Category Archives: Business

economy and business news

Federal Reserve: US Households, Businesses See Good Times Ahead

Households are feeling more stable, small businesses are making money and many expect to expand and hire in the coming year, signs of continued optimism in two key parts of the economy, the Federal Reserve reported Tuesday in a pair of annual surveys.

Among more than 8,000 small businesses and more than 12,000 households covered in separate surveys late last year by the Fed and its 12 regional banks, the message was similar: economic conditions have been getting better and the expectation is for the good times to continue.

“We see a decided uptick” in the economic and credit conditions faced by small businesses, said one Fed official involved in the small business survey. “We are seeing improved business confidence and improved business performance,” with profitability and access to finance increasing in 2017, more than 70 percent of firms expecting revenue growth next year, and 48 percent expecting to add employees.

Among households, 74 percent of U.S. adults said they were financially comfortable or at least okay in 2017, four percentage points higher than in 2016 and 10 percentage points higher than the first survey year of 2013. Improvement was strongest in lower income households. The percentage of households that reported they were struggling financially fell to 7 percent from 9 percent last year.

The results from the surveys show that improvements in household and business conditions that took root under President Obama continued through the first year of the Trump administration.

Both findings are potentially significant for the economy’s future performance. Businesses with fewer than 500 employees generate perhaps 60 percent of new jobs, the New York Fed estimated in material released with the small business survey, and many report plans to expand in 2018.

Consumer spending, meanwhile, accounts for the bulk of U.S. gross domestic product, and strong household income growth in recent years has buoyed the economy overall.

“The mass of the consumer sector is in pretty good shape and that should continue,” Nathan Sheets, chief economist at PGIM Fixed Income said in an interview.

However, based on answers to a series of questions, about 2-in-5 adults faced what the Fed judged to be a “high likelihood of material hardship,” such as an inability to afford sufficient food, medical treatment, housing or utilities. About 4 in 10 said they could not meet an unexpected expense of $400 without carrying a credit card balance or borrowing from a friend.

Among the smallest firms, those with less than $100,000 in revenue, about 74 percent had trouble paying their bills, and a majority of those were either averse to borrowing or worried they would be turned down and so did not apply for credit.

But in overall the results for positive, said Fed officials.

Among firms that did apply for loans, for example, 46 percent received all they requested, compared to 40 percent last year. Nearly 60 percent wanted to use the money to expand. 

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Federal Reserve: US Households, Businesses See Good Times Ahead

Households are feeling more stable, small businesses are making money and many expect to expand and hire in the coming year, signs of continued optimism in two key parts of the economy, the Federal Reserve reported Tuesday in a pair of annual surveys.

Among more than 8,000 small businesses and more than 12,000 households covered in separate surveys late last year by the Fed and its 12 regional banks, the message was similar: economic conditions have been getting better and the expectation is for the good times to continue.

“We see a decided uptick” in the economic and credit conditions faced by small businesses, said one Fed official involved in the small business survey. “We are seeing improved business confidence and improved business performance,” with profitability and access to finance increasing in 2017, more than 70 percent of firms expecting revenue growth next year, and 48 percent expecting to add employees.

Among households, 74 percent of U.S. adults said they were financially comfortable or at least okay in 2017, four percentage points higher than in 2016 and 10 percentage points higher than the first survey year of 2013. Improvement was strongest in lower income households. The percentage of households that reported they were struggling financially fell to 7 percent from 9 percent last year.

The results from the surveys show that improvements in household and business conditions that took root under President Obama continued through the first year of the Trump administration.

Both findings are potentially significant for the economy’s future performance. Businesses with fewer than 500 employees generate perhaps 60 percent of new jobs, the New York Fed estimated in material released with the small business survey, and many report plans to expand in 2018.

Consumer spending, meanwhile, accounts for the bulk of U.S. gross domestic product, and strong household income growth in recent years has buoyed the economy overall.

“The mass of the consumer sector is in pretty good shape and that should continue,” Nathan Sheets, chief economist at PGIM Fixed Income said in an interview.

However, based on answers to a series of questions, about 2-in-5 adults faced what the Fed judged to be a “high likelihood of material hardship,” such as an inability to afford sufficient food, medical treatment, housing or utilities. About 4 in 10 said they could not meet an unexpected expense of $400 without carrying a credit card balance or borrowing from a friend.

