U.S. stocks surged Monday as fears eased about the possibility of an all-out trade war with China over competing tariff increases.

The closely watched Dow Jones Industrial Average of 30 key stocks jumped by more than 1.5 percentage point in New York in early-day trading and other indexes were also advancing sharply. Earlier, Asian stocks were mixed, while European indexes edged down for the day.

Global markets plummeted last week after U.S. President Donald Trump announced tariffs on $60 billion worth of Chinese imports in an effort to trim $100 billion off the $375 billion trade deficit the U.S. recorded last year with China. Beijing immediately vowed to retaliate with higher import duties on U.S. goods.

But there were signs Monday of easing of tensions between the world’s two biggest economies.

White House trade adviser Peter Navarro told CNBC that U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer are talking with Chinese officials about trade issues between the two countries. Mnuchin told Fox News he was “cautiously hopeful” that the U.S. would reach a deal to keep China from imposing tariffs on $50 billion worth of U.S. exports.

The Trump administration is asking China to lower tariffs on U.S. car exports and open its markets to U.S. financial service companies. Bloomberg News reported that Mnuchin called China’s Liu He to congratulate him on his appointment as China’s vice premier for economic policy and that the two officials discussed ways the two countries could mutually agree to close the wide trading gap between the two countries.

Chinese Foreign Ministry spokesperson Hua Chunying said China would be willing to meet with U.S. officials to work out the two countries’ trade issues, while China’s foreign ministry urged the U.S. to “stop economic intimidation” over tariffs.

While avoiding mention of the tariff dispute and last week’s sharp drop in stock prices, Trump boasted about the performance of the U.S. economy.

“The economy is looking really good,” he said in a Twitter comment. “It has been many years that we have seen these kind of numbers. The underlying strength of companies has perhaps never been better.”
…

A senior Chinese official is warning that a trade war would hurt all sides and set off a “greater conflict.”

“A trade war serves the interests of none. It will only lead to serious consequences and negative impact,” Vice Premier Han Zheng said at a development forum in Beijing Sunday. “We believe trade protectionism, against the trend, will lead to nowhere.”

Han did not mention the United States or President Donald Trump by name, whose announcement of stiff tariffs on imported Chinese steel and aluminum was answered with tariffs and duties on a list of U.S. imports.

Han appealed to all global trading partners to “cooperate with each other like passengers in the same boat … make economic globalization more open, inclusive, balanced and beneficial for all.”

Fears of a trade war between the world’s two largest economies have sent world markets tumbling.

The United States has accused China of unfair trade practices, including intellectual property theft and dumping Chinese goods on the global marketplace to make U.S. goods appear more expensive.

China has denied the U.S. charges, and Vice Premier Liu He told U.S. Treasury Secretary Steven Mnuchin in a telephone call Saturday that China is ready to defend its interests.
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In Russia’s far north, the city of Vorkuta is slowly being reclaimed by the Arctic tundra. Its population has plummeted as the local coal mines have closed, and the very future of the city is in doubt. As Henry Ridgwell reports for VOA, Vorkuta’s fate reflects a wider population crisis across Russia’s far north as old Soviet industries have crumbled.
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Tourist numbers in Indonesia swelled last year on the back of overseas advertising and infrastructure development. President Joko Widodo has said he wants to “create 10 tourist destinations like the island of Bali.” But the pleasing economic numbers also come with a social and environmental cost as rampant development threatens ecosystems and traditional livelihoods. Jack Hewson has this report.
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German business leaders are expressing concerns that President Donald Trump’s 25 percent tariff on imported steel could affect the auto industry in the South.

WABE Radio reports Mercedes-Benz USA this month opened its new North American headquarters in Sandy Springs, Georgia, for 1,000 employees.

The luxury car manufacturer is owned by Germany-based Daimler, but Mercedes-Benz USA CEO Dietmar Exler used the grand opening to remind the crowd of the brand’s U.S. presence.

German automakers in US 

That includes operations in South Carolina and in Alabama.

“We are now in the midst of construction of our own factory here, which will open doors in the fall in Charleston, South Carolina, and we’ll make all of the Sprinter vans for North America right here,” Exler said at the grand opening of its headquarters in Sandy Springs, Georgia, just north of Atlanta.

“Right next to me you have a member of the most successful SUV family, a GLE Coupe,” Exler said. “As you know, the GLE and the GLS are produced in Alabama. Last year, 280,000 cars were produced here not just for the U.S. market, but for markets all over the world.”

German car factories in the U.S. made more than 800,000 vehicles last year, and about half were sold overseas, according to the German Association of the Automotive Industry.

This month, Volkswagen of America Inc. announced plans to build a new five-passenger SUV at its factory in Chattanooga, Tennessee, where it manufactures other vehicles. Volkswagen AG is based in Wolfsburg, Germany.

“During my time as governor, I’ve watched Volkswagen Chattanooga flourish from a single vehicle producer, starting with the Passat, into what it is today — a thriving U.S. manufacturing operation that can produce three models, and counting,” said Tennessee Gov. Bill Haslam said in a statement Monday, when plans were announced.

