Washington Post: “China will impose tariffs on $60 billion in U.S. goods if the United States presses ahead with its latest trade threats, Beijing warned Friday. The move was cast as a response to an Aug. 2 plan to raise tariffs on $200 billion in Chinese goods from 10 to 25 percent.”
Wall Street Journal: “Trump administration advisers are debating measures that might bring Chinese negotiators to the table. Some are pushing the president to apply tariffs as high as 25% on $200 billion of Chinese imports, up from an original proposal for 10%.”
“The White House won’t make a final decision until at least late August on those tariffs, which are likely to target consumer goods and food as well as machinery components. Advisers are justifying the steeper tariffs, in part, to make up for the rapid depreciation of the yuan in recent months. Since May 30, the yuan has fallen 6% against the dollar.”
New York Times: “A Wesleyan Media Project analysis of national advertising data from Kantar Media/CMAG also shows Republicans are rarely bragging to voters about the economy’s strength.”
“Republicans have reason to doubt the efficacy of an economic message in hotly contested midterm campaigns, which have historically been referendums on the sitting president. The last time the economy grew 4 percent in a quarter was in the middle of 2014, under President Barack Obama, just before Senate Democrats lost nine seats — and their majority — that fall.”
“For their part, Democrats are weaponizing the tax law — which is mired in only middling popularity — against Republican opponents in some key races. Their critiques have been fed by government statistics showing that wages for typical American workers have not risen over the past year, after adjusting for inflation, even though Republicans promised the tax cuts would unleash rapid wage growth.”
Washington Post columnist Catherine Rampell joins Chris Riback on this episode to help us better understand Trumponomics — and whether bad economics might just be good politics.
Thanks, as always, to the Cook Political Report for sponsoring this episode.
“United States gross domestic product rose at an annual rate of 4.1% in the second quarter, up from 2.2% in the first three months of the year. It was the strongest quarter of growth since 2014,” the New York Times reports.
“The second-quarter acceleration was widely anticipated by economists, a result of a confluence of events unlikely to recur. Most economists expect growth to slow in the second half of the year.”
“If you want to be stupid, I can be stupid, as well.”
— European Commission President Jean-Claude Juncker, quoted by the Wall Street Journal, telling President Trump that they “need to refrain from further punitive tariffs or they would foolishly harm themselves.”
“The United States and the European Union stepped back from the brink of a trade war on Wednesday, after President Trump said the Europeans agreed to work toward lower tariffs and other trade barriers, and to buy billions of dollars of American soybeans and natural gas,” the New York Times reports.
“The surprise announcement, made by Mr. Trump and the president of the European Commission, Jean-Claude Juncker, defused, for the moment, a trade battle that began with Mr. Trump’s tariffs on steel and aluminum exports and threatened to escalate to automobiles.”
Washington Post: “White House officials viewed the meeting as a major breakthrough and an acknowledgment that Trump’s hardball tactics were paying dividends.”
“Republicans on Tuesday quietly exhaled after President Trump announced $12 billion in subsidies to rescue farm country, fretting that a trade war could bankrupt the agriculture industry and cost the party seats in the midterm elections,” Washington Examiner reports.
“Amid loud grumbling about federal bailouts and ‘Soviet’ central planning, Republicans in Congress conceded that action was needed to mitigate the economic and political fallout from the retaliatory tariffs sparked by Trump’s trade war. In major agriculture states, some of which are also key 2018 battlegrounds, free-trade Republicans reluctantly endorsed the president’s intervention.”
“Several of President Trump’s senior economic advisers believe he plans to impose a 25 percent tariff on close to $200 billion in foreign-made automobiles later this year,” the Washington Post reports.
“Trump wants to move forward despite numerous warnings from GOP leaders and business executives who have argued that such a move could damage the economy and lead to political mutiny. But Trump has become increasingly defiant in his trade strategy, following his own instincts and intuition and eschewing advice from his inner circle.”
President Trump’s “bailout for the ag industry is driving his many Republican trade critics to exasperation,” Politico reports.
