SAN FRANCISCO/WASHINGTON (Reuters) – Facebook Inc Chief Executive Mark Zuckerberg on Friday endorsed U.S. legislation to regulate political ads across the internet, a concession to lawmakers days before he is scheduled to testify in two U.S. congressional hearings.
FILE PHOTO: Facebook Founder and CEO Mark Zuckerberg speaks on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017. REUTERS/Stephen Lam/File Photo
Zuckerberg also said Facebook would begin requiring people who want to run ads on the social network addressing political issues to verify their identity and location. That expands an earlier plan to require such verification for ads directly about elections.
“Election interference is a problem that’s bigger than any one platform, and that’s why we support the Honest Ads Act,” Zuckerberg wrote in a Facebook post on Friday.
That legislation was introduced last October to counter concerns about foreign nationals using social media to influence American politics, an issue being looked at as part of an investigation into possible Russian meddling during the 2016 U.S. presidential campaign.
Facebook disclosed in September that Russians under fake names had used the social network to try to influence U.S. voters in the months before and after the 2016 election, writing about inflammatory subjects, setting up events and buying ads.
In February, U.S. Special Counsel Robert Mueller charged 13 Russians and three Russian companies with interfering in the election by sowing discord on social media.
The legislation would expand existing election law covering television and radio outlets to apply to paid internet and digital advertisements on platforms like Facebook, Twitter Inc and Alphabet Inc’s Google.
Facebook had previously stopped short of backing the legislation, saying it wanted to work with lawmakers further and announcing attempts at self-regulation.
Zuckerberg is scheduled to appear on Tuesday before a joint hearing of two U.S. Senate committees, and on Wednesday before a U.S. House committee.
Under the Honest Ads Act, digital platforms with at least 50 million monthly views would need to maintain a public file of all electioneering communications purchased by anyone spending more than $500.
Zuckerberg said on Friday that he also wanted to shed more light on “issue ads,” or ads that discuss a political subject but do not directly relate to an election or a candidacy.
Issue ads are frequently run by interest groups, lobbying organizations and wealthy individuals who want to influence legislation or have an indirect impact on an election.
Every advertiser who wants to run an issue ad will need to confirm their identity and location, Zuckerberg wrote.
Reporting by David Ingram in San Francisco and Dustin Volz in Washington; Editing by Bill Rigby
CHICAGO (Reuters) – The Federal Reserve will likely need to keep raising U.S. interest rates to keep inflation under control, Fed Chairman Jerome Powell said in a speech on the economic outlook that did not address the economic risks of rising trade tensions.
FILE PHOTO: Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Market Committee meetings in Washington, U.S., March 21, 2018. REUTERS/Aaron P. Bernstein
In his first speech on the economic outlook since assuming the helm at the U.S. central bank on February 5, Powell said on Friday the labor market appeared close to full employment and that inflation was poised to rise toward the Fed’s 2 percent objective in the coming months.
“As long as the economy continues broadly on its current path, further gradual increases in the federal funds rate will best promote these goals,” Powell said at an event in Chicago.
Powell said the risks to the U.S. economic outlook appeared “roughly balanced.”
In his speech, he made no mention of rising trade tensions between Washington and Beijing in which each government is threatening to hike tariffs on tens of billions of dollars in bilateral trade.
Instant View: Fed’s Powell sees more gradual rate hikes
The Fed has been slowly raising rates since 2015, most recently in March when policymakers signaled they expected to increase borrowing costs two more times in 2018. Prices for interest rate futures have suggested that investors expect the Fed will do just that.
Powell’s comments on Friday bolstered that view. He said there were many signs that the job market was nearly at full strength and only a few indicators pointed to weakness.
“I will be looking for an additional pickup in wage growth as the labor market strengthens further,” Powell said.
He said Fed policymakers discussed inflation “thoroughly” in January and that he believed inflation will be influenced by the labor market over time, meaning that a tight labor market could fuel faster price gains.
Reporting by Jason Lange; Editing by Andrea Ricci and Chizu Nomiyama
BEIJING/WASHINGTON (Reuters) – China warned on Friday it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if the United States follows through on President Donald Trump’s threat to slap tariffs on an additional $100 billion of Chinese goods.
Trump, in light of what he called China’s “unfair retaliation” against earlier U.S. trade actions, had upped the ante on Thursday by ordering U.S. officials to identify extra tariffs, escalating a tit-for-tat confrontation with potentially damaging consequences for the world’s two biggest economies.
China’s Commerce Ministry spokesman, Gao Feng, called the U.S. action “extremely mistaken” and unjustified, adding that the spat was a struggle between unilateralism and multilateralism. He also said no negotiations were likely in the current circumstances.
“The result of this behavior is to smash your own foot with a stone,” Gao told a news briefing in Beijing. “If the United States announces an additional $100 billion list of tariffs, China has already fully prepared, and will not hesitate to immediately make, a fierce counter strike.”