“We value Volkswagen as a committed partner, whose investments in the state have not only created new jobs, but have helped us build a skilled Tennessee workforce,” Haslam said.

Volkswagen Chattanooga also manufactures the Passat and the Atlas.

​Trump proclamation, industry concern

Trump signed a proclamation last week to impose a 25 percent tariff on steel from every country except Canada and Mexico. The hope is to boost steel manufacturing in the U.S.

The concern among some industry experts is that tariffs on steel could hurt companies like Mercedes-Benz, Volkswagen and Porsche, all of which have significant operations in the South, said Stefan Mair of the Federation of German Industries in Berlin.

“Do you see the cars outside? There’s a lot of steel in there,” Mair said at the grand opening of the Georgia headquarters complex. “We think there will be some additional percentage points on the prices of cars.”

That price increase could be enough to stop people from buying new cars, said Lisa Cook, who teaches economics and international relations at Michigan State University.

“If consumers are price sensitive, and they are for many types of cars, this could cause people to postpone their decision to purchase a car,” Cook said.

US steel in cars

A little more than a quarter of all U.S. steel is used to make cars in this country, according to the German American Chamber of Commerce for the southern U.S.

“Approximately 25 percent of all steel is used in automotive manufacturing and 10 percent in machinery and equipment; both industries that German companies have heavily invested in the U.S. over the years,” said Stefanie Ziska, president of GACC South.

Making cars more expensive to build and export could hurt U.S. jobs, said Jeffrey Rosensweig, who teaches international business at Georgia’s Emory University.

“That would not only cost us jobs, it would hurt the U.S. and could potentially harm the U.S. trade balance,” Rosensweig said. “Just the opposite of what President Trump thinks he’s trying to achieve.”

He said the steel tariffs could trigger a trade war that would go beyond the auto industry.

“These foreign nations that we’re going to put these import taxes on, these tariffs, are not stupid,” Rosensweig said. “They’re going to retaliate against our exports, and they’re going to hit us where it hurts, which is often our farm exports.”
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The United States has flouted trade rules with an inquiry into intellectual property and China will defend its interests, Vice Premier Liu He told U.S. Treasury Secretary Steven Mnuchin in a telephone call on Saturday, Chinese state media reported.

The call between Mnuchin and Liu, a confidante of President Xi Jinping, was the highest-level contact between the two governments since U.S. President Donald Trump announced plans for tariffs on up to $60 billion of Chinese goods on Thursday.

The deepening rift has sent a chill through financial markets and the corporate world as investors predicted dire consequences for the global economy should trade barriers start going up.

Several U.S. chief executives attending a high-profile forum in Beijing on Saturday, including BlackRock Inc’s Larry Fink and Apple Inc’s Tim Cook, urged restraint.

In his call with Mnuchin, Liu, a Harvard-trained economist, said China still hoped both sides would remain “rational” and work together to keep trade relations stable, the official Xinhua news agency reported.

U.S. officials say an eight-month probe under the 1974 U.S. Trade Act has found that China engages in unfair trade practices by forcing American investors to turn over key technologies to Chinese firms.

However, Liu said the investigation report “violates international trade rules and is beneficial to neither Chinese interests, U.S. interests nor global interests”, Xinhua cited him as saying.

In a statement on its website, the office of the U.S. Trade Representative Robert Lighthizer said it had filed a request – at the direction of Trump – for consultations with China at the World Trade Organization to address “discriminatory technology licensing agreements.”

China’s commerce ministry expressed regret at the filing on Saturday, and said China had taken strong measures to protect the legal rights and interests of both domestic and foreign owners of intellectual property.

Counter moves

During a visit to Washington in early March, Liu had requested Washington set up a new economic dialogue mechanism, identify a point person on China issues, and deliver a list of demands.

The Trump administration responded by telling China to immediately shave $100 billion off its record $375 billion trade surplus with the United States. Beijing told Washington that U.S. export restrictions on some high-tech products are to blame.

“China has already prepared, and has the strength, to defend its national interests,” Liu said on Saturday.

According to an editorial by China’s state-run Global Times, it was Mnuchin who called Liu.

Firing off a warning shot, China on Friday declared plans to levy additional duties on up to $3 billion of U.S. imports in response to U.S. tariffs on steel and aluminium, imposed after a separate U.S. probe.

Zhang Zhaoxiang, senior vice president of China Minmetals Corp, said that while the state-owned mining group’s steel exports to the U.S. are tiny, the impact could come indirectly.

“China’s direct exports to the U.S. are not big. But there will be some impact due to our exports via the United States or indirect exports,” Zhang told reporters on the sidelines of the China Development Forum in Beijing on Saturday.

Global Times said Beijing was only just beginning to look at means to retaliate.

“We believe it is only part of China’s countermeasures, and soybeans and other U.S. farm products will be targeted,” the widely-read tabloid said in a Saturday editorial.

Wei Jianguo, vice chairman of Beijing-based think tank China Centre for International Economic Exchanges, told China Daily that Beijing could impose tariffs on more U.S. products, and is considering a second and even third list of targets.

