There are 6.7 million job openings and just 6.4 million available workers to fill them, according to the Bureau of Labor Statistics.
April marked the second month in a row that there were more vacancies than available hires, a phenomenon that had not happened before 2018.
Despite the mismatch, sizeable wage gains remain elusive, with average hourly earnings up just 2.7 percent over the past year.
There are more jobs than people out of work, something the U.S. has never experienced before
The jobs market has reached what should be some kind of inflection point: there are now more openings than there are workers.
April marked the second month in a row this historic event has occurred, and the gap is growing.
According to the monthly Job Openings and Labor Turnover Surveyreleased Tuesday, there were just shy of 6.7 million open positions in April, the most recent month for which data are available. That represented an increase of 65,000 from March and is a record.
The number of vacancies is pulling well ahead of the number the Bureau of Labor Statistics counts as unemployed. This year is the first time the level of the unemployed exceeded the jobs available since the BLS started tracking JOLTS numbers in 2000.
As of April, the total workers looking and eligible for jobs fell to 6.35 million, a decrease from 6.58 million the previous month. The number fell further in May to 6.06 million, though there is no comparable JOLTS data for that month.
Under normal circumstances, the mismatch would be creating a demand for higher wages. However, average hourly earnings rose just 2.7 percent annualized in May, up one-tenth of a point from April.
“Given these trends, the sluggish wage growth rate is even more perplexing,” said Cathy Barrera, chief economist at ZipRecruiter, an online employment marketplace. “If employers want to fill these 6.7 million job openings, they are either going to have to raise wages or find more clever and creative ways to recruit workers off the sidelines.”
Employers have been complaining for years about a skills mismatch, or the inability to find workers with the right training for the positions available. In the meantime, companies are adding other incentives to retain workers and pull new ones in.
As the demand grows, workers have gotten more confident about leaving their current positions for better ones.
The total “quits” rate has been nudging higher this year and was at 2.3 percent in April, the highest since 2005 and above the 2.1 percent rate a year ago and the 1.3 percent bottom set in 2010. Barrera said the rate should be higher.
“While more people are getting into jobs, folks aren’t moving around much once they do,” she said. “Unfortunately, the lack of mobility means that employers face little pressure to raise wages. They just aren’t competing over jobholders.”
How long it will take until the gap is bridged has confounded economists and policymakers at the Federal Reserve. April saw the difference between job openings and hires continue to be wide as the labor market gets closer to full employment.
“This is the ongoing difficulty of employers finding qualified workers. The disparity between job openings and hiring is over a million again for the second month in a row,” said Jessica Rabe, co-founder of DataTrek Research. “In terms of wages, it’s hard to increase wages when you don’t have the proper qualifications for a worker to fill that role.”
Another factor working against wage gains is demographics and the aging workforce.
While the unemployment rate has dropped to 3.8 percent, tied for the lowest rate since 1969, the level of those falling out of the workforce has surged. The total of those counted as not in the labor force is now at a record 95.9 million, a 21 percent rise over the past decade.
(Reuters) The European Union will consider introducing tariffs on coal, pharmaceuticals and chemical products from the United States if President Donald Trump imposes restrictions on European cars, Germany’s Wirtschaftswoche magazine reported on Thursday.
“Depending on progress made during the visit of European Commission President Jean-Claude Juncker, the member states will decide on their future strategy at the end of next week,” an unnamed EU diplomat was quoted as saying in the magazine.
The list of countermeasures could then be agreed on, said the magazine.
Juncker heads to Washington next week to discuss strained trade relations between the EU and U.S. after Trump imposed tariffs on EU steel and aluminum, and following his repeated threats to extend those measures to European cars.
Wirtschaftswoche said any steps taken in response to tariffs on European cars would have to be broader than earlier, targeted countermeasures following U.S. tariffs on steel and aluminum.
Juncker is due to meet Trump on July 25 and has said he will explain that the European Commission coordinates trade policy for the 28-nation bloc.
(Economist) The summit offered up a graphic reaffirmation of what was already known
THE story of the meeting between President Donald Trump and President Vladimir Putin in Helsinki has a beginning and an end, but no middle.
It began with a statement from the American president. The lowly state of Russo-American relations, he tweeted, was not the fault of the Russian government for seizing Crimea, shooting down a passenger airliner, interfering in America’s presidential election or using a banned nerve agent to kill citizens of a close ally on its own soil. No, it was the fault “of US foolishness and stupidity and now, the Rigged Witch Hunt”.
It ended with a joint press conference that John McCain, a Republican senator, described as, “one of the most disgraceful performances by an American president in memory.”
In the middle was a void, in which the two presidents met with nobody else in the room but their interpreters. For those who watch Mr Trump daily and have observed his habit of being confrontational with other people when at a safe distance and then seeking to please them when face-to-face, this encounter seemed freighted with risk. Would he give away Crimea by mistake? Would he commit to some Russian-led military initiative in Syria? In fact this part seems to have gone relatively well. Both presidents reported that they talked about nuclear weapons, including the Intermediate-Range Nuclear Forces Treaty (INF) which covers short- and medium-range nuclear missiles. The chances of them signing an extension to the new Strategic Arms Reduction Treaty (START) are perhaps greater now than they were before the meeting. That is not nothing.
Yet it is hard to pinpoint a decisive change in American foreign policy that came out of the Helsinki meeting. What it offered instead was a reaffirmation of things that America already knew about its president. Mr Trump thinks that the world benefits when America and Russia have close relations, and that “the United States has been foolish” on this point. He takes the judgment of America’s intelligence services that Russia intervened in the 2016 election campaign to be a personal insult, an accusation that he needed outside help to beat Hillary Clinton. He will readily believe the word of a former KGB agent over the views of the CIA or FBI on this point. Americans who question this are liable to be described by their president as enemies of the people. The probe run by Robert Mueller is “a disaster for our country”. It was jarring to see Mr Trump say these things standing on a podium next to Mr Putin, but they are all things he has said before, countless times. This is not a performance. He really means it.
One part, near the end of the press conference, is worth quoting at length to give an unmediated sample of the president’s thinking:
REPORTER, Associated Press: President Trump, you first. Just now, President Putin denied having anything to do with the election interference in 2016. Every U.S. intelligence agency has concluded that Russia did. My first question for you, sir, is: who do you believe? My second question is: would you now, with the whole world watching, tell President Putin, would you denounce what happened in 2016 and would you want him to never do it again?
PRESIDENT TRUMP: So let me just say that we have two thoughts. You have groups that are wondering why the FBI never took the server. Why haven’t they taken the server? Why was the FBI told to leave the office of the Democratic National Committee? I’ve been wondering that. I’ve been asking that for months and months and I’ve been tweeting it out and calling it out on social media. Where is the server? I want to know where is the server and what is the server saying? With that being said, all I can do is ask the question. My people came to me, Dan Coats [director of national intelligence], came to me and some others they said they think it’s Russia. I have President Putin. He just said it’s not Russia. I will say this: I don’t see any reason why it would be. But I really do want to see the server but I have, I have confidence in both parties. I really believe that this will probably go on for a while but I don’t think it can go on without finding out what happened to the server. What happened to the servers of the Pakistani gentleman that worked on the DNC? Where are those servers? They’re missing. Where are they? What happened to Hillary Clinton’s e-mails? 33,000 e-mails gone, just gone. I think in Russia they wouldn’t be gone so easily. I think it’s a disgrace that we can’t get Hillary Clinton’s 33,000 e-mails. I have great confidence in my intelligence people but I will tell you that President Putin was extremely strong and powerful in his denial today and what he did is an incredible offer. He offered to have the people working on the case come and work with their investigators, with respect to the 12 people [GRU officers indicted by the Department of Justice]. I think that’s an incredible offer. OK? Thank you.
For readers who are rubbing their eyes at this point, it is important not to lose sight of a few things that will endure once this summit is over. Mr Mueller’s probe has gathered so much detail about the activities of the GRU that its future activities would seem to be compromised. Russia’s economy is weak, and American sanctions will not be lifted by the Senate anytime soon. Some of America’s institutions are not doing their job. But some of them quietly are.
BBC diplomatic correspondent James Robbins says Mr Trump’s tweet is likely to alarm White House advisers, already nervous about the risks of giving too much ground to the Russian leader during the talks.
Many in the West have criticised Moscow for what they regard as its destabilising activities in Ukraine. The US, among others, has imposed sanctions on Russia over its annexation of Crimea.
The summit – in which the two leaders are being joined only by their interpreters – comes after a tumultuous European tour that saw Mr Trump criticise allies of the US over trade and military spending.
What are the main sources of tension with Russia?
Russia has been criticised in the US because of its military support for President Bashar al-Assad in Syria as well as its actions in Ukraine.
