SAN FRANCISCO/NEW YORK (Reuters) – Federal Reserve Chair Jerome Powell spends more time with U.S. lawmakers, White House advisers, and bankers than did his predecessor Janet Yellen, who tended to favor meetings with professors, the Treasury secretary and community advocates.
FILE PHOTO: Federal Reserve Board Chairman Jerome Powell speaks at his news conference after the two-day meeting of the Federal Open Market Committee (FOMC) on interest rate policy in Washington, U.S., June 13, 2018. REUTERS/Yuri Gripas
That is the rough picture that emerges from calendars detailing Powell’s first four months on the job, the latest of which was published on the U.S. central bank’s website on Friday.
The schedules do not indicate who sought each meeting or what was discussed, but they do suggest who has the Fed chair’s ear and offer some hints about his priorities.
The Fed has been assessing the strength of the economy and the risks of inflation as it measures whether to further raise interest rates this year amid concerns that global trade tensions could take a toll on growth. The Trump administration and Congress have cut taxes and raised spending in an effort to boost the economy, but Trump on Friday imposed tariffs on China that spurred China to retaliate in kind.
In the four months through May, Powell had 117 meetings or calls, usually one-on-ones, with non-Fed staff that were not part of his regular duties like attending Group of Seven meetings or regulatory panels. Yellen had 96 such meetings during her first four months, according to a review of the schedules.
Of Powell’s meetings, 27 were with members of Congress, split almost equally between Republicans and Democrats. In contrast, in her first four months on the job, Yellen met with seven lawmakers, six of whom were Democrats.
Powell also appears to be keeping an open line to the White House, meeting with President Donald Trump’s economic advisers seven times, compared to Yellen’s four in the period after she took the helm in 2014.
To be sure, legislation in May that rolled back some financial regulations, as well as relatively quick turnover within Trump’s White House, may have drawn particular attention from the Fed chair. The Fed declined to comment.
Powell, a lawyer who worked at private equity firm Carlyle Group before becoming a Fed governor in 2012, held 12 meetings with banking executives and financial experts in the first four months and only one with an economics professor: Stanford University’s John Taylor, who had also been on Trump’s short list to head up the Fed.
Yellen, who holds a doctorate in economics and was a university professor before joining the Fed, had six meetings with bankers and eight with economics professors. She also had four meetings with community advocates, while Powell had one.
The two Fed chairs met frequently with their respective Treasury secretaries, though Yellen booked nine meetings to Powell’s six. Powell met international central bankers and other foreign government officials 32 times versus Yellen’s 26.
Those meetings show how closely the Fed works with other policymakers both at home and abroad as they try to steer the U.S. economy clear of troubles and toward full employment and 2 percent inflation.
Reporting by Ann Saphir and Jonathan Spicer; Editing by Leslie Adler
(Reuters) – Twitter Inc suspended more than one million accounts a day in recent months to reduce the flow of misinformation on the platform, the Washington Post reported.
FILE PHOTO — People holding mobile phones are silhouetted against a backdrop projected with the Twitter logo in this illustration picture taken in Warsaw September 27, 2013. REUTERS/Kacper Pempel/Illustration/File Photo
Twitter and other social media platforms such as Facebook Inc have been under scrutiny by U.S. lawmakers and international regulators for doing too little to prevent the spread of false content.
The companies have been taking steps such as deleting user accounts, introducing updates and actively monitoring content to help users avoid being a victim to fake content.
Twitter suspended more than 70 million accounts in May and June, and the pace has continued in July, the Post reported on Friday, citing data it obtained.
“It’s hard to believe that 70 million accounts were affected when Twitter has only 336 million monthly active users (MAU),” Wedbush analyst Michael Pachter said.
Twitter’s MAU is expected to grow nearly 3 percent to 337.06 in the second quarter, according to Thomson Reuters I/B/E/S.
“My guess is that a large number of these suspended accounts were dormant … it should have little impact on the company,” Pachter told Reuters.
If the 70 million were mostly active accounts, the affected accounts would have been “screaming bloody murder”, added the analyst.
According to a Washington Post source, however, the aggressive removal of unwanted accounts may result in a rare decline in the number of monthly users in the second quarter.
“Due to technology and process improvements during the past year, we are now removing 214 percent more accounts for violating our spam policies on a year-on-year basis,” the company said in a blog post last month.
In May, it identified and challenged more than 9.9 million “potentially spammy” or automated accounts per week, compared with 6.4 million in December 2017.