Among the smallest firms, those with less than $100,000 in revenue, about 74 percent had trouble paying their bills, and a majority of those were either averse to borrowing or worried they would be turned down and so did not apply for credit.

But in overall the results for positive, said Fed officials.

Among firms that did apply for loans, for example, 46 percent received all they requested, compared to 40 percent last year. Nearly 60 percent wanted to use the money to expand. 

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Official: Trump Administration to Publish Proposed Rule Changes for Gun Exports

The Trump administration is preparing to publish on Thursday long-delayed proposed rule changes for the export of U.S. firearms, a State Department official said on Tuesday.

The rule changes would move the oversight of commercial firearm exports from the U.S. Department of State to the Department of Commerce.

The action is part of a broader Trump administration overhaul of weapons export policy that was announced in April.

Domestic gun sales drop

Timing for the formal publication of the rule change and the opening of the public comment period was unveiled by Mike Miller the acting secretary for the Directorate of Defense Trade Controls, the State Department’s body that currently oversees the bulk of commercial firearms transfers and other foreign military sales.

He was speaking at the Forum on the Arms Trade’s annual conference at the Stimson Center, a Washington think tank.

Reuters first reported on the proposed rule changes in September as the Trump administration was preparing to make it easier for American gun makers to sell small arms, including assault rifles and ammunition, to foreign buyers.

Domestic gun sales have fallen significantly after soaring under President Barack Obama, when gun enthusiasts stockpiled weapons and ammunition out of fear that the government would tighten gun laws.

A move by the Trump administration to make it simpler to sell small arms abroad may generate business for gun makers American Outdoor Brands and Sturm, Ruger & Company in an industry experiencing a deep sales slump since the election of President Donald Trump.

Remington recovers from bankruptcy

Remington, America’s oldest gun maker, filed for bankruptcy protection in March, weeks after a shooting at a high school in Parkland, Florida, killed 17 people and triggered intensified campaigns for gun control by activists. Remington emerged from bankruptcy last week.

The expected relaxing of rules could increase foreign gun sales by as much as 20 percent, the National Sports Shooting Foundation has estimated. As well as the industry’s big players, it may also help small gunsmiths and specialists who are currently required to pay an annual federal fee to export relatively minor amounts of products.

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Official: Trump Administration to Publish Proposed Rule Changes for Gun Exports

The Trump administration is preparing to publish on Thursday long-delayed proposed rule changes for the export of U.S. firearms, a State Department official said on Tuesday.

The rule changes would move the oversight of commercial firearm exports from the U.S. Department of State to the Department of Commerce.

The action is part of a broader Trump administration overhaul of weapons export policy that was announced in April.

Domestic gun sales drop

Timing for the formal publication of the rule change and the opening of the public comment period was unveiled by Mike Miller the acting secretary for the Directorate of Defense Trade Controls, the State Department’s body that currently oversees the bulk of commercial firearms transfers and other foreign military sales.

He was speaking at the Forum on the Arms Trade’s annual conference at the Stimson Center, a Washington think tank.

Reuters first reported on the proposed rule changes in September as the Trump administration was preparing to make it easier for American gun makers to sell small arms, including assault rifles and ammunition, to foreign buyers.

Domestic gun sales have fallen significantly after soaring under President Barack Obama, when gun enthusiasts stockpiled weapons and ammunition out of fear that the government would tighten gun laws.

A move by the Trump administration to make it simpler to sell small arms abroad may generate business for gun makers American Outdoor Brands and Sturm, Ruger & Company in an industry experiencing a deep sales slump since the election of President Donald Trump.

Remington recovers from bankruptcy

Remington, America’s oldest gun maker, filed for bankruptcy protection in March, weeks after a shooting at a high school in Parkland, Florida, killed 17 people and triggered intensified campaigns for gun control by activists. Remington emerged from bankruptcy last week.

The expected relaxing of rules could increase foreign gun sales by as much as 20 percent, the National Sports Shooting Foundation has estimated. As well as the industry’s big players, it may also help small gunsmiths and specialists who are currently required to pay an annual federal fee to export relatively minor amounts of products.