While U.S. officials said they were prepared to talk the issues through with China, there was no clear path to communication. Both Treasury Secretary Steve Mnuchin and Trump economic advisor Larry Kudlow were on television to promote the idea of talks, with Mnuchin telling CNBC “we are in communication regularly”.
Gao was speaking shortly after Trump defended his proposed tariffs on U.S. radio, saying the move might cause “a little pain” but the United States will be better off in the long run.
Asked in an interview with New York station WABC about the effect on U.S. stock markets, Trump said the market has gone up (since he took office) “so we might lose a little bit of it.”
“So we may take a hit and you know what, ultimately we’re going to be much stronger for it.”
Financial markets have been roiled by the prospect of threats becoming action and U.S. stocks tumbled on Friday as investors worried about an escalating trade war.
Kudlow told Bloomberg Television Trump and America’s top trade official Robert Lighthizer were “thinking about submitting a list of suggestions to the Chinese.”
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Trump says U.S. treated unfairly vs China at WTO: tweet
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On Wednesday, China unveiled a list of 106 U.S. goods including soybeans, whiskey, frozen beef and aircraft targeted for tariffs, just hours after the Trump administration proposed duties on some 1,300 Chinese industrial, technology, transport and medical products.
Washington called for those $50 billion in extra duties after it said an investigation had determined that Chinese government policies are designed to transfer U.S. intellectual property to Chinese companies and allow them to seize leadership in key high-technology industries of the future.
China said it was not afraid of a trade war, even though it did not seek one, and accused the United States of provoking the conflict. Gao said comments from U.S. officials about ongoing talks about trade issues were incorrect.
“Under these conditions, the two sides cannot conduct any negotiations on this issue,” Gao said, without elaborating.
Kudlow, who has repeatedly sought this week to soothe markets with mention of possible talks, told Bloomberg Television there were always ongoing discussions on trade between the United States and China but that negotiations on the tariffs had not begun.
Seeking to tamp down alarm, he told reporters outside the White House, “so nothing’s happened. Nothing’s been executed … There’s no ‘there’ there yet, but there will be.”
While Beijing calls Washington the aggressor and says it is spurring global protectionism, China’s trading partners have complained for years that it abuses World Trade Organization rules and propagates unfair policies that lock foreign firms out of some sectors. China has promised repeatedly to open up sectors such as financial services.
Shipping containers are being loaded onto Xin Da Yang Zhou ship from Shanghai, China at Pier J at the Port of Long Beach in Long Beach, California, U.S., April 4, 2018. REUTERS/Bob Riha Jr.
President Xi Jinping is expected to unveil reform measures next week and his country’s opening up while attending the Boao Forum, China’s equivalent of Davos, in the southern island province of Hainan.
So far, U.S. information technology products from mobile phones to personal computers have largely escaped the ire of Beijing, as well as telecoms equipment and aircraft larger than the equivalent of a Boeing 737.
Among sectors most affected by a trade war could be technology, particularly chipmakers. The U.S. semiconductor industry relies on China for about a quarter of its revenue.
It also remains to be seen if the dispute would trigger a nationalistic backlash in terms of travel. When ties between Beijing and Seoul chilled, Chinese tourism to South Korea plummeted and Chinese consumers shunned Made-in-South Korea products.
On Chinese social media on Friday, among the most searched phrases were “China hasn’t grown up afraid” and “China will follow through to the end.”
The China Chamber of International Commerce said the Chinese business community would firmly support its government’s efforts to counter “irrational and erroneous” U.S. words and actions, the official Xinhua news agency reported, and urged Washington not to go “further and further down the wrong path.”
Analysts at Oxford Economics, referring to the fact that the tariffs announced this week are not yet in effect, said in a note to clients that, “Importantly, these threatened tariffs will be subject to negotiation, and therefore shouldn’t be considered as final.”
However it added a full-blown trade war “would have a more pronounced effect. The U.S. and China would suffer significant slowdown in real GDP growth – a cumulative loss around 1.0 percentage point.” It cut global economic growth to 2.5 percent in 2019 from 3.0 percent in Oxford’s baseline scenario.
The escalating tit-for-tat over trade has roiled global financial markets, hitting equities, the dollar and a range of riskier assets such as copper, and boosting safe havens such as the Japanese yen and gold.
Slideshow (2 Images)
“This is what a trade war looks like, and what we have warned against from the start,” said National Retail Federation President and CEO Matthew Shay.
“We are on a dangerous downward spiral and American families will be on the losing end,” Shay added in a statement, urging Trump “to stop playing a game of chicken with the U.S. economy.”
