft of U.S. intellectual property with $60 billion in tariffs on high-tech imports.

    President Trump socked China with up to $60 billion in proposed trade tariffs, investment restrictions and plans for a formal complaint to the World Trade Organization, drawing immediate threats of retaliation from Beijing and sending the stock market into an epic nosedive Thursday over fears that the globe’s two biggest economies were heading for a trade war.

    Following though on the tough talk on trade that helped put him in the White House, Mr. Trump said the U.S. was finally cracking down on decades of unfair trade practices and theft of intellectual property. U.S. officials say these Chinese practices contributed to bilateral trade deficits for the U.S. of hundreds of billions of dollars annually.

    “We are doing things for this country that should have been done for many, many years,” the president said as he signed an order for tariffs and other get-tough measures on China.

    In comments that unnerved investors, Mr. Trump added, “This is the first of many.”

    The tariffs instruct the Commerce Department to target Chinese information technology, consumer electronics and telecoms, imposing import costs of $50 billion to $60 billion that roughly equal the value of U.S. technology lost to China because of the country’s onerous trade rules.

    China vowed retaliation.

    “China is not afraid of and will not recoil from a trade war,” the Chinese Embassy in Washington said in a statement. It said Mr. Trump’s tariffs would backfire and “directly harm the interests of U.S. consumers, companies, and financial markets.”

    Despite its huge surpluses, China is not without weapons in a trade fight. Beijing has signaled that it could strike back by cutting its soybean purchases from U.S. farmers. China is the biggest market for soybeans and many other U.S. agricultural products and is a crucial market for American aircraft, cotton, electrical machinery, cars and trucks, corn and coal.

    China is also the world’s largest holder of U.S. government debt — a double-edged sword as any move to hurt U.S. government credit could undercut the value of Beijing’s holdings as well.

    The sell-off on Wall Street was deep and immediate. All 30 stocks in the Dow Jones lost ground, and investment safe havens such as gold and U.S. Treasury bonds jumped in value.

    The Dow Jones industrial average tumbled more than 724 points, or 2.93 percent, to fall below the 24,000 mark. The broader S&P 500 slipped more than 68 points, or 2.52 percent, and the Nasdaq fell more than 178 points, or 2.43 percent.

    It was the worst day for the Dow since a chaotic sell-off in February and the blue chip index’s worst March free fall in 17 years.

    “If the Dow is allowed to vote, you can see what their vote is today: They don’t like it,” Rick Helfenbein, president of American Apparel & Footwear Association, said on Fox Business Network.

    Like many U.S. industries still in the dark on where exactly the Trump administration’s tariffs will land, Mr. Helfenbein said he hoped the tariffs wouldn’t hit his sector.

    Trade moves

    The China decision came close on the heels of a string of other trade moves to implement Mr. Trump’s “America first” economic agenda and reverse what he sees as decades of misguided U.S. trade policy promoting open markets and multilateral trade agreements.

    The administration announced tariffs on steel and aluminum imports this month, although a number of markets, including Canada, Mexico, the European Union, South Korea and Australia, will be exempted initially from the tariffs. Mr. Trump since the beginning of the year has put tariffs on Chinese solar panels and South Korean washing machines. A week later, China’s biggest maker of solar panels announced plans to open a U.S. factory.

    The U.S. is also locked in lengthy talks with Canada and Mexico over Mr. Trump’s demand for a renegotiation of the North American Free Trade Agreement. The president has vowed to leave the 24-year-old pact if a new agreement is not reached.

    Commerce Secretary Wilbur L. Ross Jr., a prime advocate of the tariffs, acknowledged that China was likely to retaliate against American companies.

    Many expect Beijing to target states where the president is most popular, but Mr. Ross played down the prospect of an all-out trade war.

    “We will end up negotiating these things rather than fighting over them, in my view,” Mr. Ross told Bloomberg News.

    With U.S. companies long complaining about China’s failure to protect foreign investors’ intellectual property rights, the president’s order focused on technology imports. But the list of items subject to the tariff could expand to include such items as clothing and shoes.

    The tariffs are being imposed under Section 301 of the Trade Act of 1974 that authorizes the president to take action or retaliation against unjustified, unreasonable or discriminatory foreign trade laws that hurt U.S. commerce. They are part of a package of measures to combat Beijing’s aggressive trade tactics, including forced intellectual property transfers for U.S. companies as the price of doing business in China.

    The actions included:

    ⦁ Adding 25 percent to tariffs on products supported by China’s unfair industrial policy, including aerospace, cellphones, computers and machinery.

    ⦁ Opening a World Trade Organization case against China’s discriminatory technology licensing practices.

    ⦁ New restrictions on Chinese companies buying into U.S. technology business.

    At the White House signing ceremony, Mr. Trump was surrounded by former top national security officials and CEOs from defense companies Raytheon, Lockheed Martin, General Atomics and Leidos.

    Lockheed Martin CEO Marillyn Hewson called it a “very important moment for our country.”

    “We are addressing what is a critical area for the aerospace and defense industry, and that is protecting our intellectual property,” she said. “That is the lifeblood of our companies. And so we very much welcome this action on the part of the Trump administration and the president of the United States.”

    Corporate angst

    U.S. Trade Representative Robert Lighthizer, who spearheaded the action against China, said the Trump administration was moving to protect America’s future.