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US, China Near Rescue Deal for Chinese Telecom Firm ZTE

U.S. President Donald Trump said Tuesday “there is no deal” yet to lift the seven-year ban on the sale of American-made components to the giant Chinese telecommunications company ZTE, but that there might be a settlement as part of ongoing trade talks between the world’s two biggest economies.

Trump told reporters at the White House that he could envision a $1.3 billion fine against ZTE for violating the U.S. ban on trading with Iran and North Korea, the replacement of ZTE’s management and board of directors and imposition of “very, very strict security” to prevent the theft of U.S. intellectual and national security secrets.

“We caught them doing bad things,” he said.

Trump said Chinese President Xi Jinping asked him to look into the fate of ZTE after the firm said it had to shut its production because the U.S. banned sale of American-made components ZTE uses to manufacture an array of technology products until 2025. Trump said he also heard protests from the U.S. companies selling goods to ZTE.

Trump declared he was “not satisfied” with the state of U.S.-China trade talks after last week’s negotiations in Washington. China agreed to “substantially reduce” the $375 billion annual trade surplus it has over the U.S. by buying more American goods, but there was no mention of any specific import and export targets in the statement agreed to by the two countries.

U.S. Commerce Secretary Wilbur Ross is headed to China next week for further trade talks.

Trump commented on the ZTE case as U.S. news accounts quoted officials as saying a deal was near.

His suggestion of a $1.3 billion fine was slightly more than the $1.2 billion penalty the U.S. imposed last year on ZTE after uncovering its trade ban violations.

On Sunday, White House economic adviser Larry Kudlow said, “Do not expect ZTE to get off scot-free. Ain’t going to happen.”

Congressional opposition

But some U.S. lawmakers voiced opposition to settling the case.

U.S. Sen. Marco Rubio, who lost the 2016 Republican presidential nomination to Trump, contended that Washington had “surrendered” to Beijing. The Florida lawmaker said he would try to block it.

“Making changes to their board and a fine won’t stop them from spying and stealing from us. But this is too important to be over. We will begin working on veto-proof congressional action,” Rubio said on Twitter.

Senate Democratic Leader Charles Schumer said, “The proposed solution is like a wet noodle,” contending ZTE’s technology devices threaten to steal U.S. national security secrets.

Rescuing ZTE

Trump last week called for rescuing ZTE “to get back into business, fast.” He said “too many jobs in China” were being lost after the U.S. banned the sales of American-made components to ZTE. The U.S. leader said, “Commerce Department has been instructed to get it done!”

While some U.S. officials said the penalties against ZTE — the fine and the ban on sale of U.S. components until 2025 — were a law enforcement action, Trump linked the issue to ongoing trade and tariff disputes with China. The two countries over the weekend called off the threat of imposing higher tariffs on billions of dollars of each other’s exports while their negotiations continue.

Meanwhile, China announced Tuesday that on July 1 it will cut tariffs on most imported cars from 25 percent to 15 percent, still well above the 2.5 percent levy the U.S. imposes on cars imported from overseas.

The announcement by China’s finance ministry follows a pledge by Xi last month to lower the import duties and to ease foreign ownership restrictions for the Chinese auto industry.

Trump repeatedly has mentioned the 25 percent automobile tariff as a key trade barrier between the two countries.

On Monday, Trump said new trade between China and the U.S. will especially benefit U.S. farmers.

“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” he said on Twitter.

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US, China Near Rescue Deal for Chinese Telecom Firm ZTE

U.S. President Donald Trump said Tuesday “there is no deal” yet to lift the seven-year ban on the sale of American-made components to the giant Chinese telecommunications company ZTE, but that there might be a settlement as part of ongoing trade talks between the world’s two biggest economies.

Trump told reporters at the White House that he could envision a $1.3 billion fine against ZTE for violating the U.S. ban on trading with Iran and North Korea, the replacement of ZTE’s management and board of directors and imposition of “very, very strict security” to prevent the theft of U.S. intellectual and national security secrets.

“We caught them doing bad things,” he said.

Trump said Chinese President Xi Jinping asked him to look into the fate of ZTE after the firm said it had to shut its production because the U.S. banned sale of American-made components ZTE uses to manufacture an array of technology products until 2025. Trump said he also heard protests from the U.S. companies selling goods to ZTE.