Reporting by Tom Daly, Michael Martina and Min Zhang in BEIJING and Steve Holland, David Lawder and Doina Chiacu in WASHINGTON; Additional writing by Ryan Woo, Alex Richardson, Lindsay Dunsmuir and David Chance; Editing by Frances Kerry and James Dalgleish
(Reuters) – The Dow Jones Industrial Average fell more than 450 points and the other main indexes slipped on Friday after U.S. President Donald Trump’s latest tariff threat on Chinese imports revived fears of a trade war between the two countries.
Trump on Thursday threatened to slap $100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a “fierce counter strike”.
Fears of a trade war since Trump announced tariffs on steel and aluminum more than a month ago have kept investors on edge over concerns that such protectionist measures would hit global economic growth.
“Markets are absolutely appalled by protectionism,” said Dec Mullarkey, managing director at Sun Life Investment Management based in Wellesley, Massachusetts.
Mullarkey said the markets may tolerate some tit-for-tat, given the strong fundamentals.
“Let’s fast forward to next week, if earnings are strong then markets will take a lot of comfort and that’s the expectation.”
Mixed signals from administration officials also added to the nervousness. Trump’s top economic adviser Larry Kudlow told CNBC he learnt of the new tariffs on Thursday night. He told Bloomberg TV that negotiations had not yet started, but later said on Fox Business that talks are ongoing.
“Clearly the reaction from China to tariffs is clearly the only factor driving the markets today,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.
At 12:54 a.m. the Dow Jones Industrial Average .DJI was down 320.42 points, or 1.31 percent, at 24,184.8. The Dow dropped 456 points at session’s low.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 5, 2018. REUTERS/Brendan McDermid
The SP 500 .SPX was down 26.29 points, or 0.99 percent, at 2,636.55 and the Nasdaq Composite .IXIC was down 63.26 points, or 0.89 percent, at 7,013.29.
All 30 Dow components were in the red and each of the 11 major SP sectors were lower, with the defensive utilities and real estate sectors falling the least.
As on Wednesday, industrials led the decliners. Boeing (BA.N), the single largest U.S. exporter to China, fell 2.5 percent. Caterpillar (CAT.N) declined 2.8 percent and Deere (DE.N) dropped about 2.3 percent.
Chipmakers, which as a group rely on China for about a quarter of their revenue, also declined. The Philadelphia semiconductor index .SOX fell 1.2 percent.
Nonfarm payrolls increased by a fewer-than-expected 103,000 last month, a Labor Department report showed. While the annual growth in average hourly earnings rose to 2.7 percent, it stayed below the 3-percent that economists estimate is needed to lift inflation toward the Federal Reserve’s 2-percent target.
“That’s not showing us wage inflation where the Fed would have to step in. This seems to be a natural improvement,” said Sean Lynch, co-head of global equity strategy, Wells Fargo Investment Institute in Omaha, Nebraska.
Declining issues outnumbered advancers by a 2.64-to-1 ratio on the NYSE and a 2.25-to-1 ratio on the Nasdaq.
The SP index showed two new 52-week highs and one new lows, while the Nasdaq recorded 33 new highs and 37 new lows.
Reporting by Sruthi Shankar in Bengaluru, additional reporting by Sinead Carew in New York; Editing by Sriraj Kalluvila
WASHINGTON, (Reuters) – The U.S. economy created the fewest jobs in six months in March as the boost from mild temperatures faded, but a pickup in wage gains pointed to a tightening labor market, which should allow the Federal Reserve to further raise interest rates this year.
Nonfarm payrolls increased by 103,000 last month, with construction and retail sectors shedding jobs, the Labor Department said on Friday. That was the smallest gain since last September and followed a 326,000 surge in February, which was the largest in more than two years.
Temperatures returned to normal in March, with snowstorms in some parts of the country. The pullback in job gains is likely to be temporary as layoffs are at historic low levels and other independent labor market indicators were strong in March.
“Inclement weather was the primary culprit for the slowdown in the pace of job growth in March,” said Joseph Song, an economist at Bank of America Merrill Lynch in New York.
Employment gains averaged 202,000 jobs per month in the first quarter, highlighting underlying labor market strength. The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population.
The unemployment rate held steady at 4.1 percent for a sixth straight month. Economists polled by Reuters had forecast the economy adding 193,000 jobs in March and the unemployment rate dropping to 4.0 percent.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working part time because they cannot find full-time employment, fell two-tenths of a percentage point to 8.0 percent last month.
With labor market slack diminishing, wage growth picked up a bit in March. Average hourly earnings rose eight cents or 0.3 percent last month after edging up 0.1 percent in February.
The gain lifted the annual increase in average hourly earnings to 2.7 percent from 2.6 percent in February. Annual wage growth is inching closer to the at least 3 percent pace that economists say is needed to lift inflation toward the Fed’s 2 percent target.