”Pro-free trade Republicans were already furious with Trump’s escalation of tariffs against U.S. allies and China — a multi-front trade war they say is hurting U.S. farmers and manufacturers. But the administration’s response Tuesday — sending $12 billion to farmers hurt by retaliatory tariffs to ease the pain — is the precise anathema of conservative, free-trade orthodoxy.”
Said Sen. Ron Johnson (R-WI): “This is becoming more and more like a Soviet-type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits. I’m very exasperated. This is serious.”
“The White House plans to announce on Tuesday a plan to extend $12 billion in emergency aid to farmers caught in the midst of President Trump’s escalating trade war, two people briefed on the plan said, the latest sign that growing tensions between the United States and other countries will not end soon,” the Washington Post reports.
”The funds will come through direct assistance, a food purchase and distribution program, and a trade promotion program.”
Bloomberg: “First, the tax reform hasn’t yet resulted in appreciably higher wages for American workers. Real average hourly compensation actually fell in the first quarter after the tax reform was passed.”
“Official data for the second quarter isn’t available yet, but private data isn’t looking encouraging. PayScale’s index of real wages shows a dramatic deterioration in the period.”
President Trump’s “trade wars could become a major political drag for Republicans, with job losses and price increases piling up just as voters head to the polls in November,” Politico reports.
“Trump jolted markets once again early Friday when he said he’s prepared to impose penalties on some $500 billion in Chinese goods regardless of the consequences that might ensue, economic or political… But market analysts, industry experts and economists warn that the economic fallout of the president’s tariffs — those that are already in effect and those he’s threatening to impose — is only going to intensify over the coming months and could reach a peak around election time. ”
“It takes months for most consumers to feel the impact of tariffs, but as the fall approaches, everything from groceries to appliances could start to cost more at major retailers across the country.”
President Trump told CNBC that he’s ready to escalate the U.S.-China trade war and put tariffs on every Chinese good imported to the U.S. — worth $505.5 billion.
Axios: “Trump’s tariffs are introducing a new, wildly unpredictable issue into the midterm elections, thanks to their heavy impact on states with critical Senate races as well as their likely role in House races across the country.”
Business Insider: “Trump-themed flags and hats made in China are reportedly being held up at US customs amid an intensifying trade war.”
“Textile suppliers who export their goods to the US told China’s state-run tabloid Global Times their products have been delayed at US customs, which is affecting their sales.”
President Trump “stood by his threats to levy sweeping tariffs on automobile imports as a way to extract concessions from trading partners, despite opposition from the industry and discontent in Congress with the White House’s proposal,” the Wall Street Journal reports.
“Resistance to the tariffs is strong and growing. A coalition of foreign and domestic auto companies, along with auto dealers and auto-parts makers, released a letter on Wednesday urging Mr. Trump to refrain from the tariffs. A bipartisan group of 149 House members also urged the president not to move forward with the tariffs.”
Bloomberg: “Trump’s decision to start a trade war four months before the midterm elections carries a heavy risk for his party because many of his most loyal followers will bear the brunt of the fallout. This wasn’t the case with his major actions before now. The crackdown on refugees and immigrants didn’t hurt the white, blue-collar voters who make up the core of his support. And although they got little benefit from his tax cut, aimed primarily at corporations and the wealthy, neither were they directly penalized.”
“Trade is different. The bulk of punitive tariffs from around the globe falls heavily on Farm Belt and Rust Belt states that went for Trump. Many of the new measures are designed, with almost surgical precision, to harm his supporters. Of the 30 congressional districts hit hardest by Chinese tariffs on U.S. soybeans, 25 are represented by Republicans, five by Democrats—but all 30 voted for Trump.”
Caitlin Owens: “Congressional Republicans think President Trump’s tariffs are going to hurt the economy, undoing some of their economic wins — but they’re not ready to cross the president until their voters feel the pain.”
“While some Republicans think Trump has a plan up his sleeve, most think there’s no good ending here. But they think the GOP base — which is fiercely loyal to Trump — needs to feel the impact of the new trade policies before Congress will have the voters’ permission to do something.”