Shares of Twitter fell marginally to $46.50 after the bell on Friday.
Reporting by Vibhuti Sharma in Bengaluru; Editing by Maju Samuel
BEIJING/WASHINGTON (Reuters) – The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, slapping tariffs on $34 billion worth of each others’ goods and giving no sign of willingness to start talks aimed at a reaching a truce.
Duties on a range of Chinese goods imported into the United States took effect on Friday and were immediately countered by measures from China, with Beijing accusing the United States of triggering the “largest-scale trade war”.
The escalating fight between the world’s two biggest economies meant that it could “take economic and political pain to get these two parties to the (negotiating) table”, said Scott Kennedy, head of China studies at the Center for Strategic and International Studies in Washington.
President Donald Trump is already threatening additional rounds of tariffs, possibly targeting more than $500 billion worth of Chinese goods – roughly the total amount of U.S. imports from China last year.
It will take weeks or months for the U.S. Trade Representative to review and possibly activate any new rounds of punishment.
“The key questions during that time are what will happen to financial markets, how will U.S. voters react and will China’s economy start to wobble,” Kennedy said in a telephone interview.
Erin Ennis, senior vice president of the U.S. China Business Council, said there was a danger the two sides will dig in on trade sanctions without a clear strategy for resuming negotiations.
While U.S. companies doing business in China agree with Trump’s complaint about Chinese intellectual property practices, Ennis said they do not see tariffs pushing China into submission.
China’s commerce ministry said it was forced to retaliate, meaning imported U.S. goods including cars, soybeans, and lobsters also faced 25 percent tariffs.
Some of Trump’s fellow Republicans in the U.S. Congress lashed out at his actions.
“Tariffs not only hurt our farmers, ranchers and airplane manufacturers, but they also harm every American consumer. We should be working with our allies to isolate China rather than escalate a trade war,” said Senator Jerry Moran, who represents the agriculture-heavy state of Kansas.
China’s soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses amid initial market confusion over whether Beijing had actually implemented the tariffs, which it later confirmed it had.
Instant View: U.S. triggers China tariffs, fuels fears of escalating trade war
China to keep on path of reform, opening markets: Li
USTR sets 90-day deadline for China tariff exclusion requests
Friday’s long-expected China tariff volley fueled fear that a prolonged and escalating battle would hurt global trade, investment and growth, while also damaging U.S. farm exports and potentially driving up food prices in China.
For example, U.S.-based audio company Sonos Inc noted in an initial public offering on Friday its performance “may be materially harmed” by trade restrictions.
“Trade war is never a solution,” Chinese Premier Li Keqiang said at a news briefing with Bulgarian Prime Minister Boyko Borissov in Sofia before a summit with 16 central and easternEuropean countries.
“China would never start a trade war but if any party resorts to an increase of tariffs, then China will take measures in response to protect development interests,” he said.
There was no sign of renewed negotiations between U.S. and Chinese officials in the run-up to Friday, business sources in Washington and Beijing said.
The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks.
China lodged a case with the World Trade Organization against the United States, its commerce ministry said on Friday.
White House Council of Economic Advisers Chairman KevinHassett said in an interview on Fox Business Network on Friday Trump is “going to deliver better (trade) deals”. He said that, for now, “he’s called the bluff of other countries that have basically been abusing” U.S. companies and workers.
FILE PHOTO: Shipping containers are seen at the port in Shanghai, China April 10, 2018. REUTERS/Aly Song/File Photo
Importers of American retail goods hit by higher Chinese duties were reluctant to pass the costs on to consumers for now.
An analysis of more than four dozen targeted U.S products showed that prices were little changed on Friday afternoon from earlier in the week. The products, sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.
Ford Motor Co said on Thursday that, for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China. However, German automaker BMW said it is unable to “completely absorb” new Chinese tariff on imported U.S.-made models and will raise prices.
U.S. stocks shook off the tariffs, which investors said had been well-anticipated and priced in. The SP 500 rose to a two-week high on Friday, partly buoyed by strong U.S. jobs growth. However, investors said a significant escalation intension would cause worries to set in.
Companies seeking product exclusions from tariffs on Chinese goods imported into the United States will get 90 days to file such requests, the U.S. Trade Representative’s office said onFriday.
Chinese state media slammed Trump’s trade policies and onFriday likened his administration to a “gang of hoodlums”.