    “Technology is really the backbone of the future of the U.S. economy,” he said.

    Still, leaders from many business sectors overwhelmingly opposed the tariffs and warned that it would be a tax ultimately paid by U.S. consumers.

    “The internet industry has serious concerns with the impact of these tariffs — and potential retaliatory actions — on American jobs, consumers, and the digital economy,” said Melika Carroll of the Internet Association, an industry lobbying group.

    The Business Roundtable, an association of CEOs from the biggest U.S. companies, said in a statement that the Trump tariffs “will only raise prices in America, make American companies and products less competitive, and harm U.S. workers and consumers.”

    Mr. Trump brushed aside the concerns.

    Emphasizing that America’s $800 billion trade deficit with the world could not be allowed to continue, Mr. Trump said other trading partners such as South Korea and the European Union were begging to make deals in the face of his tough trade policies.

    The U.S. trade deficit with China topped $375 billion last year, but Mr. Trump cited calculations that put it over $500 billion.

    He said the tariffs, which do not take effect immediately, had already brought Beijing to the negotiating table. Since taking office, Mr. Trump has been pressing Chinese President Xi Jinping and other top officials to rein in unfair trade restrictions and lower the trade deficit by $100 billion.

    “We are in the midst of very major and very positive negotiations,” the president said.

    But pulling the trigger on tariffs could pressure Mr. Xi to respond at least as hard to show his own government that he can’t be bullied.

  • Donald Trump considering tariff exemptions for Canada, Mexico

    The White House opened the door Wednesday to exempting Canada and Mexico from the proposed tariffs on steel and aluminum, the first pullback from a plan that critics say will spark a trade war.

    The White House opened the door Wednesday to exempting Canada and Mexico from the proposed tariffs on steel and aluminum, the first pullback from a plan that critics say will spark a trade war.

    Much of the pressure to carve out Canada from President Trump’s big tariffs came from within the U.S. steel industry, which shares ownership in steel mills across the Great White North and reaps hefty profits from cross-border trade.

    A tariff exemption for Canada, Mexico and possibly other countries could help tamp down fears about a trade war, but it definitely promises to further boost profits for U.S. steel companies, analysts say.

    “The U.S. steel industry has had a long history of pursuing cartel-enhancing trade policies,” said Thomas Prusa, an international trade policy scholar at Rutgers University. “In most cases, the steel executives would benefit from exclusions because it would allow the [multinational corporations] to continue to maximize global profits.”

    Some of the largest steel conglomerates, including Arcelor Mittal and Nucor, operate in both the U.S. and Canada.

    Canada is the No. 1 supplier of steel imported by the U.S. It supplied about 16 percent of the 26.9 million tons of steel imported last year. Canada also buys more U.S. steel than any other country, accounting for half of U.S. exports.

    Other top steel suppliers to the U.S. are the European Union, Brazil, South Korea, Japan and Mexico. Many have threatened to retaliate against Mr. Trump’s tariffs by taxing such U.S. goods as bluejeans, bourbon and motorcycles.

    China supplies about 2 percent of steel to the U.S., ranking it as the No. 11 supplier. The country’s steel is also subject to anti-dumping and countervailing duties.

    Mr. Trump argues that China supplies much more steel to the U.S. by transshipping, or disguising the origin of the steel by shipping it through other countries.

    The president had repeatedly voiced opposition to granting exemptions to his proposed tariffs — 25 percent on steel and 10 percent on aluminum.

    He said this week that the tariffs could be adjusted as part of the ongoing renegotiations of the North American Free Trade Agreement among the U.S., Canada and Mexico. The tariffs, however, are a relatively small issue within that massive trade deal.

    A redo of NAFTA and slapping tariffs on steel were prominent campaign promises from Mr. Trump.

    White House press secretary Sarah Huckabee Sanders made the pivot to potential exemptions.

    “There are potential carve-outs for Mexico and Canada based on national security, and possibly other countries as well based on that process,” she said.

    She said the exemptions for Canada, Mexico and possibly other countries would be on “case-by-case and country-by-country basis, but it would be determined whether there is a national security exemption.”

    The pullback came a day after the resignation of Gary Cohn, the president’s top economic adviser who was fiercely opposed to the tariffs. His resignation was blamed on his clash with Mr. Trump over the tariff plan.

    The Commerce Department recommended the tariffs based on an investigation that determined there was a national security risk from U.S. reliance on imported steel and aluminum, which are used extensively in military goods.

    Mr. Trump also has been under intense pressure from Capitol Hill Republicans and free trade conservatives who want him to narrowly target tariffs at bad actors such as China.

    House Ways and Means Committee Chairman Kevin Brady of Texas and 106 fellow House Republicans sent Mr. Trump a letter arguing for exceptions to the tariff, including grandfathering current contracts for imports and a process to exempt countries.

    “We support your resolve to address distortions caused by China’s unfair practices, and we are committed to acting with you and our trading partners on meaningful and effective action. But we urge you to reconsider the idea of broad tariffs to avoid unintended negative consequences to the U.S. economy and its workers,” they wrote.

    Despite the alterations to the plan, Mr. Trump is still expected to sign the order by the end of the week, Mrs. Sanders said.

    “Look, it’s a lengthy process finalizing the details,” she said. “It’s a complicated process, and we want to make sure we every i’s dotted and all t’s are crossed.”