Trump declared he was “not satisfied” with the state of U.S.-China trade talks after last week’s negotiations in Washington. China agreed to “substantially reduce” the $375 billion annual trade surplus it has over the U.S. by buying more American goods, but there was no mention of any specific import and export targets in the statement agreed to by the two countries.

U.S. Commerce Secretary Wilbur Ross is headed to China next week for further trade talks.

Trump commented on the ZTE case as U.S. news accounts quoted officials as saying a deal was near.

His suggestion of a $1.3 billion fine was slightly more than the $1.2 billion penalty the U.S. imposed last year on ZTE after uncovering its trade ban violations.

On Sunday, White House economic adviser Larry Kudlow said, “Do not expect ZTE to get off scot-free. Ain’t going to happen.”

Congressional opposition

But some U.S. lawmakers voiced opposition to settling the case.

U.S. Sen. Marco Rubio, who lost the 2016 Republican presidential nomination to Trump, contended that Washington had “surrendered” to Beijing. The Florida lawmaker said he would try to block it.

“Making changes to their board and a fine won’t stop them from spying and stealing from us. But this is too important to be over. We will begin working on veto-proof congressional action,” Rubio said on Twitter.

Senate Democratic Leader Charles Schumer said, “The proposed solution is like a wet noodle,” contending ZTE’s technology devices threaten to steal U.S. national security secrets.

Rescuing ZTE

Trump last week called for rescuing ZTE “to get back into business, fast.” He said “too many jobs in China” were being lost after the U.S. banned the sales of American-made components to ZTE. The U.S. leader said, “Commerce Department has been instructed to get it done!”

While some U.S. officials said the penalties against ZTE — the fine and the ban on sale of U.S. components until 2025 — were a law enforcement action, Trump linked the issue to ongoing trade and tariff disputes with China. The two countries over the weekend called off the threat of imposing higher tariffs on billions of dollars of each other’s exports while their negotiations continue.

Meanwhile, China announced Tuesday that on July 1 it will cut tariffs on most imported cars from 25 percent to 15 percent, still well above the 2.5 percent levy the U.S. imposes on cars imported from overseas.

The announcement by China’s finance ministry follows a pledge by Xi last month to lower the import duties and to ease foreign ownership restrictions for the Chinese auto industry.

Trump repeatedly has mentioned the 25 percent automobile tariff as a key trade barrier between the two countries.

On Monday, Trump said new trade between China and the U.S. will especially benefit U.S. farmers.

“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” he said on Twitter.

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Mexican Truckers Travel in Fear as Highway Robberies Bleed Economy

Glancing constantly at his rear view mirror, truck driver “El Flaco” journeys the highways of Mexico haunted by the memory of when he was kidnapped with his security detail by bandits disguised as police officers two years ago.

Back then, El Flaco, who spoke on condition of anonymity for fear of reprisals, was beaten, blindfolded and taken to a house near Mexico City where his captors threatened to kill him. Three days later he managed to escape and flee.

Today he travels with a machete and a satellite tracking device in his cab that can pinpoint him in emergencies.

Truckers covering Mexico’s vast territory often move in convoys to reduce the risk of robberies, which in 2017 almost doubled to nearly 3,000. Some drive with armed escorts traveling alongside them. Others remove the logos from their trucks.

Companies like brewer Grupo Modelo, a unit of AB InBev, and the Mexican subsidiary of South Korea’s LG Electronics have stepped up efforts to protect their drivers, deploying sophisticated geo-location technology and increasing communication with authorities.

The problem is part of a wider Latin American scourge of highway robbery that acts as a further drag on a region long held back by sub-par infrastructure.

“Roads are getting more and more dangerous, you try not to stop,” the 50-year-old El Flaco said, as he drove in the central state of Puebla, the epicenter of highway freight theft.

“Since I was kidnapped, I’ve gotten into the habit of looking in the mirror, checking car number plates, looking at who’s gone past me,” he added. “I look at everything.”

On the most dangerous roads, like those connecting Mexico City with major ports on the Gulf of Mexico and the Pacific, it is almost certain that one in every two truckers will be held up, a study by U.S.-based security firm Sensitech showed.

