WASHINGTON (AP) — The Trump administration raised doubts Tuesday about the substance of a U.S.-China trade cease-fire, contributing to a broad stock market plunge and intensifying fears of a global economic slowdown.
Investors had initially welcomed the truce that the administration said was reached over the weekend in Argentina between Presidents Donald Trump and Xi Jinping — and sent stocks up Monday. But on Tuesday, after a series of confusing and conflicting words from Trump and some senior officials, stocks tumbled, with the Dow Jones shedding about 800 points, or 3.1 percent.
White House aides have struggled to explain the details of what the two countries actually agreed on. And China has not confirmed that it made most of the concessions that the Trump administration has claimed.
“The sense is that there’s less and less agreement between the two sides about what actually took place,” said Willie Delwiche, an investment strategist at Baird. “There was a rally in the expectation that something had happened. The problem is that something turned out to be nothing.”
Other concerns contributed to the stock sell-off, including falling long-term bond yields. Those lower rates suggested that investors expect the U.S. economy to slow, along with global growth, and possibly fall into recession in the coming year or two.
John Williams, president of the Federal Reserve Bank of New York, also unnerved investors by telling reporters Tuesday that he supports further Fed rate hikes. His remarks renewed fears that the Fed may miscalculate and raise rates so high or so fast as to depress growth.
The disarray surrounding the China deal coincides with a global economy that faces other challenges: Britain is struggling to negotiate its exit from the European Union. Italy’s government is seeking to spend and borrow more, which could elevate interest rates and stifle growth.
And in the United States, home sales have fallen sharply in the past year as mortgage rates have jumped.
Trump and White House aides have promoted the apparent U.S.-China agreement in Buenos Aires as a historic breakthrough that would ease trade tensions and potentially reduce tariffs. They announced that China had agreed to buy many more American products and to negotiate over the administration’s assertions that Beijing steals American technology. But by Tuesday morning, Trump was renewing his tariff threats in a series of tweets.
“President Xi and I want this deal to happen, and it probably will,” Trump tweeted. “But if not remember, I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.”
Trump added that a 90-day timetable for negotiators to reach a deeper agreement had begun and that his aides would see “whether or not a REAL deal with China is actually possible.”
He revisited the issue later Tuesday with a tweet that said: “We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major Tariffs against Chinese product being shipped into the United States. Ultimately, I believe, we will be making a deal – either now or into the future. China does not want Tariffs!”
The president’s words had the effect of making the weekend agreement, already a vague and uncertain one, seem even less likely to produce a long-lasting trade accord.
“We expect the relationship between the world’s two largest economies to remain contentious,” Moody’s Investors Service said in a report. “Narrow agreements and modest concessions in their ongoing trade dispute will not bridge the wide gulf in their respective economic, political and strategic interests.”
Among the conflicting assertions that White House officials made was over whether China had actually agreed to drop its 40 percent tariffs on U.S. autos.
In addition, Treasury Secretary Steven Mnuchin said Tuesday on the Fox Business Network that China agreed to buy $1.2 trillion of U.S. products. But Mnuchin added, “If that’s real” — thereby raising some doubt — it would close the U.S. trade deficit with China, and “We have to have a negotiated agreement and have this on paper.”
Many economists have expressed skepticism that very much could be achieved to bridge the vast disagreements between the two countries in just 90 days.
“The actual amount of concrete progress made at this meeting appears to have been quite limited,” Alec Phillips and other economists at Goldman Sachs wrote in a research note.
During the talks in Buenos Aires, Trump agreed to delay a scheduled escalation in U.S. tariffs on many Chinese goods, from 10 percent to 25 percent, that had been set to take effect Jan. 1. Instead, the two sides are to negotiate over U.S. complaints about China’s trade practices, notably that it has used predatory tactics to try to achieve supremacy in technology. These practices, according to the administration and outside analysts, include stealing intellectual property and forcing companies to turn over technology to gain access to China’s market.
In return for the postponement in the higher U.S. tariffs, the White House said China had agreed to step up its purchases of U.S. farm, energy and industrial goods. Most economists noted that the two countries remain far apart on the sharpest areas of disagreement, which include Beijing’s subsidies for strategic Chinese industries, in addition to forced technology transfers and intellectual property theft.
Chief economic adviser Larry Kudlow acknowledged those challenges in remarks Tuesday morning.
“China’s discussed these things with the U.S. many times down through the years and the results have not been very good,” he said. “So this time around, as I said, I’m hopeful, we’re covering more ground than ever … So we’ll see.”
Complicating the challenge, Trump’s complaints strike at the heart of the Communist Party’s state-led economic model and its plans to elevate China to political and cultural leadership by creating global champions in robotics and other fields.
“It’s impossible for China to cancel its industry policies or major industry and technology development plans,” said economist Cui Fan of the University of International Business and Economics in Beijing.