Tensions also are high as a result of accusations of Russian interference in the 2016 US election. The allegations are being investigated by Special Counsel Robert Mueller.
Mr Trump has consistently denounced the inquiry as a “witch hunt”.
Top Democrats including party chairman Tom Perez have urged Mr Trump to cancel the talks, saying Mr Putin was “not a friend of the United States”.
On the Republican side, Senator John McCain said the summit “should not move forward” unless the president “is prepared to hold Putin accountable”.
Russia denies the hacking allegations, and says it is looking forward to the talks as a vehicle for improving relations.
What is being discussed at the summit?
US National Security Adviser John Bolton has said that both sides have agreed the meeting will have no set agenda.
But he said he found it “hard to believe” Mr Putin did not know about the alleged election hacking and the subject would be mentioned.
“That’s what one of the purposes of this meeting is, so the president can see eye to eye with President Putin and ask him about it,” he told ABC News.
Mr Trump has also been urged to raise the poisoning of two people in the UKwho came into contact with the nerve agent Novichok on 30 June. Investigators believe the incident is linked to the poisoning of a former Russian spy and his daughter in March.
Mr Trump elaborated on what would be discussed at the summit during a joint press conference with UK Prime Minister Theresa May last week.
“We’ll be talking about Syria,” he said. “We’ll be talking about other parts of the Middle East. I will be talking about nuclear proliferation.”
This is not the first time US and Russian leaders have met in Helsinki.
Finland remained politically and militarily neutral after World War Two, as US and Soviet Union went headlong into the Cold War, making it an attractive meeting spot for the two superpowers.
The city saw the signing of the 1975 Helsinki Accords, which are credited for improving relations between the Soviet Union and Western countries.
Helsinki remained a destination in the post-Soviet era, and the Trump-Putin summit is the fourth such meeting in the city.
What has Mr Trump been doing so far in Europe?
His tour has included a Nato summit in Belgium and a visit to the UK. Neither passed without controversy.
The UK visit also had its ups and downs after Mr Trump told a newspaper the US would probably not give the UK a trade deal under the terms of Mrs May’s Brexit plans – and then later appeared to backtrack on this position.
He also said Europe was “losing its character” because of immigration from Africa and the Middle East.
On Sunday, just before he departed for Helsinki, Mr Trump described the European Union as a foe on trade.
He told CBS News that European countries were taking advantage of the US and not paying their Nato bills.
(CNN) The amount of money coming into American companies from overseas fell 32% last year.
Foreign investors spent $259.6 billion to acquire, launch, and expand businesses in the United States in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. That’s down from an historic high of $439.5 billion in 2015.
The largest chunk of last year’s foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan.
Foreign direct investment is influenced by a number of factors. A strong US dollar can make American assets more attractive. That may have partially driven a spike in foreign investment over the past two years.
Financial instability abroad also makes the United States’ relatively safe markets seem like a good bet, although America’s share of global foreign direct investment has declined over the years as developing countries have become more competitive.
The United States wasn’t the only country to receive less money from outside its borders last year. According tothe Organization for Economic Cooperation and Development, global foreign direct investment flows were down 18% in 2017 from the previous year and nearly 24% from its post-recession high in 2015, which the OECD attributed to a surge in financial and corporate restructuring.
Big businesses tend to support foreign investment in US companies, saying that the money supports expansion, research and development, and employment of U.S. residents.
The Trump administration has had a more mixed outlook.
President Donald Trump has celebrated foreign business activities in the United States, including the Chinese company Foxconn’s construction of a factory in Wisconsin. But the White House also blocked Singaporean chipmaker Broadcom’s acquisition of California-based Qualcomm, citing concerns that American technology could end up in the hands of China.
Trump has backed a bill pending in Congress that would expand the powers of the Committee on Foreign Investment in the United States, which reviews such transactions.
Trade adviser Peter Navarro, meanwhile, has characterized foreign investment as “conquest by purchase.”
Nancy McLernon, president of a trade group of multinational companies called the Organization for International Investment, thinks that attitude — along with Brexit in the U.K. — took a toll on investment.
“Last year, there was a lot of uncertainty,” McLernon says. “Multinational companies in general are concerned about how governments will be treating foreign companies operating in their countries. Cross-border acquisition is not surprisingly taking a hit from economic nationalism, not just in the U.S. but also worldwide”
Told of his pride at taking wife Melania to meet the Queen
Mr Trump’s remarks come as he prepares to meet the PM for a working lunch at Chequers.
He will then board a helicopter for Windsor Castle to meet the Queen before flying up to Scotland for a private two-day visit.
Thousands of people are expected to take part in a series of protests during his stay in the UK.
I told May how to do Brexit but she didn’t listen to me
THERESA May’s new soft Brexit blueprint would “kill” any future trade deal with the United States, Donald Trump warns today.
Mounting an extraordinary attack on the PM’s exit negotiation, the President also reveals she has ignored his advice on how to toughen up the troubled talks.
Instead he believes Mrs May has gone “the opposite way”, and he thinks the results have been “very unfortunate”.
His fiercest criticism came over the centrepiece of the PM’s new Brexit plan — which was unveiled in full yesterday.
It would stick to a common rulebook with Brussels on goods and agricultural produce in a bid to keep customs borders open with the EU.
But Mr Trump told The Sun: “If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal.
US President Donald Trump talks candidly to The Sun about the British Prime Minister Theresa May and Brexit
“If they do that, then their trade deal with the US will probably not be made.”
Mr Trump made the bombshell intervention during a world exclusive interview with The Sun — the only British media outlet he spoke to before his arrival in the UK for his first visit as President.
US President Donald Trump talks candidly to The Sun about UK / US deals
It will pour nitroglycerine on the already raging Tory Brexiteer revolt against the PM.
And in more remarks that will set off alarm bells in No10, Mr Trump also said Mrs May’s nemesis Boris Johnson — who resigned over the soft Brexit blueprint on Monday — would “make a great Prime Minister”.
A big US-UK trade deal, long promised by Mr Trump, is cherished by Leave campaigners as Brexit’s biggest prize.
But the President said Mrs May’s plan “will definitely affect trade with the United States, unfortunately in a negative way”.
He explained: “We have enough difficulty with the European Union.
“We are cracking down right now on the European Union because they have not treated the United States fairly on trading.
“No, if they do that I would say that that would probably end a major trade relationship with the United States.”
President Donald Trump and Melania Trump depart for dinner with PM Theresa May at Blenheim Palace
Questioned on Boris’s comments at a private dinner two weeks ago that Mr Trump “would go in bloody hard” if he was negotiating Brexit, the President swiftly replied: “He is right.”
He added: “I would have done it much differently. I actually told Theresa May how to do it but she didn’t agree, she didn’t listen to me.
“She wanted to go a different route.
“I would actually say that she probably went the opposite way. And that is fine.
“She should negotiate the best way she knows how. But it is too bad what is going on.”
US President Donald Trump talks candidly to The Sun about Trade
Asked if that meant he would be prepared to walk away from the negotiating table, Trump replied: “Oh, absolutely. I think what is going on is very unfortunate. Too long.
“You know, deals that take too long are never good ones. When a deal takes so long, they never work out very well.”
Mr Trump also went even further in questioning whether Mrs May’s new Brexit plan upholds the referendum result — which he claimed he predicted two years ago. He said: “The deal she is striking is a much different deal than the one the people voted on.
“It was not the deal that was in the referendum. I have just been hearing this over the last three days. I know they have had a lot of resignations. So a lot of people don’t like it.”
President Donald Trump and Melania Trump arrive at Blenheim Palace for dinner with Prime Minister Theresa May
Despite the withering criticism of Mrs May’s Brexit strategy, Trump insisted he still thinks she is “a very good person”.
He also denied claims that she bores him.
Asked about a report in The Washington Post that he thinks of Mrs May as “a bossy schoolteacher”, Mr Trump said: “No, no, no, no. I never said anything bad about her.
“That is fake news. I think she is a nice person. I get along with her very nicely. The Washington Post is totally fake. They are just a lobbyist for Amazon.”
Recalling a visit to one of his luxury golf resorts in Scotland two years ago, Mr Trump said: “I predicted Brexit.
“I was cutting a ribbon for the opening of Turnberry — you know they totally did a whole renovation, it is beautiful — the day before the Brexit vote.
“I said, ‘Brexit will happen’. The vote is going to go positive, because people don’t want to be faced with the horrible immigration problems that they are being faced with in other countries.
“You remember that Barack Obama said that there is no way it is going to happen, and the UK will get to the back of the line if it ever does, right? I said Brexit will happen, and I was right.”
At a press conference in Brussels yesterday at the end of a summit of Nato leaders, Mr Trump again cast doubt on whether the PM’s soft Brexit plan was true to the referendum result.