China’s commerce ministry called the U.S. actions “a violation of world trade rules” and said it had “initiated the largest-scale trade war in economic history”.
Trump has railed against Beijing for intellectual property theft, barriers to entry for U.S. businesses and a $375 billionU.S. trade deficit with China.
A China central bank adviser said the planned U.S. import tariffs on $50 billion worth of Chinese goods – $34 billion plus a planned follow-on list worth $16 billion – would cut China’s economic growth by 0.2 percentage points, the official Xinhua news agency reported on Friday.
China’s tariff list is heavy on agricultural goods such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.
Slideshow (7 Images)
Reporting by Adam Jourdan in SHANGHAI, Michael Martina,Christian Shepherd, Dominique Patton, Elias Glenn and JosephineMason in BEIJING, David Lawder, Jeff Mason and Justin Mitchellin WASHINGTON, Meg Shen in HONG KONG and Tsvetelia Tsolova inSOFIA; Writing by Tony Munroe and Richard Cowan; Editing by Nick Macfie, Nick Zieminski and Eric Meijer
SOFIA (Reuters) – China will stick to the path of opening its markets and other reforms that has lifted its growth, Premier Li Keqiang said on Saturday, a day after the Washington and Beijing slapped tariffs on $34 billion worth of each others’ imports.
Chinese Premier Li Keqiang speaks during the 7th Summit of Heads of Government of CEEC and China in Sofia, Bulgaria, July 7, 2018. REUTERS/Stoyan Nenov
China will open its door wider to foreign products as free trade needs to be firmly upheld to ensure sustained global economic growth, Li told a summit of eastern European leaders in Sofia.
“For foreign products which meet Chinese consumer needs, we would open the door wider… We would lower overall import tariffs to the Chinese market,” he said through an interpreter, without going into details.
Li said economic reform had played a critical role in China’s growth, and that the fundamentals underpinning it remained unchanged.
“Opening up has been a key driver of China’s reform agenda so we will continue to open wider to the world, including widening market access for foreign investors,” he said.
Slideshow (2 Images)
Beijing earlier accused Washington of triggering the “largest-scale trade war”. U.S. duties on a range of Chinese imported goods took effect on Friday and were immediately countered by measures from China.
Neither side gave any sign of willingness to start talks aimed at a reaching a truce, though Li said on Friday that a trade war was never a solution and no one would gain from it.
He spoke on Saturday to central and eastern European leaders at an annual “16+1” gathering aimed a boosting business ties and investments.
Reporting by Tsvetelia Tsolova; Writing by Jason Hovet; editing by John Stonestreet
WASHINGTON (Reuters) – The U.S. economy created more jobs than expected in June, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases this year.
Nonfarm payrolls rose by 213,000 jobs last month as manufacturers stepped up hiring, the Labor Department said on Friday. The economy added 37,000 more jobs in April and May than previously reported. It needs to create about 120,000 jobs per month to keep up with growth in the working-age population.
“Overall the report is good news insofar as it suggests the economy still has some capacity to grow at an above-trend pace without generating much inflationary pressure,” said Michael Feroli, an economist at JPMorgan in New York. “Similarly, it should ease the concerns of the hawks (at the Fed) who worry that the Fed’s rate hike campaign is behind the curve.”
The report showed strength in the economy before a trade war started between the United States and China, which analysts warned could slow hiring, especially in the manufacturing sector. The U.S. and China slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday.
Washington is also engaged in fights with other major trade partners, including Canada, Mexico and the European Union after President Donald Trump imposed tariffs on steel and aluminum imports. Trump argues that the duties are necessary to protect domestic industries from what he says is unfair competition from foreign manufacturers.
Economists have warned the tit-for-tat tariffs could disrupt the supply chain, undermine business investment and raise prices for consumers, and wipe out the stimulus from a $1.5 trillion tax cut package that came into effect in January.
The unemployment rate rose to 4.0 percent in June from an 18-year low of 3.8 percent in May as 601,000 job seekers entered the labor force in a sign of confidence in the labor market. That was the first increase in the jobless rate in 10 months.
The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose to 62.9 percent last month from 62.7 percent in May. It had declined for three straight months.
Average hourly earnings gained five cents, or 0.2 percent in June after increasing 0.3 percent in May. That kept the annual increase in average hourly earnings at 2.7 percent. But with a record 6.7 million unfilled jobs in April, economists are confident that wage growth will accelerate later this year.