Trump had tweeted Sunday that China agreed to “reduce and remove” its 40 percent tariff on cars imported from the U.S. Mnuchin said Monday that there was a “specific agreement” on the auto tariffs.
Yet Kudlow said later that there was no “specific agreement” regarding auto trade, though he added, “We expect those tariffs to go to zero.”
Associated Press writer Joe McDonald in Beijing contributed to this report.
Carlson vs. Shapiro: A way forward
Tucker Carlson has recently caused quite a stir. He’s taken a very populist view of the role of government when it comes to intervening in the market, going so far as to suggest such things the mandated limiting of automation. To justify this, he points to the fact that as the market changes and certain skills become more or less in demand, many people get left behind. As coal plants shutdown, miners are left without work, as kiosks are deployed, fast food workers are back on the street, and truckers may soon be replaced with self-driving trucks. The solution to these issues, Carlson suggests, lies in retraining programs dictated by the government or subsidies to keep unprofitable businesses going.
On the other side of the issue are those who count on the free-market to work things out, people like Ben Shapiro. Shapiro and others acknowledge that some people will get left behind by technological advancement and the market changes that follow. However, they point out that in the end, most of those people can and do relocate or retrain on their own, and ultimately more people are helped by those changes than are hurt by them.
Both make good points. Carlson is right that it isn’t fair that people have to suffer in the name of progress and Shapiro is right that government intervention tends to exacerbate the problem. After all, many of those miners would still have jobs if government regulations weren’t making the coal plants shutdown in the first place. Yet, I think both are missing something important.
To get at what that is, we need to go all the way back to 2007 and the election of Barack Obama. Much was made – on both sides of the isle – about Obama’s background; particularly that of his role as a “community organizer.” Democrats considered it a positive, showing his concern for the people around him. Republicans mocked it almost universally because… few every really said. There was actually a solid line of attack on this – much of Obama’s work was with Acorn, a now discredited organization that did little more than encourage people to sign up for government benefits. Yet, that’s not what was done. During the Republican Convention that year, the likes of Rudy Giuliani and Sarah Palin spoke of Obama’s community organizer background in terms and tones of obvious mockery and derision, as though the concept were beneath them. This struck me as strange. Wasn’t the GOP the party of personal responsibility? Of small government? Wouldn’t someone who worked within his community to make it better be someone to lift up? Shouldn’t the GOP be wishing for more community organizers who worked along small government and free market principles rather than those of Acorn? If any of this was discussed, it didn’t make it to my eyes and years. As such, it seemed that the Republican Party was undermining its own principles with this attack. Many others thought so as well. I read more than a few comments from people saying that this attack and others like it were pushing people away from the GOP.
Fast forward four years to the Romney campaign. Everyone remembers the “47% percent are going to vote for Obama no matter what” remark and the damage that did. It made Romney seem even more elitist and out of touch. Again, this was largely self-inflicted, instead of leaning into the comment and explaining why that was, emphasizing the fact that the support for Obama and Democrats in general was largely based on false pretenses, the campaign tried to backtrack. Some of the right wing commentators actually did own it and try to use it as a positive. Unfortunately, it morphed into a “makers and takers” narrative, dividing the country between those who create new products and jobs and those who don’t.
The main problem with his line of thinking is that it tends to lump in the average blue-collar, and most white-collar, workers in with people who are happy to stay in the welfare system. Naturally, most people fit into this category, people who go to work every day so they can collect a paycheck and continue to raise their families. The maker vs. taker outlook naturally makes them feel left out, as though their own contributions are without value. The result is that people either stay home on voting day or vote for the side that at least pretends to care about them. If not for the candidacy of Donald Trump and his deliberate appeal to those very same voters, we would still be stuck in that same narrative.
However, we really haven’t found a solid replacement. The Carlson view tends to elevate the role of government more than conservatives are comfortable with while down-playing the market’s benefits. The Shapiro view tends to dehumanize the individuals who work down in the trenches every day, treating them more like cogs in the free-market machine. For the record, I think Carlson is aware of the potential dangers of government intervention and Shapiro doesn’t actually think of people as cogs. The issue that both are struggling with is to find a way to talk about the way a changing market affects people without falling into either trap.
So how do we resolve this? How do we begin to address the individuals that make up our society and recognize their individual worth and dignity without invoking the state in a misguided attempt to enforce it?
I had been puzzling this for some time, unable to find a satisfactory answer until the daily Mass readings brought to my attention a passage I’d read many times before. This time though, it seemed like a giant neon sign point the way to an answer. In Romans, St. Paul addresses the congregation in Rome, a group of Christians that apparently was having a problem with some people acting like they were better than others, and with the subsequent envy of those who don’t have the more visibly prominent gifts. I’ll let St. Paul explain (Romans 12: 3-8):
For by the grace given to me I tell everyone among you not to think of himself more highly than one ought to think, but to think soberly, each according to the measure of faith that God has apportioned.