While no official data on losses exist, insurers paid out almost $100 million in 2016 to crime-hit cargo operators, up 4.5 percent on 2015, Mexican insurance association AMIS says.

The true sum is likely far higher: only one in three loads is insured due to the cost, according to industry estimates.

More than 80 percent of goods are transported by road and rail in Mexico, and the thefts are hurting competitiveness at a time the country is seeking to diversify trade and tap new sources of business.

Fuels, food and beverages, building materials, chemicals, electronic goods, auto parts and clothing are all top targets, Sensitech said.

Competition squeeze

Upon taking office in December 2012, President Enrique Pena Nieto promised to get a grip on gang violence and lawlessness.

But after some initial progress, the situation deteriorated and murders hit their highest level on record last year.

Highway robberies of trucks fell through 2014. But they almost doubled in 2015 to 985, hit 1,587 in 2016 and reached 2,944 last year.

The government has responded by stepping up police patrols in affected areas and lengthening prison sentences for freight robbery to 15 years. But robberies are still rising and most are not even reported due to the arduous bureaucratic process involved, Sensitech says.

“It’s hurting productivity and competitiveness,” said Leonardo Gomez, who heads a transportation national industry body.

Some drivers are armoring cabs in trucks made by companies like U.S. firm Kenworth, an expensive move that still only covers a tiny fraction of the almost 11 million trucks crisscrossing Latin America’s second-largest economy.

Last year, 53 trucks were armored against high-caliber weapons, up 40 percent from 2016, according to the Mexican Association of Automotive Armorers.

Attacks are not confined to roads. Some 1,752 robberies were recorded on railways last year, official data show. Criminals have also become more sophisticated.

They are turning to high-caliber weapons and employ devices to block Global Positioning Systems (GPS) to prevent trucks communicating their whereabouts, experts say.

Previously, companies that suffered robberies were generally able to recover their vehicles. Not any more.

“It’s not just the goods they want, it’s the trucks too,” said Carlos Jimenez of Mexican insurance association AMIS.

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Mexican Truckers Travel in Fear as Highway Robberies Bleed Economy

Glancing constantly at his rear view mirror, truck driver “El Flaco” journeys the highways of Mexico haunted by the memory of when he was kidnapped with his security detail by bandits disguised as police officers two years ago.

Back then, El Flaco, who spoke on condition of anonymity for fear of reprisals, was beaten, blindfolded and taken to a house near Mexico City where his captors threatened to kill him. Three days later he managed to escape and flee.

Today he travels with a machete and a satellite tracking device in his cab that can pinpoint him in emergencies.

Truckers covering Mexico’s vast territory often move in convoys to reduce the risk of robberies, which in 2017 almost doubled to nearly 3,000. Some drive with armed escorts traveling alongside them. Others remove the logos from their trucks.

Companies like brewer Grupo Modelo, a unit of AB InBev, and the Mexican subsidiary of South Korea’s LG Electronics have stepped up efforts to protect their drivers, deploying sophisticated geo-location technology and increasing communication with authorities.

The problem is part of a wider Latin American scourge of highway robbery that acts as a further drag on a region long held back by sub-par infrastructure.

“Roads are getting more and more dangerous, you try not to stop,” the 50-year-old El Flaco said, as he drove in the central state of Puebla, the epicenter of highway freight theft.

“Since I was kidnapped, I’ve gotten into the habit of looking in the mirror, checking car number plates, looking at who’s gone past me,” he added. “I look at everything.”

On the most dangerous roads, like those connecting Mexico City with major ports on the Gulf of Mexico and the Pacific, it is almost certain that one in every two truckers will be held up, a study by U.S.-based security firm Sensitech showed.

While no official data on losses exist, insurers paid out almost $100 million in 2016 to crime-hit cargo operators, up 4.5 percent on 2015, Mexican insurance association AMIS says.

The true sum is likely far higher: only one in three loads is insured due to the cost, according to industry estimates.

More than 80 percent of goods are transported by road and rail in Mexico, and the thefts are hurting competitiveness at a time the country is seeking to diversify trade and tap new sources of business.