He said: “I don’t know if that’s what they voted for.”
Downing Street was left shell-shocked by the criticism.
Mrs May rushed out her own statement to hit back at the President’s claim.
The PM insisted: “We have come to an agreement at the proposal we’re putting to the European Union which absolutely delivers on the Brexit people voted for.
They voted for us to take back control of our money, our law and our borders and that’s exactly what we will do.”
Johnson tipped as future PM
US President Donald Trump talks candidly to The Sun about Boris Johnson
The US President described the former Foreign Secretary as “a very talented guy”, adding: “I like him a lot.”
He said: “I have a lot of respect for Boris. He obviously likes me, and says very good things about me.
“I was very saddened to see he was leaving government and I hope he goes back in at some point. I think he is a great representative for your country.”
Asked if the ex-minister could be in No 10 one day, he replied: “Well I am not pitting one against the other. I am just saying I think he would be a great Prime Minister. I think he’s got what it takes.”
Novichok attack will not stop Trump meeting Putin
BRITAIN’S fury over the Salisbury nerve agent attack will not stop Donald Trump from bonding with Vladimir Putin next week.
The President flies from the UK to a summit with the Russian leader in Helsinki on Monday.
Quizzed on whether the Novichok attack made him reconsider, he said: “I think getting along with China, getting along with Russia, is a good thing.”
He suggested Mrs May’s plans for a soft Brexit was a hostile move towards the US because “the European Union is very bad to the United States on trade”.
Theresa May has urged Mr Trump to tackle Mr Putin on Novichok and other international outrages, including cyber attacks.
Mayor Khan doesn’t like me but I say to him: You’ve done terrible job on terror
The Labour heavyweight has “done a very bad job on terrorism” by allowing so many migrants to come to the city, the President controversially argues.
US President Donald Trump talks candidly to The Sun about London’s Mayor Sadiq Khan
The incendiary remarks are the most vicious in the White House boss’s long-running feud with London’s first Muslim mayor.
It began more than two years ago during Trump’s US presidential election campaign when Mr Khan attacked his vow to temporarily ban all Muslims from entering America.
Deepening the duo’s bitter war of words again, Mr Trump told The Sun in an exclusive interview ahead of his arrival in Britain: “I think allowing millions and millions of people to come into Europe is very, very sad.
“I look at cities in Europe, and I can be specific if you’d like. You have a mayor who has done a terrible job in London. He has done a terrible job.
“Take a look at the terrorism that is taking place. Look at what is going on in London. I think he has done a very bad job on terrorism.
“I think he has done a bad job on crime, if you look, all of the horrible things going on there, with all of the crime that is being brought in.”
London was hit by four terror attacks last year — including in Westminster, London Bridge, Parsons Green Tube station and Finsbury Park’s mosque.
Speaking to The Sun inside the US Embassy in Brussels, the US President also revealed he thinks Mr Khan has shown a lack of respect to America by attacking him personally.
Mr Trump added: “I think he has not been hospitable to a government that is very important. Now he might not like the current President, but I represent the United States.
“I also represent a lot of people in Europe because a lot of people from Europe are in the United States.”
Mr Trump also clashed with Mr Khan after last June’s van and knife rampage on London Bridge and Borough Market — mocking the mayor for his appeal to Londoners to stay calm.
The President tweeted: “At least 7 dead and 48 wounded in terror attack and Mayor of London says there is ‘no reason to be alarmed!’”
Mr Khan described the tweet as “ill-informed”.
A source close to Mr Khan last night pointed out that the Home Office is in charge of immigration policy for London and the whole country and not those in City Hall.
Meanwhile, a Tory MP faced calls to be suspended yesterday after being accused of Islamophobia over a picture he tweeted of Mr Khan.
Michael Fabricant posted an image with the London Mayor’s head on an inflatable pig that is being mounted by a second pig along with Mr Trump laughing.
Piers Morgan and Sadiq Khan get into furious row over crime stats in London as GMB host asks ‘Is my child going to be stabbed in the street?’
The tweet is thought to be in response to Mr Khan’s decision to allow a 20ft “Trump Baby” blimp to be flown over London during the President’s visit.
Mr Fabricant deleted the image and claimed he did not see that it featured Mr Khan’s face, saying: “My fault was not checking it closer on my iPhone first.”
But Labour’s Luke Pollard said: “Tweeting racism is not a good look for a Conservative MP when there is a real problem with Islamophobia in the Tory party.”
Trump on London crimewave
DONALD Trump says London is in the middle of a crimewave — and blasted Sadiq Khan for failing to tackle the problem.
He said the mayor has “done a bad job on crime”.
It follow suggestions by the President earlier this year that gangs in the capital were getting round our strict gun laws by stabbing people instead.
Mr Trump said: “Yes that’s right — they don’t have guns, they have knives.”
More than 50 Londoners have been killed with knives this year. Nine people have been shot.
In 2017, there were at least 115 murder probes with 80 deaths the result of stabbings.
Blood on the walls
ONE British hospital is so bad that it has “blood all over the walls”, the President has claimed.
Recalling an article he read recently, Mr Trump said: “They had a story in one of the major New York newspapers recently about your hospital. You know about that story? I’m sure you’ve seen it.
“What they say is, it is worse than any hospital they have ever seen in a war zone.
“It is right in the middle of London. I guess it used to be the ultimate and now there is, you know, there is blood all over the walls, all over the floors.
“It was a very major story and I have heard it from others, too, so I think it is very sad. Very sad.”
It is the second time the US leader has attacked the hospital, which he has not named.
It is believed to be the Royal London Hospital in Whitechapel, East London, where a record 702 stabbing victims were treated last year.
Trump dubbed it “a war zone” during a speech in May to the National Rifle Association about the spiralling danger posed by knife crime.
Leading Royal London trauma surgeon Dr Martin Griffiths later said he would be “happy to invite Mr Trump to my prestigious hospital”.
The wave of migrants from the Middle East and Africa is permanently changing the continent for the worse, the 72 year-old president argued.
And he claimed the situation pains him personally as the son of two EU countries.
Mr Trump told The Sun: “I have great love for countries in Europe.
“Don’t forget, essentially I’m a product of the European Union, between Scotland and Germany.
“Right? My father Germany, my mother Scotland.
But in a controversial outburst, he added: “I think what has happened to Europe is a shame.
“Allowing the immigration to take place in Europe is a shame.
“I think it changed the fabric of Europe and, unless you act very quickly, it’s never going to be what it was and I don’t mean that in a positive way.
“So I think allowing millions and millions of people to come into Europe is very, very sad.
“I think you are losing your culture. Look around. You go through certain areas that didn’t exist ten or 15 years ago.”
Mr Trump made tackling illegal US immigration one of the planks of his 2016 election campaign.
No1 fan loves his football shirt gift
“MR President, these gentlemen are from The Sun,” an aide formally announced as we were ushered into the Trump inner sanctum.
Entering the court of an emperor, it pays to bring a gift.
We presented him with an England shirt when we interviewed him at the US Embassy in Brussels on Wednesday, ahead of the Nato summit.
“Oh wow. I love gifts,” he said, happily obliging our photographer Paul Edwards by holding the personalised top up with a trademark grin.
“You don’t hear the word England as much as you should,” he continued.
“I think England is a beautiful name.”
Two things about him struck me most.
First, Trump has total power. Nobody on his White House staff tells him what to say, or questions him when he says it.
When Press Secretary Sarah Huckabee Sanders announced our scheduled ten-minute slot was almost up, the President swiftly interjected: “No, give them a little bit more.”
We stayed for 28 minutes, with no more prompts to go.
Secondly, he is a very sensitive man, constantly saying how much various people like him. It clearly pains him today that he is not being welcomed to Britain as a hero and our most important ally.
On our way out, we met Trump’s Chief of Staff John Kelly. The former US Marine Corps general took me aside and said: “I read The Sun every day. I love Britain.”
Why would I stay in London when I feel so unwelcome?
DONALD Trump has admitted he “feels unwelcome” in London as a major security operation was launched for his arrival in the UK yesterday.
But the tycoon insists real British people “love the President of the United States”.
Mr Trump told The Sun he will be largely staying away from the capital to avoid huge street protests of up to 200,000 today.
But he blamed them on politicians — singling out his nemesis, Mayor of London Sadiq Khan.
Revealing he has been told of the 20ft “Trump Baby” blimp that will be flown above Parliament Square today, he said: “I guess when they put out blimps to make me feel unwelcome, no reason for me to go to London.
“I used to love London as a city. I haven’t been there in a long time. But when they make you feel unwelcome, why would I stay there?
“And when I say that I am talking about government because the people of the UK agree with me.”
Mr Trump let his true feelings slip during an exclusive interview with The Sun hours before Air Force One touched down at Stansted Airport at 2pm yesterday.