June’s moderate wage growth should, for now, allay fears of the economy overheating. The Fed’s preferred inflation measure hit the central bank’s 2 percent target in May for the first time in six years. Economists expect inflation will hover around its target because of labor market tightness.
“Wages could rise at a faster pace in the future as the economy is humming and the labor market is tight,” said Sung Won Sohn, chief economist at SS Economics in Los Angeles. “However, the ongoing trade war with China and our allies could hurt investment spending and hold back job and wage gains.”
Instant View: U.S. June payrolls gain more than expected
The dollar fell to a three-week low against a basket of currencies on the employment report. Prices for longer-dated U.S. Treasuries rose. Stocks on Wall Street were trading higher, with the SP 500 and the Nasdaq indexes touching two-week highs.
Economists polled by Reuters had forecast nonfarm payrolls increasing by 195,000 jobs last month and the unemployment rate steady at 3.8 percent.
Minutes of the Fed’s June 12-13 policy meeting published on Thursday were upbeat on the labor market. The U.S. central bank raised interest rates last month for the second time this year and has projected two more rate hikes by year end.
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, rose to 7.8 percent last month from a 17-year low of 7.6 percent in May.
The employment report together with data from the Commerce Department showing the trade deficit narrowed 6.6 percent to a 1-1/2-year low of $43.1 billion in May reinforced expectations of robust economic growth in the second quarter.
Gross domestic product growth estimates for the April-June period are as high as a 5 percent annualized rate, more than double the 2.0 percent pace logged in the first quarter.
But the Trump administration’s “America First” trade policy, is casting a pall over the outlook for the rest of the year and into 2019. Manufacturing, construction and other sectors heavily reliant on trade are seen taking a big hit from the tariff wars.
“Fortunately the economy has a good head of steam going into a period of significant uncertainty in terms of the impact of higher tariffs across a broad range of imports and exports,” said Brian Bethune, chief economist at Alpha Economic Foresights in Boston. “Unequivocally, this is a nightmare situation.”
Manufacturers hired 36,000 workers in June, the most in six months, adding to the 19,000 jobs created in May. The factory jobs were concentrated in the automobile industry, which had seen a decline in employment in May after a fire at a major parts supplier disrupted production.
Construction payrolls rose by 13,000 last month after increasing by 29,000 jobs in May. There were gains in professional and business services employment as well as leisure and hospitality. But retailers cut 21,600 jobs last month, after boosting payrolls by 25,100 in May.
Government payrolls increased by 11,000 jobs in June, buoyed by local government hiring.
FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson/File Photo
Reporting by Lucia Mutikani; Editing by Andrea Ricci
SAO PAULO/PARIS (Reuters) – Boeing Co (BA.N) struck a deal for a controlling stake in the commercial aircraft arm of Brazilian planemaker Embraer SA (EMBR3.SA) under a new $4.75 billion joint venture, the firms said on Thursday, reshaping a global passenger jet duopoly.
The new company, encompassing Embraer’s airliner business, thrusts Boeing into the lower end of the market, giving stiffer competition to the CSeries jets designed by Canada’s Bombardier Inc (BBDb.TO) and backed by European rival Airbus SE (AIR.PA).
The memorandum of understanding signed by Boeing and Embraer values the Brazilians’ commercial aircraft operations, the world’s third-largest, at $4.75 billion and Boeing’s planned 80-percent stake in the venture at $3.8 billion.
The Boeing-Embraer alliance, following on the heels of the Airbus-Bombardier tie-up announced last year, represents the biggest realignment in the global aerospace market in decades, strengthening established Western planemakers against newcomers from China, Russia and Japan, analysts say.
Chief Executive Paulo Cesar Silva told employees in a note reviewed by Reuters that consolidation in the aerospace supply chain had also forced Embraer’s hand.
“This has been happening with both our suppliers and our clients. They have started to organize in big blocs, making it harder for companies of Embraer’s size to negotiate,” he said.
Embraer shares fell 10 percent in New York and nearly 15 percent in Sao Paulo on disappointment at the financial terms of the long-awaited deal.
The price tag for Embraer’s commercial aviation unit was “significantly lower” than early reports, according to analysts at Vertical Research Partners, who underscored in a client note that a deal must still clear political and regulatory barriers before closing as proposed at the end of next year.
“We also see strong odds of Embraer shareholders demanding a higher price for the stake in the commercial segment,” wrote BTG Pactual analysts Renato Mimica and Samuel Alves in a note.