There is hope that wage growth will accelerate in the second half of the year and keep the U.S. central bank on a path of gradual interest rate hikes. The Fed increased borrowing costs last month and forecast two more interest rate hikes this year.
“In sum, no change in the Fed’s trajectory,” said Steven Blitz, chief U.S. economist at a TS Lombard in New York. “If anything, the wage data are beginning to strengthen the argument for three more hikes this year.”
The step-down in employment gains combined with mounting trade tensions between the United States and China to undercut stocks on Wall Street and the dollar.
Beijing warned on Friday it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if Washington followed through with President Donald Trump’s threat to slap tariffs on an additional $100 billion in Chinese goods.
U.S. stocks were trading lower and the dollar fell against a basket of currencies. Prices for U.S. Treasuries rose.
Economists do not see an impact on hiring in the near-term from the stock market selloff, which has caused a tightening in financial conditions.
While the weather dampened hiring last month, it did not have an impact on hours worked. The average workweek held at 34.5 hours. That together with the modest job gains and increase in average hourly earnings boosted a proxy for take-home pay.
“This morning’s figures may suggest a little less momentum heading into the second quarter, but taken with other data, the continued expansion in total hours worked points to a modest acceleration in activity this quarter, provided we manage to avoid shooting ourselves in the foot on trade policy,” said Michael Feroli, an economist at JPMorgan.
The economy appears to have slowed in the first quarter, with gross domestic product growth estimates mostly below a 2 percent annualized rate. Growth in the January-March period tends to be weak because of a seasonal quirk.
The economy grew at a 2.9 percent pace in the fourth quarter. Growth this year is seen bolstered by a $1.5 trillion income tax cut package and increased government spending, which economists say will offset some of the impact from the stock market gyrations.
The unemployment rate has hovered at 4.1 percent since October as people piled into the labor market. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, slipped one-tenth of a percentage point to 62.9 percent in March after rising to a five-month high of 63.0 percent in February.
The return of cold weather and a shortage of skilled workers weighed on hiring at construction sites in March. Payrolls in the sector fell 15,000, the first drop since last July, after surging 65,000 in February.
Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida
Manufacturing employment increased 22,000. The retail sector shed 4,400 jobs after adding 47,300 positions in February.
Temporary help, seen as a harbinger of future permanent hiring, slipped by 600. Leisure and hospitality employers added only 5,000 jobs last month, the least since September. Government payrolls rose by 1,000 in March.
Reporting by Lucia Mutikani; Editing by Andrea Ricci Lucia.Mutikani@thomsonreuters.com; +1-202-898-8315; Reuters Messaging: email@example.com
NEW YORK (Reuters) – The buzzy debut of Spotify Technology SA (SPOT.N) on the New York Stock Exchange on Tuesday drew retail investors across generations, not just the Millennials who make up the largest proportion of the music streaming service’s customer base, retail brokerages said on Wednesday.
FILE PHOTO: The Spotify logo is displayed after the stock began selling as a direct listing on the floor of the New York Stock Exchange in New York, U.S., April 3, 2018. REUTERS/Lucas Jackson
Spotify’s listing was hotly followed, as it went public via the unusual method of a direct listing, without selling new shares. There was demand for the stock, and shares ended up 12.9 percent on their first day of trade on the New York Stock Exchange. On Wednesday, the shares ended the day’s session at $145.87, down 2.1 percent from Tuesday’s close.
Social media platform Snap Inc’s (SNAP.N) high-profile IPO last year had been notable for being popular with Millennials, the primary user base for the company’s mobile app Snapchat. But though Millennials are also a key demographic for Spotify, the Swedish company’s listing did not draw disproportionate interest from that generation.
Demand was seen across age groups, according to brokerages Fidelity and TD Ameritrade.
“There’s good interest in it,” said J.J. Kinahan, TD Ameritrade’s chief market strategist, who is based in Chicago. “It’s pretty well split across age groups.”
Fidelity said among its customers, baby boomers were slightly more active in trading Spotify shares than Millennials or members of Generation X. Baby boomers made nearly one-third more trades than Millennials and 20 percent more trades than members of Generation X. A similar pattern holds for other tech IPOs, a Fidelity spokesman said.
Retail investor behavior indicated some caution about jumping in.
On StockTwits, a social media platform whose users are mostly retail investors, only 40 percent of members were bullish on Spotify ahead of the debut. Negative sentiment toward the IPO rose as the date approached and the expected trading price climbed, said Pierce Crosby, StockTwits director of business development, based in New York.
“Our community is as bearish as they’ve ever been (about Spotify),” Crosby said.
On the site, users posted messages expressing concerns about Spotify’s lack of profits and competition from companies such as Apple Inc (AAPL.O).