Of his four-day visit, he added: “Many people are delighted. I get thousands of notifications from people in the UK that they love the President of the United States.”
He described a West London pub being renamed The Trump Arms for the duration of the trip as “wonderful”, adding: “I love those people. Those are my people.”
Mr Trump added: “You know, a poll just came out that I am the most popular person in the history of the Republican Party — 92 per cent. Beating Lincoln. I beat our Honest Abe.
“But the people of the UK, and I’ll bet if you had an honest poll, I’d be very strong. They want the same thing I want. I love the UK.”
His trip is a lower key working visit rather than the full state visit that the Queen invited him on 18 months ago.
Asked why he has failed to visit Britain as President until now, Mr Trump said: “Well, you know the United States has been very busy. We have been doing very well.”
Theresa May hosted a dinner with 150 business bosses at Winston Churchill’s birthplace Blenheim Palace for Mr Trump last night.
Donald Trump arrives in UK and boasts that Brits ‘like me a lot’
The Scots, Irish and Welsh Guards’ bands opened the event with a military ceremony in the Great Court.
Mr Trump and wife Melania are travelling everywhere in his Marine One helicopter to avoid demonstrations — including in and out of last night’s accommodation at the US Ambassador’s residence, Winfield House in Regents Park.
Protesters outside mounted a “Keep Trump Awake” rally — banging pots, pans and drums and blowing vuvuzelas from 8pm.
But when an estimated 200,000 protesters meet for the “Together Against Trump March” in central London at 2pm today, he will be at Chequers for talks with Mrs May.
The Trumps then fly to Scotland to spend the weekend at his golf resorts in Turnberry and Aberdeen.
Labour leader Jeremy Corbyn attacked Mrs May for inviting Mr Trump to Britain while “his dangerous and inhumane policies are putting the lives and wellbeing of millions of people at risk”.
Trump to meet ‘incredible’ Queen
DONALD Trump described the Queen as “a tremendous woman” ahead of their first meeting today.
The US President and wife Melania were due to have tea with the 92-year-old monarch at Windsor Castle this afternoon.
He told The Sun he was not nervous about it — but was in awe of Her Majesty’s flawless public service.
Mr Trump said: “She is a tremendous woman. I really look forward to meeting her. I think she represents her country so well.
“If you think of it, for so many years she has represented her country, she has really never made a mistake. You don’t see, like, anything embarrassing. She is just an incredible woman.
“My wife is a tremendous fan of hers. She has got a great and beautiful grace about her.”
Mr Trump’s Scottish-born mum Mary was an obsessive fan of the Queen, he said.
He added: “My mother loved the Queen. Any time the Queen was on television, my mother wanted to watch it.” Her Majesty will meet Mr Trump and the First Lady at the dais in the Quadrangle of the historic royal residence in Berkshire.
A guard of honour, comprised of the Coldstream Guards, will give a royal salute and US anthem The Star-Spangled Banner will be played.
Mr Trump and the Queen will then inspect the guard of honour and watch the soldiers march past.
Afterwards, The President and First Lady will join the Queen for tea inside the castle.
Her Majesty has met with previous White House couples including Barack and Michelle Obama, George W and Laura Bush, and Ronald and Nancy Reagan.
UK must up defence spending
THERESA May must listen to her generals and hike defence spending to keep the Special Relationship intact, said Mr Trump.
His Secretary of Defense asked the UK Government to go significantly above Nato’s minimum target of 2 per cent of GDP in funding for its military as the US’s major ally.
The President told The Sun he agrees with Jim Mattis “100 per cent”.
He added: “Two per cent isn’t enough. The US pays 4.2 per cent of a much larger GDP.
“I’m very impressed that Jim sent that letter. I think that is an exact right letter.”
Mr Trump defended himself against allies’ charges of blackmail over his demand for rapid rises in all 29 Nato member states’ defence budgets.
Asked if he was a bully, he said: “I’ll tell you what, we’ve had 40 years of presidents saying the same thing in a nicer way and they got nothing, so call it what you want.
US President Donald Trump talks candidly to The Sun about Defence budgets
“They’re taking advantage of the United States. I’m not going to let it happen.”
Mr Trump caused panic by implying he could pull the US out of Nato if other countries did not hike their contributions.
He was asked at a Brussels press conference if he had threatened to withdraw and replied: “I told people I’d be very unhappy if they didn’t up their commitment. Yesterday I let them know I was extremely unhappy.”
He insisted nations had finally agreed to increase expenditure, adding: “Everyone in the room thanked me.”
But French President Emmanuel Macron denied Nato allies had agreed a spending rise.
The US wants its Nato allies to share more of the financial burden on defence.
In 2014 Nato nations committed to moves toward reaching the 2 per cent of GDP figure within 10 years.
Nato estimated just 15 members will meet the aim by 2024 based on current trends.
(BBG) The U.K.’s populist triumph is now in doubt. What about the U.S. version?
The U.K.’s 2016 vote to leave the European Union represented a moment of vindication and hope for Donald Trump. No wonder he sounds worried now, as he arrives in the U.K. for his visit.
It’s not the protestors waiting at every stop, or even the giant orange Trump Baby balloon floating over London that’s likely to irk the thin-skinned president most. It’s the fact that a great, populist juggernaut that so closely prefigured his own rise to power is sputtering.
Trump is certainly bothered. He declared the U.K. in “turmoil” as he left Washington, and then in an explosive interview with the tabloid Sun newspaper Thursday, just before he joined Prime Minister Theresa May for a black tie dinner, the president let rip. He accused May of botching Brexit, said former Foreign Secretary Boris Johnson, a staunch Brexiter and May rival, would “make a great prime minister” and suggested her Brexit position would kill the prospect of a U.S.-U.K. trade deal.
That trade deal is prized by Brexiters as proof it was all worth it. The U.S. is Britain’s largest single-country export market, though it is well behind the EU, where about 43 percent of U.K. goods and services exports go and which is the source of 54 percent of imports. But it’s difficult to believe it matters that much to Trump. The U.S. does more trade with Canada, Mexico and China. A U.K.-U.S. trade agreement would be nice, especially as a reward for Britain’s security support. But it’s not the kind of deal that is going to keep Trump up at night.
Rather, Trump has good reason to focus on the details of the U.K.’s Great Divorce because of what its problems say about his own grand projects — his Mexican border wall, his trade wars, his North Korean denuclearization — when they come up against reality.
It’s becoming clear now to Britons that the promised benefits of Brexit aren’t likely to materialize, and that the best they can hope for is a divorce settlement with Europe that minimizes the disadvantages of leaving.
That’s a long way from the grand ambition expressed by the Brexiters’ campaign rallying cry, “Take Back Control.” And it has to make Trump wonder whether Americans might start thinking the same about “Make American Great Again.” Both populist slogans were oxygenated by an external enemy: Where Trump declared war on immigrants and the Washington swamp, Brexiters spit venom at a sovereignty-usurping foreign bureaucracy. If Brexiters could rally people against smug Eurocrats in Brussels, then surely Trump could win Americans to his side too. Like his candidacy, the Leave campaign succeeded against considerable odds.
But the Brexit dream, as ex-Foreign Secretary Boris Johnson put it in his resignation letter on Monday, is dying. It’s not that Brexit won’t happen; even now, it’s hard to imagine a way back to a pre-referendum world. But Leave leaders marched their followers up a hill from where they now survey a muddy, costly and laborious path with none of the promised “sunlit uplands” that Brexiters appropriated from Churchill’s famous peroration.
On Thursday, May’s government published its first detailed document setting out proposals for a future relationship with the EU. It came with oratory about leaving the European single market and taking back legal control, but the reality is that she’s seeking a deal that apes a lot of existing arrangements in an attempt to keep trade flowing and prevent economic losses. Trump, the self-proclaimed deal-maker, might have noticed that Britain’s large financial services sector has been left in the lurch.
May’s plan is so offensive to hardcore Brexiters that two senior ministers resigned in the days after her plan was revealed to the cabinet, and many more have been plotting to undermine it. And yet, it’s just an opening bid in negotiations that have a long way to run. There’s every possibility that the EU — which insists that its single market freedoms of goods, labor, capital and services cannot be turned into an a la carte buffet — will reject the offer. There’s still a possibility that the U.K. and the EU will not reach a deal, in which case a very harsh Brexit that exposes Britain to hostile economic relations with longtime allies indeed is possible.
The central conceit of those who led the Brexit campaign was the notion that the referendum represented a clear objective. The reality is that Brexiters within May’s cabinet could not even agree on what leaving the EU should mean. It’s absurd to think that voters have a clearer idea.