The partnership, which adds a 70- to 130-seat family to Boeing’s lineup, is expected to boost the U.S. firm’s earnings per share from 2020, generating annual pre-tax cost savings of about $150 million by the third year, the companies said.
Boeing shares were little changed on Thursday.
CASH AND DEBT
Embraer will transfer much of its debt to the new venture and receive cash from Boeing, Embraer executives told analysts.
About a fifth of the cash payment will go to taxes and the rest could be split between share buybacks, a special dividend, deleveraging and new product development, they said.
Silva told employees in his note that Embraer would improve its cash position by $1 billion once the deal closes, allowing more investment in new projects.
Slideshow (2 Images)
Embraer will hold the remaining 20 percent of the Boeing joint venture and keep control of its defense and business jet operations. Concern over U.S. influence in military programs had raised flags in the Brazilian government, which holds a strategic veto at Embraer dating back to its privatization.
However, recent signals from Brazil’s President Michel Temer and military officials suggest the government is satisfied with the new structure of the tie-up, as long as Brazilian jobs are maintained and Embraer continues to develop new technology.
One government official said the deal as announced on Thursday was likely to get approval in Brasilia. Another official said government approval was not certain and would depend on the final details presented later this year. Both spoke on the condition of anonymity.
In addition to the passenger jet deal, Boeing and Embraer will deepen a sales and services partnership on the new KC-390 military cargo jet through a separate defense venture that is likely to eventually receive a joint investment, Silva said.
The Embraer-Boeing tie-up took shape more than two years after the idea was first presented internally to Boeing’s board and reflects a longstanding affinity between the two planemakers, a person familiar with the discussions said.
However, the pressure for an alliance accelerated when Airbus last year announced it would take control of the CSeries jet, which had been struggling in its battle with Embraer at the small end of the airliner market.
That deal put enormous marketing weight behind Embraer’s competitor, while for Boeing the transatlantic tie-up threatened to expand the revenue base of its European arch-rival.
“The Boeing-Embraer announcement confirms the strong market potential in the 100- to 150-seat category,” Airbus said through a spokesman. “Boeing and Embraer are following Airbus and Bombardier.”
Reporting by Brad Haynes in Sao Paulo and Tim Hepher in Paris; Additional reporting by Arunima Banerjee in Bengaluru, Lisandra Paraguassu in Brasilia, Paula Laier and Flavia Bohone in Sao Paulo; and Tracy Rucinski in Chicago; Editing by Daniel Flynn, Nick Zieminski and Lisa Shumaker
NEW YORK (Reuters) – Wall Street’s major indexes rose on Thursday as reports that the United States and the European Union may agree to withdraw auto tariffs fostered optimism on international trade relations among investors.
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid
German Chancellor Angela Merkel said she would back lowering EU tariffs on U.S. car imports. An industry source told Reuters that the U.S. ambassador to Germany, Richard Grenell, had mentioned to German auto executives that U.S. President Donald Trump could abandon threatened tariffs on imported European cars if in return the European Union scrapped duties on U.S. cars.
U.S. stocks added to gains in the last hour of trading after having slightly pared gains upon the release of minutes from the Federal Open Market Committee’s June meeting.
The minutes reflected confidence among the Federal Reserve’s policymakers in the strength of the U.S. economy and its plans for future interest-rate hikes. In the June meeting, the Fed increased rates for the second time this year, and it has signaled that additional increases are likely.
Technology stocks led gains on the SP 500, with shares of several chipmakers rising. The Philadelphia semiconductor index rose 2.7 percent.
“The fact that EU and U.S. officials are discussing proposals to eliminate certain tariffs on auto imports, that’s helping sentiment today and calming fears of an escalating trade war,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.
Still, the Trump administration’s tariffs on $34 billion worth of Chinese imports are due to go into effect at 0401 GMT on Friday. Beijing said it would respond immediately and in equal measure on U.S. goods ranging from cars to soybeans.
There was no evidence of any last-minute negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.
Investors, however, suggested that Friday’s impending tariffs had already been priced into stocks.
“There’s a lot of uncertainty, but the markets have reacted fairly calmly and rationally,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. “There’s been a lot of rhetoric but not a lot of actual action in terms of a trade war.”
The Dow Jones Industrial Average rose 181.92 points, or 0.75 percent, to 24,356.74, the SP 500 gained 23.39 points, or 0.86 percent, to 2,736.61 and the Nasdaq Composite added 83.75 points, or 1.12 percent, to 7,586.43.