High-profile IPOs of companies associated with the tech sector have had a mixed track record in the past year. Shares of MuleSoft Inc (MULE.N) and Roku Inc (ROKU.O), which went public in March 2017 and September 2017, respectively, have climbed more than 100 percent since those companies’ IPOs. On the other hand, shares of Snap and Blue Apron Holdings Inc (APRN.N) have fallen below their IPO prices.
Individual investors who spoke with Reuters similarly expressed reservations about buying Spotify shares.
“I think a lot of similarly situated retail investors still view many of the VC-backed, marketplace tech companies as destined IPO flops,” said Layla Tabatabaie, an entrepreneur and advisor to tech startups who lives in New York.
Others said they would only consider buying the stock at a lower price.
“It’s certainly a strong company in regards to the service it offers,” said Jonathan Johnson, a relationship banker in Portland, Oregon. “I’d consider buying it but not at these (price) levels.”
Reporting by April Joyner; additional reporting by Sinéad Carew in New York; Editing by David Gregorio
TOKYO (Reuters) – Asian shares bounced from two-month lows on Thursday as world equities recovered from a selloff triggered by escalating Sino-U.S. trade tensions, with investors hoping a full-blown trade war between the world’s two biggest economies can be averted.
FILE PHOTO: A pedestrian casts a shadow in front of an electronic stock quotation board outside a brokerage in Tokyo, Japan, November 9, 2016. REUTERS/Issei Kato
Sentiment was lifted as the United States expressed willingness to negotiate a resolution to the trade fight after the proposed U.S. tariffs on $50 billion in Chinese goods prompted a quick response from Beijing that it would retaliate by targeting key American imports.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent, a day after it hit its lowest in almost two months. Trade-dependent Singapore’s Straits Times Index .STI rose more than 2.0 percent.
Japan’s Nikkei .N225 gained 1.6 percent while markets in mainland China, and those in Hong Kong and Taiwan, are closed for the Tomb Sweeping Day holiday on Thursday.
U.S. SP 500 mini futures ESc1 rose 0.4 percent in Asia.
On Wednesday, the SP 500 .SPX gained 1.16 percent and the Nasdaq Composite .IXIC added 1.45 percent, clawing back heavy losses of more than 1.5 percent right from earlier in the U.S. session.
“I think that the substance of trade restrictions and their real impact will be far less than the headlines,” said Jeffery Becker, Chairman and CEO at Jennison Associates in New York. “U.S. and Chinese cross border trade has grown significantly over the last decade and economic inter-dependence runs very deep, deeper than the actual trade numbers. And both countries have a lot to lose by escalating a trade war.”
Many investors viewed U.S. President Donald Trump’s latest tariffs plan as part of his negotiation strategy, rather than his final policy.
Indeed, Trump’s top economic adviser, Larry Kudlow, when asked whether the latest U.S. tariffs plan may never go into effect and may be a negotiating tactic, told reporters: “Yes, it’s possible. It’s part of the process.” He called the announcements by the two countries mere opening proposals.
The U.S. trade actions will not be carried out immediately, giving the two countries room for maneuver and providing investors with hope of a compromise.
The proposed 25 percent U.S. tariffs on some 1,300 industrial technology, transport and medical products from China now see a public comment and consultation period that is expected to last around two months.
“Our view on the China-U.S. trade situation is that typically, the initial headline is worse than what we expect the implementation to ultimately turn out to be. So our expectation is it will remain a tense situation but will not break out, and to an all out trade war,” said Mike Lillard, chief investment officer at PGIM Fixed Income in Newark, New Jersey.
Many suspect Washington will likely back down on some fronts after Beijing threatened tariffs on U.S. soybeans, the top U.S. agricultural export to China.
It is considered one of the most powerful weapons in Beijing’s trade arsenal given the impact on Iowa and other farming states that backed Trump in the election.
“The U.S. administration will have to tread cautiously considering the risk this could hurt the election prospects,” said Yukino Yamada, senior strategist at Daiwa Securities.
Optimists also argued that the global economy is currently running so strong that it could cope with the impact of the proposed tariffs, which cover a fraction of the world’s trade.
U.S. economic data published on Wednesday underscored the prevailing bullish view on the economy. U.S. private payrolls increased solidly in March as hiring rose across the board, boding well for Friday’s jobs data.
Yet others also cautioned that uncertainties caused by fears of a trade war could result in many companies delaying capital expenditure investments in the near term.
Concerns about trade wars could also hit some specific assets, such as U.S. soybeans Sc1 and corn Cc1. Both products licked their wounds after having fallen 2.2 percent and 1.9 percent, respectively, on Wednesday on China’s trade moves.
Oil prices bounced back in tandem with global share prices, and on a surprise draw in U.S. crude stockpiles.
U.S. crude futures CLc1 traded at $63.71 per barrel, up 0.5 percent.
In the currency market, the recovery in risk appetite helped to boost the dollar against the yen. The U.S. currency changed hands at 106.93 yen JPY=, near last week’s high of 107.015.