For as in one body we have many parts, and all the parts do not have the same function, so we, though many, are one body in Christ* and individually parts of one another.
Since we have gifts that differ according to the grace given to us, let us exercise them: if prophecy, in proportion to the faith; if ministry, in ministering; if one is a teacher, in teaching; if one exhorts, in exhortation; if one contributes, in generosity; if one is over others, with diligence; if one does acts of mercy, with cheerfulness.
What St. Paul is telling us, is that we all have different gifts and as such, a different part to play. Some are more obvious than others, more significant. Yet, that doesn’t mean that others are not worth doing, even necessary. St. Paul applies the same thinking elsewhere, pointing out how silly it is to worry about whether the head or the foot is more important. The thing to keep in mind is that they need each other. The head isn’t getting far without the feet and the feet won’t have a place to go to without the head making decisions. Sure, the head has the bigger role, but it still needs the feet.
To bring it back to the Carlson/Shapiro debate, we need to reframe our discussion of economics to recognize the reality that St. Paul is pointing us toward. We all have a role, from the janitor, to the burger flipper, to the CEO. Clearly, the CEO has the bigger impact on society, yet he still needs others to perform their roles well. Bill Gates needed a team of programmers to turn his ideas into reality. Even more than that, patent clerks, lawyers, construction workers, and countless others had to do their jobs well in order for Gates to build his idea into the giant that is Microsoft. Are their contributions smaller? Yes. But they are no less necessary. Even President Trump owes some small part of his success to some guy with a shovel who broke ground on one of his properties.
What is the point of this? Why bring this up at all? By taking our cues from St. Paul, we can remember that every person, no matter their role has value, that they are contributing. That success need not be defined by whether or not you own your own business. That just because you are working by the hour and punching a clock, you are not a taker. You are a worker and a maker, making a life for yourself and those you love.
There are many questions to be explored in later articles such as social mobility, the role of automation, and how to manage when a business closes. This is not an end to the debate over how we should manage economic and technological change. Rather, it is a way to breathe some much needed fresh air into this debate.
Shannon Grove on high speed rail: ‘The more we look at this project, the more uncertainties come to light’
SACRAMENTO – Senate Republican Leader Shannon Grove (R-Bakersfield) issued the following statement after the Assembly Transportation Committee held an extensive hearing on the California High-Speed Rail project today.
“The more we look at this project, the more uncertainties come to light. Whether it is the loss of federal funds, the looming deadlines, or the failure to comply with the requirements of Proposition 1A, these hearings have proven beyond a shadow of a doubt that the California High-Speed Rail Authority is incapable of building anything that resembles what they promised the voters.
“Sacramento Democrats can no longer pretend they don’t know this project is off the rails. It is a shameful waste of taxpayers’ dollars and we must stop throwing our hard-earned money down the drain. It is time to kill the big rail fail,” said Senate Republican Leader Shannon Grove.
Senate Republican Leader Shannon Grove represents California’s 16th Senate District which encompasses large portions of Kern, Tulare and San Bernardino counties and including the cities of Bakersfield, Barstow, California City, Exeter, Frazier Mountain, Joshua Tree, Mojave, Needles, Ridgecrest, Rosamond, Taft, Tehachapi, Twentynine Palms, Tulare, Visalia, Yucca Valley and portions of the Kern River Valley. Follow her on Facebook and Twitter.
For press inquiries or questions, please contact Jacqui Nguyen, press secretary for the Senate Republican Caucus, at 858.999.7706.
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Gary Vaynerchuk never talks about politics, but he’s great when he does
Language warning, in case you’ve never listened to Gary Vaynerchuk before. I have, and he’s great.
Those who know of Gary Vaynerchuk think of wine, social media, and digital strategy. The Belarusian American entrepreneur has been an outspoken advocate of all things “віно і маркетинг” for over a decade, but he rarely speaks about politics.
Recently, he did, and one prediction in particular caught my eye.
The way he sees it, both major parties are pushing to the extremes on the ideological scale, opening up spots for moderate progressives and moderate conservatives to have major parties of their own. This is the case in most countries; the United States is one of the few that has a true two-party system despite the fact that most of our founding fathers didn’t want it to turn out this way.
John Adams said:
There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.
But Vaynerchuk, who has built a career around being write much more often than he’s wrong, says the opening is already being seen today. He railed against both parties, blaming both Presidents George W. Bush and Barack Obama for poorly handling the financial crisis of the late 00s.
Millions have learned over the years to listen to Gary Vaynerchuk when he’s offering opinions. Though his political opinions are few and far between, there’s a wisdom to them you don’t hear from the pundits. It’s authentic, a rare quality indeed.
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