Fuels, food and beverages, building materials, chemicals, electronic goods, auto parts and clothing are all top targets, Sensitech said.

Competition squeeze

Upon taking office in December 2012, President Enrique Pena Nieto promised to get a grip on gang violence and lawlessness.

But after some initial progress, the situation deteriorated and murders hit their highest level on record last year.

Highway robberies of trucks fell through 2014. But they almost doubled in 2015 to 985, hit 1,587 in 2016 and reached 2,944 last year.

The government has responded by stepping up police patrols in affected areas and lengthening prison sentences for freight robbery to 15 years. But robberies are still rising and most are not even reported due to the arduous bureaucratic process involved, Sensitech says.

“It’s hurting productivity and competitiveness,” said Leonardo Gomez, who heads a transportation national industry body.

Some drivers are armoring cabs in trucks made by companies like U.S. firm Kenworth, an expensive move that still only covers a tiny fraction of the almost 11 million trucks crisscrossing Latin America’s second-largest economy.

Last year, 53 trucks were armored against high-caliber weapons, up 40 percent from 2016, according to the Mexican Association of Automotive Armorers.

Attacks are not confined to roads. Some 1,752 robberies were recorded on railways last year, official data show. Criminals have also become more sophisticated.

They are turning to high-caliber weapons and employ devices to block Global Positioning Systems (GPS) to prevent trucks communicating their whereabouts, experts say.

Previously, companies that suffered robberies were generally able to recover their vehicles. Not any more.

“It’s not just the goods they want, it’s the trucks too,” said Carlos Jimenez of Mexican insurance association AMIS.

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Trump Claims New Accord with China on Trade Negotiations

U.S. President Donald Trump says American farmers will be big beneficiaries of more trade with China.

“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” Trump said Monday on Twitter.

In another comment, he said China “has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products – would be one of the best things to happen to our farmers in many years!”

The U.S. leader said one result of talks with China last week in Washington is barriers to U.S.-Chinese trade and tariffs on each country’s exports will “come down for (the) first time.”

President Trump’s tweets come a day after U.S. Treasury Secretary Steven Mnuchin announced the two nations have agreed to back away from imposing tough new tariffs on each other’s exports, after reaching a deal Saturday for Beijing to buy more American goods to “substantially reduce” the huge trade deficit with the United States.

Mnuchin told Fox News the world’s two biggest economic powers “made very meaningful progress and we agreed on a framework” to resolve trade issues. “So right now we have agreed to put the tariffs on hold while we try to execute the framework,” he said.

China’s state-run news agency Xinhua quoted Vice Premier Liu He, who led Chinese negotiators in trade talks in Washington this past week, as saying, “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”

China’s state-run news agency Xinhua quoted Vice Premier Liu He, who led Chinese negotiators in trade talks in Washington, as saying, “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”

Explainer: What is a Trade War?

Negotiations to continue

Liu said the agreement was a “necessity;” but, he added, “At the same time, it must be realized that unfreezing the ice cannot be done in a day; solving the structural problems of the economic and trade relations between the two countries will take time.”

Trump had threatened to impose new tariffs on $150 billion worth of Chinese imports and Beijing had responded that it would do the same on American goods.

Mnuchin and White House economic adviser Larry Kudlow said U.S. Commerce Secretary Wilbur Ross would soon go to Beijing to negotiate on how China might buy more American goods to reduce the huge U.S. trade deficit with Beijing, which last year totaled $375 billion. The United States has signaled it wants to trim the deficit by $200 billion annually, but no figure was mentioned in the agreement reached over the weekend.

Philip Levy, senior fellow on the global economy at the Chicago Council on Global Affairs, tells VOA that while the U.S. and China have for now avoided a tariff war, the outcome of the trade talks remains unclear.

“I think the Trump administration will crow about the fact that they arranged for some additional sales. That really wasn’t the issue. It may have been in their minds, but in terms of what is in the national interest, it wasn’t,” he said.

Levy says the result is a managed trade solution that still does not answer the fundamental question of how a state-dominated economy the size of giant China fits into the global system. 

But Kudlow said there has been a lot of progress.

“You can see where we’re going next. As tariffs come down, the barriers come down, there will be more American exports,” he told ABC television, saying any agreement reached will be “good for American exports and good for Chinese growth.”

