President Donald Trump’s push to rebalance global trade in America’s favor has investors on edge, as his threats to impose import tariffs and curb foreign investment raise the specter of retaliation that could spark a global trade war.
[Andrew Mayeda |March 28, 2018 | Bloomberg]
Here are the latest developments on trade from Washington, updated throughout the day:
U.S. ‘Win’ on South Korea Gets Mixed Marks (3:48 p.m.)
Trump administration officials have been busy all day touting the benefits of the newly revamped free-trade agreement with South Korea, which they say will help shrink America’s trade deficit with the Asian nation.
But critics say the terms will do little to even out automotive trade between the two nations, which is the biggest contributor to the bilateral trade imbalance.
While the new deal doubles to 50,000 the number of cars each U.S. automaker can sell in the Asian nation without meeting local safety standards, it’s not clear how the higher ceiling will help. American automakers didn’t come close to reaching the 25,000-car limit last year.
“Lifting a cap that we weren’t hitting anyway I think will have minimal impact,” Bernard Swiecki, a senior automotive analyst at the Center for Automotive Research, said by phone. “This is not just an American problem. Having been to Korea many times, overwhelmingly every car that you look at is Korean. It’s very much a homogeneous market.”
White House spokeswoman Sarah Huckabee Sanders pushed back against the criticism, saying the sale of automotive parts will grow in addition to car exports. “This is certainly the step in the right direction to help remove the trade deficit we have,” she told reporters.
U.S.’s China Tariffs Aimed at High-Tech: Navarro (9:45 a.m.)
The Trump administration’s tariffs on China will focus on high-tech industries where Beijing wants to lead, according to a senior White House trade adviser.
The list of products the U.S. hits with tariffs will line up with technologies China identified in its “Made in China 2025” strategy, White House adviser Peter Navarro said Wednesday in an interview with Bloomberg Television’s Jonathan Ferro.
“China in my view brazenly has released this China 2025 plan that basically told the rest of the world, ‘We’re going to dominate every single emerging industry of the future, and therefore your economies aren’t going to have a future,”’ Navarro said. “It’s artificial intelligence, robotics, quantum computing.”
Made in China 2025 was announced in 2015, and highlighted 10 sectors for support on the way to China becoming an advanced manufacturing power: Information technology, high-end machinery and robotics, aerospace, marine equipment and ships, advanced rail transport, new-energy vehicles, electric power, agricultural machinery, new materials, and bio-medical. In addition, China has a separate development strategy for artificial intelligence, published in 2017.
U.S. Trade Representative Robert Lighthizer has until April 6 to release a proposed list of products, but the list could come any day.
EU Rules Out Unilateral Concessions to Trump (6:15 a.m.)
The European Union’s executive briefed the bloc’s governments on Wednesday in Brussels, saying they must be united in trade talks with the U.S. and be ready to “think out of the box fast,” according to an official with knowledge of the discussions. The European Commission, which rules out reviving talks on a broad free-trade deal, is still trying to work out what Trump wants for a permanent exemption on the steel and aluminum tariffs. Formal talks would require a mandate from the 28 governments, something that won’t happen before May 1, when the tariff waiver expires, said the official, who asked not to be identified because talks are private.
U.S. Expected to Unveil Details of Chinese Tariffs (4:00 a.m.)
From the U.S., the next shoe to drop could be a proposed list of Chinese products that it plans to hit with import tariffs. U.S. Trade Representative Robert Lighthizer has until April 6 to publish the list in the Federal Register, though he’s expected to act as soon as March 28.
The public has 30 days to comment on the tariffs after the list appears in the Register, and the government will host a public hearing on the matter. The import duties would come in response to U.S. allegations that China violates American intellectual-property rights.
Trump administration officials said last week the list would likely cover about 1,300 so-called tariff lines, a technical term for the codes used to identify classes of products for trade purposes. Investors and analysts undoubtedly will comb through the list to get a sense of how tariffs will impact individual stocks.
Lighthizer’s office has said the list will include products in aerospace, information and communication technology, and machinery. If the tariffs edge into consumer products like shoes and clothing, they could hit retailers such as Walmart Inc. and Target Corp.
Here’s What Already Happened This Week:
- U.S. Trade Representative Robert Lighthizer said March 28 he’s “hopeful” the White House can reach an agreement in principle on Nafta “in the next little bit.”
- Senior White House officials the evening of March 27 provided details on their agreement with South Korea.
- U.S. Commerce Secretary Wilbur Ross on March 27 said the president would announce limitations on Chinese investments in America. People familiar with the matter said the White House is considering invoking a law reserved for national emergencies to crack down on Chinese investments in technologies the U.S. considers sensitive.
- In two filings with the World Trade Organization on March 26, China dismissed the U.S. assertion that the metal tariffs were instituted on national security grounds, arguing instead that they were temporary trade restrictions aimed at protecting domestic producers.
- The U.S. agreed to revise its free-trade agreement with South Korea and spare the country from steel and aluminum tariffs, the Asian nation reported on March 26.
What to Watch:
- May 1: Steel and aluminum tariffs relief lapses for Canada, Mexico, the European Union, Brazil and Argentina, unless they’ve already agreed to a permanent solution. Trump could also renew the temporary exemptions for talks to continue.
- Late May: The Treasury Department must hand over proposed measures to address China’s investment practices involving the acquisition of sensitive technologies.