Both Brexiters and Trump channeled dissatisfaction with the status quo and capitalized on the emotional draw of a clean break with an established order. But both movements lacked a workable vision of a new order. Trump stumbles from border-control edicts to tariffs to summit-wrecking. In the same way, British hard-leavers still haven’t articulated a vision of Brexit that is workable, as the new Brexit minister Dominic Raab noted on Thursday.
There is one big difference. Trump is president of the U.S. and has certain undeniable powers. The Brexiters are junior coalition partners in a weak Conservative government negotiating with a unified EU that holds better cards. The government’s negotiating position shows just how far it is from the dream the Leavers sold voters with those catchy slogans. That surely must make Trump a little uneasy.
(GUA) President praises Boris Johnson and says that May ignored his advice on Brexit negotiations in extraordinary interview
Theresa May will come under intense pressure to secure a future trade deal with the United States as she sits down with Donald Trump just hours after he warned that her soft Brexit blueprint would “kill” Britain’s chances.
In an extraordinary interview that threatened to undermine her new Brexitstrategy, painfully thrashed out with her cabinet last week, Trump questioned whether her plans upheld the referendum result and accused her of ignoring his advice.
On Thursday evening, as May told a dinner held in Trump’s honour at Blenheim Palace that her policy would create an “unprecedented opportunity” for a free trade agreement, his damaging statements were revealed.
She now faces the challenge on Friday of persuading him that her strategy would “tear down” the bureaucratic barriers that Brussels had put in the path of business as she attempts to overcome US fears about the future trading relationship.
Asked about Trump’s incendiary interview, White House press secretary Sarah Sanders insisted the president “likes and respects Prime Minister May very much”.
“As he said in his interview with the Sun she ‘is a very good person’ and he ‘never said anything bad about her’. He thought she was great on Nato today and is a really terrific person,” she added.
In the interview, which ignores all usual diplomatic conventions, Trump warned that her soft Brexit approach would scupper any hopes of a free trade agreement, a cherished prize of many Brexiters.
“If they do a deal like that, we would be dealing with the European Unioninstead of dealing with the UK, so it will probably kill the deal. If they do that, then their trade deal with the US will probably not be made,” he said.
“We have enough difficulty with the European Union. We are cracking down right now on the European Union because they have not treated the United States fairly on trading.”
Trump accused the prime minister of ignoring his advice on Brexit negotiations. “I would have done it much differently. I actually told Theresa May how to do it, but she didn’t agree, she didn’t listen to me. She wanted to go a different route,” he said.
He cast doubt on whether the prime minister was delivering the Brexit that the British people had voted for in 2016. “The deal she is striking is a much different deal than the one the people voted on. It was not the deal that was in the referendum. I have just been hearing this over the last three days. I know they have had a lot of resignations. So a lot of people don’t like it.”
Earlier, Trump, speaking at the Nato summit in Brussels, had appeared to throw his weight behind a hard Brexit by suggesting the government was taking “a different route” from the complete break from the EU that he said the British people had voted for.
But May insisted: “We have come to an agreement at the proposal we’re putting to the European Union which absolutely delivers on the Brexit people voted for. They voted for us to take back control of our money, our law and our borders and that’s exactly what we will do.”
However, he undermined her still further in his Sun interview by describing Johnson as “a very talented guy”, adding: “I am not pitting one against the other. I am just saying I think he would be a great prime minister. I think he’s got what it takes.”
The US president also attacked Sadiq Khan, the mayor of London, with whom he has had a long-running dispute, suggesting he was a “terrible mayor” who had “done a very bad job on terrorism” by allowing so many migrants to come to the city. He said that he felt unwelcome in London after hearing of the “Trump baby” blimp.
The unpopularity of Trump’s visit was already apparent by Thursday night, with protests starting as soon as he landed at Stansted in Air Force One at 1.51pm. Shortly after he was met at the airport by the international trade secretary, Liam Fox, and by the US ambassador Woody Johnson, banners were unfurled opposite the US embassy questioning his human rights record. Protesters later gathered to create a “wall of noise” outside the ambassador’s residence, where he was due to stay.
Trump will largely avoid the capital and other cities that could host significant protests. He will instead be kept mainly insulated from the public at various country estates or palaces and will travel largely by air.
Nonetheless, protesters will seek to gain his attention, with the blimp to be flown over Westminster on Friday morning before an estimated 70,000 people take to the streets. There will be rallies in Glasgow and Manchester as well as a women’s march in London and the main Stop Trump protest, which will end in Trafalgar Square.
On Thursday night, Trump and his wife, Melania, attended a black-tie dinner at Blenheim Palace in Oxfordshire, the birthplace of Winston Churchill, with business leaders as well as most senior members of the cabinet.
It is understood that he will join May on Friday for a counter-terrorism demonstration by UK and US special forces at Sandhurst, before the main business element of his trip: talks with the prime minister and the new foreign secretary, Jeremy Hunt, at the PM’s Chequers country retreat.
Downing Street said that as well as trade and Brexit, the talks would cover Russia and the Middle East.
Later on Friday Trump and his wife – who will spend some of her time on separate engagements with May’s husband, Philip – will have tea with the Queen at Windsor Castle before flying to Scotland, where they are expected to visit Trump’s golf resorts in Aberdeenshire and Ayrshire and stay at the 120-room hotel at Turnberry.
While at the Nato summit, Trump said he had been reading up closely on Brexit in recent days, and he described the UK as “a pretty hot spot with many resignations”. He had already described the UK as a country in turmoil.
He insisted he was popular in the UK, citing his strong line on migration. “They like me a lot in the UK. I think they agree with me on immigration.”
A Guardian/ICM poll released on Wednesday showed 53% of respondents disagreed with the idea Trump was doing a good job, and 63% disagreed with the statement that they would like to see a politician like him as British prime minister.
(BBG) U.S. President Donald Trump declined to brand his Russian counterpart Vladimir Putin as friend or foe ahead of the first full-fledged one-on-one summit between the two in Helsinki next week.
“I really can’t say right now. As far as I’m concerned, he’s a competitor,” Trump told reporters as he departed the White House for a European tour that will also include potentially tense meetings with leaders of the North Atlantic Treaty Organization and his first visit to the U.K. as president.
Amid criticism that the president has been harsher toward the U.S.’s NATO allies than toward the Kremlin — even in the face of evidence of attempted Russian election meddling — Trump defended his stance toward Moscow.
“I think that getting along with Russia, getting along with China, and getting along with others is a good thing,” he said Tuesday. “It’s not a bad thing.”
Senate Democratic Leader Chuck Schumer of New York said Tuesday he has heavy reservations about Trump’s meeting with Putin.
“When the president met with President Xi, when the president met with Kim Jong Un, they took him to the cleaners, it seems, and got what they wanted and we didn’t get much of what we wanted,” Schumer told reporters at the Capitol. “It’s even worse for him to meet with a very, very clever out-for-himself man like President Putin alone. And I am very much afraid what he would give away without any advisers to keep him in check.”
Also on Tuesday, a bipartisan group of 10 senators introduced a resolution condemning the Russian annexation and continued occupation of Crimea, and stating that U.S. policy should remain that Crimea is part of Ukraine. The lead sponsors of the resolution are Republican Senator Rob Portman of Ohio and Democrat Bob Menendez of New Jersey.
Trump told the assembled journalists that meeting with Putin may be the “easiest” leg of his trip and reiterated his demand that NATO countries shoulder a larger share of the alliance’s budget.
He also observed that the U.K. — and its embattled Prime Minister Theresa May — was in “somewhat turmoil” and was noticeably less effusive about May than he was about Boris Johnson, who resigned Monday over opposition to May’s plans to leave the European Union.
Donald Trump’s threat to impose tariffs on an additional $200 billion of imported Chinese goods could see China retaliate with a wide range of non-tariff barriers.
Because China only imports around $130 billion worth of goods from the U.S., its ability to match the tariffs dollar-for-dollar is limited. The U.S. imported $505 billion of goods from China last year.
While China may jack up existing tariffs beyond the 25 percent level imposed so far, it could also inflict significant pain by increasing regulatory oversight of American companies, slowing down approvals processes, canceling orders for U.S. goods or encouraging consumer boycotts.
Big American companies including Walmart Inc. and General Motors Co. host large operations in China and have plans for expansion that could be stymied. China has used these tactics before, notably against South Korea and Japan during previous political spats, with carmakers from the two nations among the victims.
One example: Japanese automakers took a major hit in their China sales in 2012 after the fight over disputed islands in the East China Sea worsened. Another: China put a huge a dent in tourism in South Korea by banning package tours in 2017 amid a dispute over a missile shield.
Then there’s the currency. China has pleased trading partners in recent times by allowing greater appreciation of the yuan, but there is no guarantee it will stick to this. The yuan is the worst-performing currency in Asia since mid-June, sliding more than 3 percent
And of course there’s also the “nuclear option.” While it seems unlikely as China would also suffer greatly, it could offload some of its huge hoard of U.S. Treasuries.