The euro EUR= was little changed at $1.2283, off Tuesday’s two-week low of $1.2254.
The Canadian dollar CAD=D4 hit a five-week high of C$1.2745 per U.S. dollar while the Mexican peso held near a six-month high of 18.065 peso to the dollar MXN=D2 hit the previous day, both helped by optimism over a NAFTA trade deal.
Additional reporting by Tomo Uetake; Editing by Sam Holmes and Jacqueline Wong
MENDOZA, Argentina (Reuters) – As the trade dispute between the United States and China was gaining steam last month, a half-dozen Chinese dancers and a person in a panda bear suit paraded across a stage inside a hotel lobby in the heart of Argentina’s wine country.
FILE PHOTO: Soybeans are harvested on a farm on the outskirts of San Jose, Uruguay, April 27, 2011. REUTERS/Andres Stapff/File photo
The March 24 ceremony celebrated the Washington-based Inter-American Development Bank’s (IDB) choice to hold its next annual meeting in Chengdu, China, a decision criticized by the United States, whose regional influence has been increasingly challenged by the Asian economic superpower.
Just over a week later, China imposed tariffs on a range of U.S. products from frozen pork to wine in response to U.S. President Donald’s Trump’s decision to place tariffs on steel and aluminum from countries including China.
The trade fight, which escalated further on Wednesday with China targeting key American imports including soybeans, planes and cars in retaliation for proposed U.S. tariffs on $50 billion in Chinese goods, has left Latin America in the middle, analyzing risks and opportunities.
“The U.S. is forcing countries in the region to choose between the U.S. and China,” said Margaret Myers, director of the Latin America and the World program at the Inter-American Dialogue. “It’s putting Latin American countries in a very challenging position while at the same time not offering a particularly attractive policy.”
China, whose demand for raw materials increased during rapid economic growth the past two decades, is already the top trade partner for countries ranging from Brazil, Latin America’s largest economy and the world’s top soybean exporter, to tiny Uruguay.
Rather than celebrating a chance to gain market share, Brazil and Argentina responded cautiously to the tariffs on Wednesday. Brazil’s Agriculture Ministry declined to comment. Argentina, the world’s No. 3 soy exporter, said it was “analyzing the situation.”
Analysts in both countries said, however, the tariffs could force China to purchase more soybeans and soy-based products from South America.
FILE PHOTO: A local producer of soybeans shows the camera a handful of freshly harvested soybeans on a farm on the outskirts of San Jose, Uruguay, April 27, 2011. REUTERS/Andres Stapff/File photo
CHINESE LOANS, INVESTMENT
Latin American countries’ turn to China for financing has alarmed Washington even as its own policy toward the region shifts.
Trump’s December 2017 national security strategy said China was seeking to “pull the region into its orbit through state-led investment and loans.”
David Malpass, the U.S. Treasury Department’s undersecretary for international affairs, said at a March conference in Buenos Aires that China’s hosting of next year’s IDB meeting “does not serve the interests of the Western Hemisphere.”
In response, IDB President Luis Alberto Moreno noted that the IDB would hold a special meeting for the bank’s 60th anniversary in Washington next year, saying: “We have found the best of all worlds.”
Trump’s trade policies and rhetoric about immigration have disturbed even the most U.S.-friendly governments in Latin America.
Slideshow (5 Images)
Before the United States temporarily exempted Brazil from planned steel tariffs, a Foreign Ministry official said trade relations between the two countries were in “uncharted waters.”
Argentina is threatening to take Washington to the World Trade Organization over biodiesel import tariffs. While the United States is the IDB’s largest shareholder, it backed out last year of one of the bank’s key funds.
Still, China’s perceived disregard for projects’ social and environmental costs has generated opposition within Latin America.
Civil society groups from Ecuador, Argentina and Peru set up an alliance to present information on “multiple human rights violations” linked to Chinese investments to the United Nations, according to a February statement from global nonprofit alliance Civicus.
MORE CHINESE PLAYERS
Chinese foreign direct investment, or FDI, in the region has increased by $70 billion since 2012, according to the Adrienne Arsht Latin America Center. While the United States remains the largest source of FDI, its share fell to 20 percent in 2016 from 25.7 percent in 2015 and 24 percent in 2012, according to the Economic Commission for Latin America and the Caribbean.
Data from the Inter-American Dialogue and Boston University show lending from Chinese state-run banks to countries in the region exceeded $20 billion in 2015 and 2016. Since 2005, those loans have exceeded combined financing to the region from the IDB, World Bank and CAF, a Latin American development bank.
Commercial banks like ICBC are becoming increasingly active, Myers said, and the Asian American Infrastructure Bank (AIIB) – a 2-year-old Beijing-based multilateral lender – is seeking to partner with the IDB on projects in the region, such as roads, railways, ports or tunnels that could improve connectivity with Asia.