ZTE

One contentious point of conflict between the U.S. and China is the fate of ZTE, the giant technology Chinese company that has bought American-made components to build its consumer electronic devices.

The U.S. fined ZTE $1.2 billion last year for violating American bans on trade with Iran and North Korea. ZTE, however, said recently it was shutting down its manufacturing operations because it could no longer buy the American parts after the U.S. imposed a seven-year ban on the sale of the components.

Trump, at the behest of Chinese President Xi Jinping, a week ago “instructed” Commerce Secretary Ross to intervene to save the company and prevent the loss of Chinese jobs.

Even so, Kudlow said, “Do not expect ZTE to get off scot free. Ain’t going to happen.”

Ira Mellman and Kenneth Schwartz contributed to this article.

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Trump Claims New Accord with China on Trade Negotiations

U.S. President Donald Trump says American farmers will be big beneficiaries of more trade with China.

“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” Trump said Monday on Twitter.

In another comment, he said China “has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products – would be one of the best things to happen to our farmers in many years!”

The U.S. leader said one result of talks with China last week in Washington is barriers to U.S.-Chinese trade and tariffs on each country’s exports will “come down for (the) first time.”

President Trump’s tweets come a day after U.S. Treasury Secretary Steven Mnuchin announced the two nations have agreed to back away from imposing tough new tariffs on each other’s exports, after reaching a deal Saturday for Beijing to buy more American goods to “substantially reduce” the huge trade deficit with the United States.

Mnuchin told Fox News the world’s two biggest economic powers “made very meaningful progress and we agreed on a framework” to resolve trade issues. “So right now we have agreed to put the tariffs on hold while we try to execute the framework,” he said.

China’s state-run news agency Xinhua quoted Vice Premier Liu He, who led Chinese negotiators in trade talks in Washington this past week, as saying, “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”

China’s state-run news agency Xinhua quoted Vice Premier Liu He, who led Chinese negotiators in trade talks in Washington, as saying, “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”

Explainer: What is a Trade War?

Negotiations to continue

Liu said the agreement was a “necessity;” but, he added, “At the same time, it must be realized that unfreezing the ice cannot be done in a day; solving the structural problems of the economic and trade relations between the two countries will take time.”

Trump had threatened to impose new tariffs on $150 billion worth of Chinese imports and Beijing had responded that it would do the same on American goods.

Mnuchin and White House economic adviser Larry Kudlow said U.S. Commerce Secretary Wilbur Ross would soon go to Beijing to negotiate on how China might buy more American goods to reduce the huge U.S. trade deficit with Beijing, which last year totaled $375 billion. The United States has signaled it wants to trim the deficit by $200 billion annually, but no figure was mentioned in the agreement reached over the weekend.

Philip Levy, senior fellow on the global economy at the Chicago Council on Global Affairs, tells VOA that while the U.S. and China have for now avoided a tariff war, the outcome of the trade talks remains unclear.

“I think the Trump administration will crow about the fact that they arranged for some additional sales. That really wasn’t the issue. It may have been in their minds, but in terms of what is in the national interest, it wasn’t,” he said.

Levy says the result is a managed trade solution that still does not answer the fundamental question of how a state-dominated economy the size of giant China fits into the global system. 

But Kudlow said there has been a lot of progress.

“You can see where we’re going next. As tariffs come down, the barriers come down, there will be more American exports,” he told ABC television, saying any agreement reached will be “good for American exports and good for Chinese growth.”

ZTE

One contentious point of conflict between the U.S. and China is the fate of ZTE, the giant technology Chinese company that has bought American-made components to build its consumer electronic devices.

The U.S. fined ZTE $1.2 billion last year for violating American bans on trade with Iran and North Korea. ZTE, however, said recently it was shutting down its manufacturing operations because it could no longer buy the American parts after the U.S. imposed a seven-year ban on the sale of the components.

Trump, at the behest of Chinese President Xi Jinping, a week ago “instructed” Commerce Secretary Ross to intervene to save the company and prevent the loss of Chinese jobs.

Even so, Kudlow said, “Do not expect ZTE to get off scot free. Ain’t going to happen.”

Ira Mellman and Kenneth Schwartz contributed to this article.

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