Unless the U.S. and China reach a compromise, the trade war between the world’s two biggest economies looks to be headed for a new level.
The two countries signed deals worth 20 billion euros ($23.6 billion).
In addition to multiple joint cooperation projects between governmental agencies, companies like BASF, BMW, Volkswagen, Daimler, Siemens and Bosch announced deals and partnerships.
Alexander Koerner/Getty Images
Porsche cars destined for export stand at Bremerhaven port on March 19, 2018 in Bremerhaven, Germany.
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang stressed their commitment to a multilateral trade system Monday in the wake of Washington’s decision to impose widespread tariffs, saying it was to everyone’s benefit.
Speaking in Berlin after the two countries signed deals worth 20 billion euros ($23.6 billion), Li told reporters the projects demonstrated how nations could work together.
In addition to multiple joint cooperation projects between governmental agencies, companies like BASF, BMW, Volkswagen, Daimler, Siemens and Bosch announced deals and partnerships.
“Free trade plays a strong leading role for both sides and for the world economy,” Li said through an interpreter in the Berlin chancellery.
On Friday, U.S. President Donald Trump imposed 25 percent tariffs on $34 billion of Chinese goods in response to complaints Beijing steals or pressuring companies to hand over technology. China announced retaliatory tariffs on a similar amount of U.S. goods.
Trump has also imposed tariffs on aluminum and steel imports that include the European Union, and has threatened additional tariffs on products like automobiles, singling out Germany in particular.
Bavaria-based automaker BMW has already been caught in the middle of escalating trade strife between the U.S. and China, saying Monday it would have to raise prices on SUVs it builds in the U.S. that it exports to China, after Beijing raised the import tax on cars from the United States to 40 percent from 15 percent.
“We have a lot of direct investment in the United States of America, we have a lot of direct investment in China,” Merkel said.
“It really is a multilateral interdependent system that at its best most likely is really a plurilateral win-win situation when we stick to the rules.”
She also applauded China for relaxing rules on foreign investment, saying that it was important to see “the market opening in China in this area is not only words, but is also being followed by deeds.”
In one deal finalized on Monday, Chinese firm CATL announced that it would build a factory in the German state of Thuringia to build batteries to supply to BMW for use in electric cars.
BMW said it had agreed to purchase 4 billion euros worth of batteries, with 1.5 billion euros of sales in Germany and 2.5 billion in China.
Merkel said the company brings a product and technology to Germany that wasn’t previously available.
She added, however: “If we could do it ourselves, I’d also not be sad.”
Mario Centeno, Portugal’s finance minister and head of the group of euro-area finance ministers, listens during a press conference following a Eurogroup meeting in Brussels, Belgium, on Monday, Jan. 22, 2018.
Higher trade tariffs coming from the U.S. are not what the euro zone needs right now following several years of a promising recovery, a high-ranked European official told CNBC.
The 19-member region that shares the single currency has been growing at a gradual pace over the last two years following a sharp downturn due to the sovereign debt crisis of 2011. But the current threat of higher tariffs with key trade partners, especially the U.S., could prove a challenge for the euro area’s fragile recovery.
“This is a major risk that we see for the global economy and certainly for the relationship between the U.S. and Europe,” Mario Centeno, who heads the group of 19 finance ministers for the euro area, told CNBC Wednesday, speaking on increased duties coming from the U.S.
The region grew at a rate of 2.4 percent in 2017 — an expansion not seen in about a decade. However, the economic momentum has cooled down in the start of 2018 — something that higher trade barriers could dampen further.
“We don’t know exactly how it will evolve, but I agree with those that see this process as an unnecessary test to the economic recovery, and actually to the (economic) expansion that our economies were experiencing,” Centeno said.
He added that right now it is important to work toward a limit to the tariffs both in scope and duration.
Greek bonds now less risky, Eurogroup president says
At midnight Washington time, the U.S. imposed new tariffs on $34 billion of annual imports from China.
This prompted Beijing to respond in kind with levy tariffs on U.S. imports, China’s foreign ministry said Friday. It did not provide any immediate details on the implementation or scale of these charges.
China’s soymeal futures plunged over 2 percent during Friday afternoon trade in Asia before recovering most of its losses, amid market confusion over whether Beijing had actually implemented tariffs on soybeans and other U.S. goods.
Xinhua | Ju Peng | Getty Images
Xi Jinping delivers a report to the 19th National Congress of the Communist Party of China (CPC) on behalf of the 18th Central Committee of the CPC at the Great Hall of the People in Beijing, capital of China, Oct. 18, 2017.
The move signals the start of a full-blown trade war between the world’s two largest economies, after President Donald Trump’s administration had initially made good on threats to impose steep tariffs on Chinese goods.
At midnight Washington time, the U.S. imposed new tariffs on $34 billion of annual imports from China. That prompted Beijing to respond in kind with levy tariffs on U.S. imports, China’s foreign ministry said Friday, though it did not provide any immediate detail on the implementation or scale of these charges.
Chinese state news agency Xinhua reported the country’s tariff rate on U.S. goods, at 25 percent, was equal to Washington’s rate on Chinese imports.
“This act is typical trade bullying,” the spokesperson said, before adding: “It seriously jeopardizes the global industrial chain … Hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers.”
China’s Ministry of Commerce also said it would look to report the U.S. to the World Trade Organization (WTO) on Friday, accusing Washington of breaching international trade laws.
China’s soymeal futures plunged over 2 percent during Friday afternoon trade in Asia before recovering most of its losses, amid market confusion over whether Beijing had actually implemented tariffs on soybeans and other U.S. goods.
The China Daily, the country’s state-run English language newspaper, initially reported China had taken countermeasures against the U.S. on Friday, before rescinding its story without an explanation.
US imposes tariffs on $34 billion worth of Chinese goods
Meanwhile, the absence of an official statement specifically clarifying China’s response to U.S. tariffs also did little to alleviate a sense of ambiguity among market participants.
The prospect of a tit-for-tat trade war is widely expected to make soymeal more expensive, supporting soymeal futures, particularly over the coming months when the U.S. is projected to become China’s primary soybean supplier.
How did we get here?
The Trump administration initiated the dispute in April, announcing the tariffs and accusing China of using “unfair” tactics to build a large trade surplus with the U.S. and expropriating American technology.
The White House has also pressed Congress to tighten rules on Chinese investment in U.S. technology.
Nonetheless, despite the urging of business groups and lawmakers to negotiate a truce, there was little sign Friday that the two sides would reach a compromise anytime soon.
There’s no obvious resolution to China-US trade tensions, expert says
Beijing and Washington have held several rounds of high-level talks since early May, but the Trump administration has since said it is considering expanding the list of targeted Chinese imports. Trump said Thursday that another $16 billion of tariffs are expected to go into effect in two weeks, before ratcheting up the stakes to warn that measures totaling $500 billion in Chinese goods could soon come into force.
External observers have widely criticized this approach, saying such protectionist rhetoric undermines free trade policies that have shaped the global exchange of goods in recent decades.
(Economist) But tumbles in Chinese equities and the yuan stem more from domestic causes.
FOR months Chinese officials have stuck to the same script: China does not want a trade war, but will win if dragged into one. As hostilities turn more serious, this confident façade has taken a blow. Chinese equities have plunged into bear-market territory. The yuan had its biggest monthly fall against the dollar on record. Economic indicators have weakened. Even bombastic state-run media have turned introspective, counselling against arrogance.
All this, and the tit-for-tat trade battle is only just getting under way. On July 6th, after The Economist went to press, America was due to impose its first major set of tariffs on China: 25% duties on $34bn-worth of imports, notably machinery and electronic parts. China was set to retaliate with tariffs on goods worth the same amount, hitting products from soyabeans to sport-utility vehicles. Both countries have listed more tariffs to follow, on goods worth another $16bn. Both have also warned that they are willing to inflict much more pain if the conflict escalates.
Donald Trump’s bet is that since China has a massive bilateral trade surplus, it stands to lose more than America as barriers go up against imports. Were their stockmarkets gauges of the two countries’ trade-war prospects, he would seem to have a point. The S&P 500, America’s leading index of big shares, has fallen by 5% since late January; the CSI 300, China’s analogue, is down by more than 20% over the same period. Exchange-rate movements reinforce the impression. The yuan has depreciated by 5% against the dollar over the past three months, a sharp fall for a closely managed currency (see chart).
China is nervous about the perception of vulnerability. A drumbeat of reports in state-run media have talked up the stockmarket. On July 3rd the central bank tried to bolster the yuan, saying that the economy’s fundamentals were strong. But the toll from the trade war is starting to show up in some data. Surveys of China’s manufacturing sector have pointed to falling export orders. Mr Trump could take all this as evidence that he was right when he tweeted that trade wars would be easy for America to win.