Seven Latin American countries including Argentina have been approved to join the AIIB, although none have yet paid in to become full members.
Additional reporting by Maximilian Heath in Buenos Aires, Anthony Boadle in Brasilia, Jose Roberto Gomes in Sao Paulo and Daniela Desantis in Asuncion; Editing by Caroline Stauffer and Peter Cooney
SAN FRANCISCO (Reuters) – Facebook Inc said on Wednesday the personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica, up from a previous news media estimate of more than 50 million.
Chief Executive Mark Zuckerberg said in a conference call with reporters that Facebook had not seen “any meaningful impact” on usage or ad sales since the scandal, although he added, “it’s not good” if people are unhappy with the company.
Shares rose more than 3 percent after the bell.
Zuckerberg told reporters that he accepted blame for the data leak, which has angered users, advertisers and lawmakers, while also saying he was still the right person to head the company he founded.
“When you’re building something like Facebook that is unprecedented in the world, there are going to be things that you mess up,” Zuckerberg said, adding that the important thing was to learn from mistakes.
He said he was not aware of any discussions on the Facebook board about him stepping down, although directors would face a challenge if they wanted to oust him because Zuckerberg is the controlling shareholder.
He said he had not fired anyone over the scandal and did not plan to. “I’m not looking to throw anyone else under the bus for mistakes that we made here,” he said.
Facebook first acknowledged last month that personal information about millions of users wrongly ended up in the hands of Cambridge Analytica.
Zuckerberg will testify about the matter next Tuesday and Wednesday during two U.S. congressional hearings.
London-based Cambridge Analytica, which has counted U.S. President Donald Trump’s 2016 campaign among its clients, disputed Facebook’s estimate of affected users. On Wednesday it said on Twitter it had received no more than 30 million records from a researcher it hired to collect data about people on Facebook.
Zuckerberg, on the call with reporters, said Facebook should have done more to audit and oversee third-party app developers like the one that Cambridge Analytica hired in 2014.
“Knowing what I know today, clearly we should have done more,” he said.
Facebook was taking steps to restrict which personal data is available to third-party app developers, he said, and it might take two more years to fix Facebook’s problems. (bit.ly/2Ejpktb)
“We’re broadening our view of our responsibility,” Zuckerberg said.
Most of the up to 87 million people whose data was shared with Cambridge Analytica were in the United States, Facebook Chief Technology Officer Mike Schroepfer wrote in a blog post. (Graphic: bit.ly/2q5r5pl)
Shares in Facebook closed down 0.6 percent on Wednesday to $155.10. They have tumbled more than 16 percent since the Cambridge Analytica scandal broke.
The previous estimate of more than 50 million Facebook users affected by the data leak came from two newspapers, the New York Times and London’s Observer, based on their investigations of Cambridge Analytica.
Zuckerberg said Facebook came to the higher estimate by looking at the number of people who had downloaded a personality quiz app created by Cambridge University academic Aleksandr Kogan, or about 270,000 people, and then adding in the number of friends they had.
Cambridge Analytica has said that it engaged Kogan “in good faith” to collect Facebook data in a manner similar to how other third-party app developers have harvested personal information.
The scandal has kicked off investigations by Britain’s Information Commissioner’s Office, Australia’s Privacy Commissioner and the U.S. Federal Trade Commission and by some 37 U.S. state attorneys general.
Nigeria’s government will investigate allegations of improper involvement by Cambridge Analytica in that country’s 2007 and 2015 elections, a presidency spokesman said on Monday.
FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File photo
Reporting by David Ingram in San Francisco; Additional reporting by Arjun Panchadar in Bengaluru, Eric Auchard in London and Tom Westbrook in Sydney; Editing by Lisa Shumaker and Clarence Fernandez
WASHINGTON/BEIJING (Reuters) – The United States voiced willingness on Wednesday to negotiate a resolution to an escalating trade fight with China after Beijing retaliated against proposed U.S. tariffs on $50 billion in Chinese goods by targeting key American imports, but the Chinese ambassador to Washington said it “takes two to tango.”
Just 11 hours after President Donald Trump’s administration proposed 25 percent tariffs on some 1,300 Chinese industrial, technology, transport and medical products, China shot back with a list of similar duties on major American imports including soybeans, planes, cars, beef and chemicals.
Beijing’s swift and forceful response raised the prospect of a quickly spiraling dispute between the world’s two economic superpowers that could harm the global economy.
While Trump posted defiant messages on Twitter, his administration signaled possible wiggle room.
Asked whether the U.S. tariffs announced on Tuesday may never go into effect and may be a negotiating tactic, Trump’s top economic adviser, Larry Kudlow, told reporters: “Yes, it’s possible. It’s part of the process.” He called the announcements by the two countries mere opening proposals.