To view a graphic on The US-China tariff war and the SP 500, click: reut.rs/2tV7kTm
Shares of chipmaker Qorvo Inc rose 5.7 percent after KeyBanc, citing strong demand for smartphones in China and stabilizing iPhone sales, upgraded the company’s stock to “overweight.” Chipmaker Micron Technology Inc’s shares rose 2.6 percent after the company forecast only a small hit from a temporary ban on some sales in China.
Earlier on Thursday, the ADP National Employment Report showed private employers added 177,000 jobs in June, below Reuters’ consensus of an increase of 190,000. That comes ahead of the more comprehensive non-farm payrolls report on Friday.
Advancing issues outnumbered declining ones on the NYSE by a 2.79-to-1 ratio; on Nasdaq, a 2.40-to-1 ratio favored advancers.
The SP 500 posted six new 52-week highs and three new lows; the Nasdaq Composite recorded 96 new highs and 36 new lows.
Volume on U.S. exchanges was 5.76 billion shares, compared to the 7.07 billion average over the last 20 trading days.
Reporting by April Joyner; Additional reporting by Sinéad Carew in New York and Sruthi Shankar in Bengaluru; editing by Nick Zieminski and Phil Berlowitz
BEIJING/WASHINGTON (Reuters) – China accused the United States on Thursday of “opening fire” on the world with tariffs set to take effect on Friday, warning that it will respond the moment that duties on $34 billion in Chinese goods kick in.
U.S. President Donald Trump has threatened to further escalate the trade conflict between the world’s two largest economies with tariffs on as much as $450 billion worth of Chinese goods if China retaliates, as the initial round of tariffs take effect at 12:01 a.m. EDT (0401 GMT) on Friday.
There was no evidence of any last-minute negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.
The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks. U.S. stocks edged higher on Thursday, lifted by technology shares, amid hopes that American trade tensions with Europe may ease after German Chancellor Angela Merkel said she would back a reduction of European car tariffs if Washington abandons its threatened higher car levies.
China has said it will not “fire the first shot” in a trade war with the United States, but its customs agency made clear on Thursday that Chinese tariffs on American goods would take effect immediately after U.S. duties on Chinese goods are put in place.
Chinese Commerce Ministry spokesman Gao Feng said that the proposed U.S. tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work.
“U.S. measures are essentially attacking global supply and value chains. To put it simply, the U.S. is opening fire on the entire world, including itself,” Gao said.
Ford says not planning China price hikes despite new tariffs
Trade war could hurt these economies far more than U.S., China
“China will not bow down in the face of threats and blackmail and will not falter from its determination to defend free trade and the multilateral system,” Gao added.
A spokeswoman for the U.S. Trade Representative’s office said the agency had no immediate comment on the activation of its initial round of tariffs beyond a statement issued on June 15.
CARS, DISK DRIVES AND PUMP PARTS
U.S. Customs and Border Protection officials are due to collect 25 percent duties on a range of products including motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.
The list avoids direct tariffs on consumer goods such as cellphones and footwear. But some products, including thermostats, are lumped into intermediate and capital goods categories.
China has threatened to respond with tariffs on hundreds of U.S. goods, including top exports such as soybeans, sorghum and cotton, threatening U.S farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.
Chinese buying of soybeans has already ground nearly to a halt ahead of the duties.
In the latest sign that the risk of penalties is hitting trade, a vessel carrying U.S. coal and heading for China switched its destination to Singapore.
Slideshow (2 Images)
Asked whether U.S. companies would be targeted with “qualitative measures” in China in a trade war, Gao said the government would protect the legal rights of all foreign companies in the country.
Gao said China’s foreign trade was expected to continue on a stable path in the second half of the year, though investors fear a full-blown Sino-American trade war would deal a blow to Chinese exports and its economy.
Foreign companies accounted for $20 billion, or 59 percent, of the $34 billion of exports from China that would be subject to new U.S. tariffs, with U.S. firms accounting for a significant part of that 59 percent, Gao said.
Guo Shuqing, head of China’s banking and insurance regulator, said that a trade war would not affect China’s own reforms and opening up, adding, “The progress of China’s economy cannot be reversed by any force.”
FORD MAINTAINS CHINA PRICING
U.S. carmaker Ford Motor Co (F.N) said on Thursday it has no plans currently to hike retail prices of its imported Ford and Lincoln models in China, despite the steep additional tariffs on imported U.S. vehicles set to come into play on Friday. Ford said it would “continue to monitor the situation as it evolves”.