In that, though, he would be mistaken. The turbulence in China reflects domestic challenges more than trade tensions. The hit to growth from the $34bn-worth of tariffs is likely to be minuscule, adding up to just about 0.1% of Chinese GDP. Depictions of China as a trade-reliant economy are hopelessly outdated: net exports account for just 2% of national income.
Instead, the bigger cause of China’s market turmoil is homegrown. After a rapid build-up of debt over the past decade, officials have been working to defuse financial risks. This has depressed demand for both equities and corporate bonds. Slower credit growth has weighed on liquidity. Capital spending has slowed sharply. Adding to the gloom was a report published by the National Institute for Finance and Development, a government-backed think-tank, on June 25th, warning that China was “very likely to see a financial panic”. The institute’s head later clarified that he believed the government could manage the risks. But jittery investors latched onto his warning, not his reassurance.
Yet seen from a different angle, China’s market troubles demonstrate one of the reasons why its officials think they can outlast America in a trade war. An authoritarian regime can limit and dictate the public discussion. After the stockmarket tumbled, authorities warned journalists against citing the trade conflict as an explanation, according to a directive published by the China Digital Times, a website that tracks government censorship. Reporters were also ordered to emphasise the economy’s bright spots. In America, meanwhile, the hurly-burly of its public discourse has been on display. On July 2nd the US Chamber of Commerce, the country’s biggest business group, launched a lobbying campaign to explain how tariffs would hurt the economy. Republican lawmakers in Congress are criticising the president’s trade policies more openly than heretofore—though on past form, if Mr Trump pushes ahead, they will probably fall into line.
Another source of confidence for China is the knowledge that it is not fighting America alone. From steel tariffs on Japan to threats of auto tariffs on Europe and negotiations that might wreck the North American Free-Trade Agreement, Mr Trump is taking on every one of America’s allies. China has tried to rally them to its side. It has asked the European Union to join it in condemning Mr Trump’s trade actions, according to Reuters (the EU declined because of its own trade grievances against China). Even as it raised tariffs on soyabeans from America, it removed them from soyabeans from India, South Korea and others in Asia. Xi Jinping, China’s president, has hinted that its markets will become more open to non-American firms.
Still, China’s preference would be to avoid a trade war altogether. That is why its officials had tried in May to hammer out an agreement to buy more American oil and farm goods, which they thought might satisfy Mr Trump. Many in China still cling to the hope that he can be reasoned with. Hawks in the White House had, after all, pushed for harsh restrictions on Chinese investors in late June, but Mr Trump went for a softer option, refusing to single out China. Lu Zhengwei of Industrial Bank, a Chinese lender, says the staggered way in which Mr Trump is imposing tariffs suggests that he wants to leave room for talks. “It feels like a chess match,” he says. With its financial markets in bad shape, China’s opening move looks wobbly. But the game is nowhere close to checkmate.
(Reuters) The U.S. ambassador to Germany has told German car bosses that President Donald Trump would suspend threats to impose tariffs on cars imported from the European Union if the bloc lifted duties on U.S. cars, a German newspaper reported on Wednesday.
Handelsblatt said Ambassador Richard Grenell told executives from Daimler (DAIGn.DE), Volkswagen (VOWG_p.DE) and BMW (BMWG.DE) during a meeting that in exchange Trump wanted the EU to annul duties on U.S. cars imported to the bloc.
Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the United States.
Handelsblatt cited people present at the meeting, which took place at the U.S. embassy in Berlin on Wednesday. It said the chief executives of Daimler, BMW and Volkswagen – Dieter Zetsche, Harald Krueger and Herbert Diess respectively – were in attendance.
Daimler and Volkswagen declined to comment. BMW was not immediately available for comment.
A spokeswoman for the German Economy Ministry also declined to comment on the report, saying issues related to the trade dispute with the United States were being handled by the European Commission in Brussels on behalf of EU member states.
A European Commission spokeswoman declined to comment on the report. She said Commission President Jean-Claude Juncker would discuss trade during talks with Trump in Washington later this month.
“This will be an opportunity to discuss the many issues of common interest, notably also relating to trade,” the spokeswoman said.
Current U.S. import tariff rates on cars are 2.5 percent and on trucks 25 percent. The EU has a 10 percent levy on car imports from the United States.
Trump hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminum at the start of June, ending exemptions that had been in place since March.
The EU executive responded by imposing its own import duties of 25 percent on a range of U.S. goods, including steel and aluminum products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.
Trump’s protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.
(Reuters) China is putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit later this month but is facing resistance, European officials said.
In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill.
One proposal has been for China and the European Union to launch joint action against the United States at the World Trade Organisation.
But the European Union, the world’s largest trading bloc, has rejected the idea of allying with Beijing against Washington, five EU officials and diplomats told Reuters, ahead of a Sino-European summit in Beijing on July 16-17.
Instead, the summit is expected to produce a modest communique, which affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO, EU officials said.
Vice Premier Liu He has said privately that China is ready to set out for the first time what sectors it can open to European investment at the annual summit, expected to be attended by President Xi Jinping, China’s Premier Li Keqiang and top EU officials.
Chinese state media has promoted the message that the European Union is on China’s side, officials said, putting the bloc in a delicate position. The past two summits, in 2016 and 2017, ended without a statement due to disagreements over the South China Sea and trade.
“China wants the European Union to stand with Beijing against Washington, to take sides,” said one European diplomat. “We won’t do it and we have told them that.”
China’s Foreign Ministry did not immediately respond to a request for comment on Beijing’s summit aims.
In a commentary on Wednesday, China’s official Xinhua news agency said China and Europe “should resist trade protectionism hand in hand”.
“China and European countries are natural partners,” it said. “They firmly believe that free trade is a powerful engine for global economic growth.”
Despite Trump’s tariffs on European metals exports and threats to hit the EU’s automobile industry, Brussels shares Washington’s concern about China’s closed markets and what Western governments say is Beijing’s manipulation of trade to dominate global markets.
“We agree with almost all the complaints the U.S. has against China, it’s just we don’t agree with how the United States is handling it,” another diplomat said.
Still, China’s stance is striking given Washington’s deep economic and security ties with European nations. It shows the depth of Chinese concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars worth of Chinese imports on July 6.
It also underscores China’s new boldness in trying to seize leadership amid divisions between the United States and its European, Canadian and Japanese allies over issues including free trade, climate change and foreign policy.
“Trump has split the West, and China is seeking to capitalize on that. It was never comfortable with the West being one bloc,” said a European official involved in EU-China diplomacy.
“China now feels it can try to split off the European Union in so many areas, on trade, on human rights,” the official said.
Another official described the dispute between Trump and Western allies at the Group of Seven summit last month as a gift to Beijing because it showed European leaders losing a long-time ally, at least in trade policy.
European envoys say they already sensed a greater urgency from China in 2017 to find like-minded countries willing to stand up against Trump’s “America First” policies.
FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China’s Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee/File Photo
NO “SYSTEMIC CHANGE”
A report by New York-based Rhodium Group, a research consultancy, in April showed that Chinese restrictions on foreign investment are higher in every single sector save real estate, compared to the European Union, while many of the big Chinese takeovers in the bloc would not have been possible for EU companies in China.
China has promised to open up. But EU officials expect any moves to be more symbolic than substantive.
They say China’s decision in May to lower tariffs on imported cars will make little difference because imports make up such a small part of the market. China’s plans to move rapidly to electric vehicles mean that any new benefits it offers traditional European carmakers will be fleeting.
“Whenever the train has left the station we are allowed to enter the platform,” a Beijing-based European executive said.
However, China’s offer at the upcoming summit to open up reflects Beijing’s concern that it is set to face tighter EU controls, and regulators are also blocking Chinese takeover attempts in the United States.
The European Union is seeking to pass legislation to allow greater scrutiny of foreign investments.
“We don’t know if this offer to open up is genuine yet,” a third EU diplomat said. “It’s unlikely to mark a systemic change.”
(ZH) Following the close of a second quarter that will be best remembered by President Trump’s vacillations on trade, Axioshas dropped a Sunday night bombshell that may spook markets hoping for a respite from the daily escalating trade war rhetoric as the second half of the year begins: White House reporter Jonathan Swan has obtained a copy of a draft bill, purportedly ordered by Trump himself, that would allow the US to “walk away” from its commitments to the World Trade Organization.