Kudlow later told Fox News Channel: “I don’t think it’s a trade war. I think there is going to be intense negotiations on both sides.”
“I think we’re going to come to agreements,” he said, adding that “I believe that the Chinese will back down and will play ball.”
Cui Tiankai, China’s ambassador to the United States, held an hour-long meeting at the U.S. State Department in Washington with acting Secretary of State John Sullivan.
“Negotiation would still be our preference, but it takes two to tango. We will see what the U.S. will do,” the ambassador said afterward.
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The trade actions will not be carried out immediately, so there may be room for maneuver. Publication of Washington’s list on Tuesday started a period of public comment and consultation expected to last around two months. The effective date of China’s moves depends on when the U.S. action takes effect.
If the two countries are unable to settle the dispute, a full-scale trade war could destabilize U.S.-Chinese commercial ties, an important component of the global economy.
China’s action rattled U.S. farmers, while shares in U.S. exporters of everything from planes to tractors were volatile.
After dropping at the outset of trading, Wall Street’s three major indexes staged a comeback to close about 1 percent higher as investors turned their focus to earnings and away from the trade fight.
White House spokeswoman Sarah Sanders said U.S. implementation of the tariffs would depend on China’s behavior.
“It’s going to be a couple months before tariffs on either side would go into effect and be implemented and we’re hopeful that China will do the right thing,” she told reporters.
“I would anticipate that if there are no changes to the behavior of China and they don’t stop the unfair trade practices, then we would move forward,” Sanders said.
Trump, who contends his predecessors served the United States badly in trade matters, wrote on Twitter: “We are not in a trade war with China that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.”
Shipping containers at Pier J at the Port of Long Beach wait for processing in Long Beach, California, U.S., April 4, 2018. REUTERS/Bob Riha Jr.
While Washington targeted products that benefit from Chinese industrial policy – including its “Made in China 2025” initiative to replace advanced technology imports with domestic products in strategic industries such as advanced IT and robotics – Beijing appeared to offer a response intended to inflict political damage.
Washington’s list was filled with many obscure industrial items, but China’s struck at signature U.S. exports, including soybeans, frozen beef, cotton and other agricultural commodities produced in states from Iowa to Texas that voted for Trump in the 2016 presidential election.
The list extends to tobacco and whiskey, both produced in states including Kentucky, home of U.S. Senate Majority Leader Mitch McConnell, like Trump a Republican.
Trump said last month that “trade wars are good, and easy to win,” but key fellow Republicans expressed unease over the latest developments.
McConnell said he was nervous about the “growing trend in the administration to levy tariffs” that could become a “slippery slope,” while Senator Chuck Grassley, whose home state of Iowa is a major agricultural producer, said: “Farmers and ranchers shouldn’t be expected to bear the brunt of retaliation for the entire country.”
The possibility of an escalating U.S.-China trade war will result in “a bumpy ride” for the U.S. economy, said James Bullard, president of the Federal Reserve Bank of St. Louis.
China said its list of 25 percent additional tariffs on U.S. goods covered 106 items with a trade value matching the $50 billion targeted on Washington’s list.
U.S.-made goods that appear to face added tariffs in China include Tesla Inc electric cars, Ford Motor Co’s Lincoln auto models, Gulfstream jets made by General Dynamics Corp and Brown-Forman Corp’s Jack Daniel’s whiskey.
Information technology products, from cellphones to personal computers, largely escaped the latest salvo of U.S.-China trade measures despite accounting for a significant portion of bilateral trade.
China ran a $375 billion goods trade surplus with the United States in 2017. Trump has demanded that the China cut the trade gap by $100 billion.
The U.S. move was aimed at forcing Beijing to address what Washington says is deeply entrenched theft of U.S. intellectual property and forced technology transfer from U.S. companies to Chinese competitors, charges Chinese officials deny.
Slideshow (9 Images)
The U.S. tariff list followed China’s imposition of tariffs on $3 billion worth of U.S. fruits, nuts, pork and wine to protest U.S. steel and aluminum tariffs imposed last month by Trump.
Reporting by David Lawder in Washington and Michael Martina in Beijing; Additional reporting by Lesley Wroughton, David Brunnstrom, Jason Lange, Ginger Gibson, Steve Holland, Jeff Mason, Makini Brice, Susan Heavey, David Chance and Lindsay Dunsmuir in Washington; Michael Martina, Cheng Fang, Ryan Woo, Ben Blanchard, Tony Munroe, Cate Cadell, Philip Wen, Dominique Patton, Josephine Mason and Stella Qiu in Beijing, Engen Tham in Shanghai and Brenda Goh in Shanghai, Tom Miles in Geneva and Michael Hogan in; Hamburg; Writing by Will Dunham; Editing by Steve Orlofsky and Peter Cooney