Adding to the tensions, a Chinese court this week temporarily barred Micron Technology Inc (MU.O) from selling its main semiconductor products in the world’s biggest memory chip market, citing violation of patents held by Taiwan’s United Microelectronics Corp (UMC) (2303.TW).
Beijing has made the semiconductor sector a key priority under its “Made in China 2025” strategy, which has intensified after a U.S. ban on sales to Chinese phone maker ZTE Corp (000063.SZ) underscored China’s lack of domestic chips.
Chinese stocks slipped on Thursday and the yuan steadied from earlier losses as a targeted cut of reserve requirements for banks took effect.
Reporting by Elias Glenn and Christian Shepherd; Additional reporting by Ben Blanchard, Stella Qiu and Michael Martina; Editing by Robert Birsel, Shri Navaratnam and Will Dunham
(Reuters) – The Trump administration wants to fire up development of the U.S. offshore wind industry by streamlining permitting and carving out vast areas off the coast for leasing – part of its ‘America First’ policy to boost domestic energy production and jobs.
The Block Island Wind farm, off the coast of Rhode Island, U.S. is pictured in this undated handout photo obtained by Reuters June 13, 2018. Deepwater Wind/Handout via REUTERS
The Europeans have taken note.
The drive to open America’s offshore wind industry has attracted Europe’s biggest renewable energy companies, who see the U.S. East Coast as a new frontier after years of success across the Atlantic.
Less experienced U.S. wind power companies, meanwhile, have struggled to compete in their own backyard, according to lease data and interviews with industry executives. Many are steering clear of the opportunity altogether, concerned by development costs and attracted to cheaper options on land.
The Trump administration hopes the industry will help supply power to the heavily-populated Northeast, eventually creating American jobs in manufacturing turbines, towers and other components. Its efforts are part of a broader push to relax regulations and spur development across the energy complex.
“This would be American produced energy, and American jobs,” said Vincent DeVito, energy policy advisor to Interior Secretary Ryan Zinke. “It fits well with the America First agenda.”
For the moment, however, Europe’s renewable energy companies are the ones using the opportunity to advance their already sizable headstart in offshore wind projects.
Since 2014, European-backed companies have won all eight of the U.S. government’s competitive offshore wind lease auctions with aggressive bids that have pumped up prices into the tens of millions of dollars.
Bidding in an auction last year for nearly 80,000 acres off the coast of New York, for example, lasted 33 rounds with Norway’s Equinor, formerly known as Statoil, eventually winning the lease for a record $42.5 million. An individual lease had never before sold for more than $5 million, according to public records.
The Block Island Wind farm off the coast of Rhode Island, U.S. is pictured in this undated handout photo obtained by Reuters June 13, 2018. Deepwater Wind/Handout via REUTERS
Europeans claimed another victory in May when a partnership between Copenhagen Infrastructure Fund and Avangrid, the U.S. arm of Spain’s Iberdrola, won the largest ever U.S. contract for offshore wind power, in Massachusetts.
Of the federal government’s 12 currently active offshore wind leases, seven are owned by European-backed companies, according to Bureau of Ocean Energy Management records. (See graphic tmsnrt.rs/2No7GtL)
“The U.S. is one of the most desirable global offshore wind markets,” Jonathan Cole, Iberdrola’s managing director of offshore wind, told Reuters.
FLYING THE FLAG
Trump’s Interior Department gave the industry a boost this year when it announced major lease sales off Massachusetts, sought input on potential lease areas off New York and New Jersey, and began a study of all Atlantic coast waters for wind energy potential.
It also proposed easing permitting, including by allowing developers to get some permits before making key decisions, like what size of turbines they would use.
Such aggressive leasing and flexible permitting helped Europe become the world’s largest offshore wind market, with thousands of wind turbines installed in the last two decades, and more than 9 billion euros in investment expected this year, according to trade group WindEurope.
While the U.S. East Coast has wind conditions and sea depths similar to the North Sea, it boasts just one five-turbine wind farm off the coast of Rhode Island.
That wind farm was developed by privately-held U.S. firm Deepwater Wind LLC, which is backed by hedge fund D. E. Shaw Group. Deepwater Wind’s chief executive, Jeff Grybowski, called the U.S. wind industry’s hesitation to move offshore outdated.