If passed, the bill (entitled the “United States Fair and Reciprocal Tariff Act”) would effectively blow up the WTO, an organization that the US helped create back in the 90s, by allowing Trump to unilaterally ignore the two most important principles:
The “Most Favored Nation” (MFN) principle that countries can’t set different tariff rates for different countries outside of free trade agreements;
“Bound tariff rates” — the tariff ceilings that each WTO country has already agreed to in previous negotiations.
“It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal,” one anonymous source reportedly told Axios.
The bill asks Congress to hand over to Trump unilateral power to ignore WTO rules and negotiate unilateral trade agreements.
The leak of the draft bill follows another WTO-related scoop from Axios, published last week, where Swan reported that Trump has repeatedly badgered his aides about pulling the US out of the WTO, which the president has famously criticized as a “disaster”.
The bill’s chances of making it through Congress are extremely low. However, if Trump has taught us anything about his trade agenda, it’s never say never.
“The good news is Congress would never give this authority to the president,” the source added, describing the bill as “insane.”
“It’s not implementable at the border,” given it would create potentially tens of thousands of new tariff rates on products. “And it would completely remove us from the set of global trade rules.”
Trump was reportedly briefed on the draft in late May. Most of the individuals who were involved in the drafting of the bill assumed it would be “dead on arrival” – that is, all but Trump advisor Peter Navarro, who repeatedly encouraged Trump’s anti-free-trade positions. The White House, the US Trade Representative and the Department of Commerce were consulted during the drafting of the bill.
While the bill might be able to find enough support to pass in the extremely pro-Trump House, Republican proponents of free trade in the Senate would likely balk at the prospect of trashing the existing free trade order,while Democrats would be reluctant to hand more unilateral authority to the president.
It’s also worth noting that Congress is already trying to roll back Trump’s steel and aluminum tariffs in the form of a bipartisan bill authored by Republican Sens. Bob Corker and Pat Toomey and Democratic Sen. Michael Bennet.
In a White House meeting to discuss the bill earlier this year, Legislative Affairs Director Marc Short bluntly told Navarro the bill was “dead on arrival” and would receive zero support on Capitol Hill, according to sources familiar with the exchange.
Navarro replied to Short that he thought the bill would get plenty of support, particularly from Democrats, but Short told Navarro he didn’t think Democrats were in much of a mood to hand over more authority to Trump.
White House spokeswoman Lindsay Walters acknowledged that the bill was genuine, but cautioned that the public shouldn’t take it too seriously – after all, Trump’s frustrations with the WTO are already widely known.
But Walters signaled that we shouldn’t take this bill as anything like a done deal. “The only way this would be news is if this were actual legislation that the administration was preparing to rollout, but it’s not,” she said.
“Principals have not even met to review any text of legislation on reciprocal trade.”
Between the lines: Note the specificity of Walters’ quote above. Trump directly requested this legislation and was verbally briefed on it in May. But he hasn’t met with the principals to review the text.
The report sent US futures lower off the gate as trade tensions once again reared their ugly head, although the BTFDers promptly emerged, and with their traditional non-challance and disregard for risk or news, quickly sent futures back to unchanged.
Deutsche Bank’s US division has failed the second round of the Federal Reserve’s annual two-stage stress tests, designed to assess how well the sector could withstand another financial crisis.
The German lender suffered from “widespread and critical deficiencies” in parts of its business, the Fed said.
Goldman Sachs and Morgan Stanley were only granted “conditional” passes.
But 31 of the 35 banks tested were given the all-clear.
Stress tests were introduced in the wake of the 2008 financial crisis and every year America’s central bank, the Federal Reserve, puts the country’s banks, including foreign subsidiaries operating in the country, through their paces.
The Fed measures whether banks are holding sufficient capital to cope with a recession and in the second part of the process it focuses on banks’ “capital plans” such as how much cash they intend to return to shareholders. However this is the first year that the results of the US units of foreign banks have been publicly released.
But the Fed found Deutsche Bank’s US arm had “material weaknesses in the firm’s data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress”.
The verdict is another blow for the troubled German lender whose financial health has been under the spotlight recently. And it will require the bank to make changes to the way it operates in the US.
Goldman Sachs and Morgan Stanley were given passes, but will not be permitted to increase the amount they return to shareholders beyond levels in line with the last couple of years, in order to bolster their capital cushions.
The Fed said it was also granting a conditional pass to Boston-based State Street, which will be required to take additional steps to manage and analyse its exposure to losses.
Last year was the first time all banks passed the second round of the tests.
The second part of the tests is closely watched because it determines how much firms can return to shareholders in the form of items like share buybacks and dividends.
The Fed said it had granted the conditional pass to Goldman and Morgan Stanley because the companies’ results had been skewed by tax changes passed last year.
The tax overhaul lowered the corporate rate from 35% to 21%, but led to larger-than-usual one-off tax bills for many banks, as a result of other changes to how losses and overseas profits are taxed.
“This one-time reduction does not reflect a firm’s performance under stress and firms can expect higher post-tax earnings going forward,” the Fed said.
Despite the restrictions, Goldman will still be permitted to spend up to $6.3bn on share buybacks and dividends this year.
Morgan Stanley said it planned to return $6.8bn to shareholders.
The decision is the latest blow for troubled Deutsche Bank. Last month the firm announced more than 7,000 job cuts and its credit rating was cut by Standard & Poor’s. The bank reported an annual loss of €500m (£438m) at the end of February.
Deutsche said its US division had “made significant investments to improve its capital planning capabilities as well as controls and infrastructure.”
“Deutsche Bank USA continues to make progress across a range of programmes and will continue to build on these efforts and to engage constructively with regulators to meet both internal and regulatory expectations,” the bank said.
The bank will be required to improve its operations, risk management and governance as a result of the test-failure. It will not be able to make distributions to its German parent firm without the Fed’s approval.
A huge $6.3 trillion in corporate debt should trouble Wall Street investors facing a stricter rate environment even as cash hoarding reaches a peak, according to S&P Global.
Speculative-grade borrowers have reached a new record-low cash-to-debt ratio of just 12 percent in 2017, below the 14 percent reported in 2008 during the Great Recession.
Scott Mlyn | CNBC
The debt load for U.S. corporations has reached a record $6.3 trillion, according to S&P Global.
The good news is U.S. companies also have a record $2.1 trillion in cash to service that debt.
The bad news is most of that cash is in the hands of a few giant companies.
And the riskiest borrowers are more leveraged than they were even during the financial crisis, according to S&P’s analysis, which looked at 2017 year-end balance sheets for non-financial corporations.
On first glance, total debt has risen roughly $2.7 trillion over the past five years, with cash as a percentage of debt hovering around 33 percent for U.S. companies, flat compared to 2016. But removing the top 25 cash holders from the equation paints a grimmer picture.
Speculative-grade borrowers, for example, reached a new record-low cash-to-debt ratio of just 12 percent in 2017, below the 14 percent reported in 2008 during the crisis.
GE on path to reduce debt by $25 billion
“These borrowers have $8 of debt for every $1 of cash,” wrote Andrew Chang, primary credit analyst at S&P Global. “We note these borrowers, many sponsor-owned, borrowed significant amounts under extremely favourable terms in a benign credit market to finance their buyouts at an ever-increasing purchase multiple without effectively improving their liquidity profiles.”
The trend persists even among highly rated borrowers: More than 450 investment-grade companies not among the top 1 percent of cash-rich issuers have cash-to-debt ratios more similar to those of speculative issuers, hovering around 21 percent.
This could lead to trouble for the economy as interest rates rise. The Federal Reserve, which has already hiked rates twice so far this year, has indicated that further increases may be needed to keep the economy in check later in 2018. It has also actively reduced the amount of purchases it is making in the Treasury and mortgage markets.
One of the alleged ringleaders once commissioned a song about himself for a party in Las Vegas with lyrics celebrating his $10,000 suits and his partner’s affinity for champagne, according to Monday’s complaint in federal court in Ocala, Florida.
The brother and sister who sued to recover losses from their late father’s investment claim the fraudsters “could not have perpetuated their scheme without the knowing assistance of their primary banking institution, Bank of America, which lent the scheme an air of legitimacy and provided critical support, including at times when the scheme would have otherwise collapsed,” according to the complaint.
Bank of America spokesman Bill Halldin had no immediate comment on the suit.
The lender is accused of failing to spot suspicious activity, including deposits of hundreds of thousands of dollars into accounts with relatively small, negative or nonexistent balances, followed by transfers within the same week to other accounts or investors seeking to cash out.
The architects of the scheme promised they would put investor funds into profitable and perhaps dividend-paying companies, according to the SEC. But they spent $20 million from the investment pool to enrich themselves, made $38.5 million in “Ponzi-like payments” and transferred much of the rest away from the companies that were supposed to receive the money, the regulator said.
The case is Heinert v. Bank of America, N.A., 5:18-cv-00324, U.S. District Court, Middle District of Florida (Ocala).