“I’m sure that we will see more American entrants in this business as time goes on,” he said. “Until then we’re happy to fly the flag.”
Other U.S. chief executives are less sanguine. Jim Robo, CEO of leading U.S. renewable energy company NextEra, told investors on a recent conference call that development time of 5 to 10 years and uncertainty around permitting raised serious questions about prospects offshore.
Slideshow (4 Images)
“It is a moon shot in terms of building, in terms of finding people who actually know what they’re doing from a construction standpoint,” Robo said.
NextEra, which owns 120 wind farms in the United States and Canada, did not respond to a request for additional comment.
Those concerns are echoed across much of the U.S. industry.
“There are so many opportunities to do onshore, at substantially lower cost,” said Mike Garland, the CEO of Pattern Energy Group. “It makes more sense for us to be focused in that area.”
Foreign companies are not just dominating the offshore leases. Most of the early projects, according to executives, will rely almost exclusively on imports of everything from subsea cables to turbines that are not currently made domestically – meaning much of the work will be overseas.
Components for Deepwater Wind’s five turbines off Rhode Island, for example, were shipped from Spain, Denmark and France, according to Grybowski. Their steel foundations were made in Louisiana.
If construction demand picks up, the picture could change, according to a 2017 report by consultants BVG Associates Limited.
The report said building 8 gigawatts of offshore wind
projects by 2030 would likely justify making most turbine components on U.S. soil, helping support up 16,700 full-time jobs.
The Interior Department’s DeVito said he saw the possibilities first hand during a visit to an offshore wind component manufacturing site in Copenhagen. He said he was he was amazed by “the level of activity, the blades, the steel towers, the cranes swinging.”
“The opportunity is to make them here,” he said.
Additional reporting by Stine Jacobsen; Editing by Richard Valdmanis and Paul Thomasch
WASHINGTON (Reuters) – U.S. central bankers discussed whether recession lurked around the corner and expressed concerns global trade tensions could hit an economy that by most measures looked strong, minutes of the Federal Reserve’s last policy meeting on June 12-13 released on Thursday showed.
FILE PHOTO: The Federal Reserve Building stands in Washington April 3, 2012. REUTERS/Joshua Roberts/File Photo
The minutes, which described a meeting in which the Fed raised interest rates for the second time this year, also suggested policymakers might soon signal that the Fed’s rate-hiking cycle was advanced enough that policy was no longer boosting or constraining the economy.
The minutes overall gave the impression of a central bank impressed by the U.S. economy’s strength and confident in its plans to continue raising rates, but also concerned with what could push the economy off its upward course.
“Most (Fed policymakers) noted that uncertainty and risks associated with trade policy had intensified and were concerned that such uncertainty and risks eventually could have negative effects,” according to the minutes.
Many of the Fed’s contacts across the economy said they were worried that a recent increase in tariffs levied by the United States and its trading partners was weighing on investment, according to the minutes’ summary of policymaker discussions.
“The trade threat is the prime risk factor so Fed officials are going to monitor how it affects business,” said Putri Pascualy, a portfolio manager at Pacific Alternative Asset Management Co in Irvine, California.
Minutes from Federal Reserve’s June FOMC meeting
Factbox: Fed staff forecasts from FOMC minutes
Fed policymakers also had a wide-ranging discussion on whether the recently slim spread between short- and long-term interest rates might be a sign of an impending recession.
“A number of participants thought it would be important to continue to monitor the slope of the yield curve,” according to the minutes.
U.S. stock prices pared earlier gains, which had been fed by optimism over reports of a possible cooling in the U.S-European Union row on car tariffs. The U.S. dollar extended losses against a basket of currencies.
At the meeting, policymakers also discussed a special presentation by Fed staff on another potential indicator of recession: the spread between the Fed’s current policy rate and the expected rate several quarters ahead derived from futures markets.
That indicator might have more reliable information than the yield curve, which might be distorted by temporary factors, the staff said, according to the minutes.
The document released on Thursday did not indicate whether policymakers took either the yield curve or the information from the staff presentation as pointing toward an impending recession.
Policymakers generally agreed recent economic data showed a strong economy that was evolving in line with their expectations.
However, they also discussed a number of global factors potentially weighing on the economy or its outlook, including “political and economic developments in Europe and some (emerging market economies).”
Reporting by Jason Lange in Washington; Additional reporting by Jennifer Ablan in New York; Editing by Andrea Ricci