Possible items include aircraft and chips, Wei, a former vice commerce minister, told the newspaper, adding that tourism could be a possible target.

Soybeans, autos, planes

The commerce ministry’s response had so far been “relatively weak,” respected former Chinese finance minister Lou Jiwei said at the forum.

“If I were in the government, I would probably hit soybeans first, then hit autos and airplanes,” said Lou, currently chairman of the National Council for Social Security Fund.

U.S. farm groups have long feared that China, which imports more than third of all U.S. soybeans, could slow purchases of agricultural products, heaping more pain on the struggling U.S. farm sector.

U.S. agricultural exports to China stood at $19.6 billion last year, with soybean shipments accounting for $12.4 billion.

Chinese penalties on U.S. soybeans will especially hurt Iowa, a state that backed Trump in the 2016 presidential elections.

Boeing jets have also been often cited as a potential target by China.

China and the U.S. had benefitted by globalization, Blackrock’s Larry Fink said at the forum.

“I believe that a dialogue and maybe some adjustments in trade and trade policy can be in order. It does not need to be done publicly; it can be done privately,” he said.

Apple’s Tim Cook called for “calm heads” amid the dispute.

The sparring has cast a spotlight on hardware makers such as Apple, which assemble the majority of their products in China for export to other countries.

Electrical goods and tech are the largest U.S. import item from China.

Some economists say higher U.S. tariffs will lead to higher costs and ultimately hurt U.S. consumers, while restrictions on Chinese investments could take away jobs in America.

“I don’t think local governments in the United States and President Trump hope to see U.S. workers losing their jobs,” Sun Yongcai, general manager at Chinese railway firm CRRS Corp, which has two U.S. production plants, said at the forum.

 
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H. Wayne Huizenga, a college dropout who built a business empire that included Blockbuster Entertainment, AutoNation and three professional sports franchises, has died. He was 80.

Huizenga died Thursday night at his home, said Valerie Hinkell, a longtime assistant. The cause was cancer, said Bob Henninger, executive vice president of Huizenga Holdings.

Starting with a single garbage truck in 1968, Huizenga built Waste Management Inc. into a Fortune 500 company. He purchased independent sanitation engineering companies, and by the time he took the company public in 1972, he had completed the acquisition of 133 small-time haulers. By 1983, Waste Management was the largest waste disposal company in the United States.

The business model worked again with Blockbuster Video, which he started in 1985 and built into the leading movie rental chain nine years later. In 1996, he formed AutoNation and built it into a Fortune 500 company.

Sports team owner

Huizenga was founding owner of baseball’s Florida Marlins and the NHL’s Florida Panthers — expansion teams that played their first games in 1993. He bought the NFL’s Miami Dolphins and their stadium for $168 million in 1994 from the children of founder Joe Robbie but had sold all three teams by 2009.

“Wayne Huizenga was a seminal figure in the cultural history of South Florida,” current Dolphins owner Stephen Ross said in a statement. “He completely changed the landscape of the region’s sports scene. … Sports fans throughout the region owe him a debt of thanks.”

The Marlins won the 1997 World Series, and the Panthers reached the Stanley Cup Finals in 1996, but Huizenga’s beloved Dolphins never reached a Super Bowl while he owned the team.

“If I have one disappointment, the disappointment would be that we did not bring a championship home,” Huizenga said shortly after he sold the Dolphins to Ross. “It’s something we failed to do.”

Fan favorite — for a time

Huizenga earned an almost cultlike following among business investors who watched him build Blockbuster Entertainment into the leading video rental chain by snapping up competitors. He cracked Forbes’ list of the 100 richest Americans, becoming chairman of Republic Services, one of the nation’s top waste management companies, and AutoNation, the nation’s largest automotive retailer. In 2013, Forbes estimated his wealth at $2.5 billion.

For a time, Huizenga was also a favorite with South Florida sports fans, drawing cheers and autograph seekers in public. The crowd roared when he danced the hokey pokey on the field during an early Marlins game. He went on a spending spree to build a veteran team that won the World Series in the franchise’s fifth year.

But his popularity plummeted when he ordered the roster dismantled after that season. He was frustrated by poor attendance and his failure to swing a deal for a new ballpark built with taxpayer money.

Many South Florida fans never forgave him for breaking up the championship team. Huizenga drew boos when introduced at Dolphins quarterback Dan Marino’s retirement celebration in 2000 and kept a lower public profile after that.

In 2009, Huizenga said he regretted ordering the Marlins’ payroll purge.

“We lost $34 million the year we won the World Series, and I just said, ‘You know what, I’m not going to do that,’” Huizenga said. “If I had it to do over again, I’d say, ‘OK, we’ll go one more year.’”

He sold the Marlins in 1999 to John Henry, and sold the Panthers in 2001, unhappy with rising NHL player salaries and the stock price for the team’s public company.

Dolphins man

Huizenga’s first sports love was the Dolphins; he had been a season-ticket holder since their first season in 1966. But he fared better in the NFL as a businessman than as a sports fan.

He turned a nifty profit by selling the Dolphins and their stadium for $1.1 billion, nearly seven times what he paid to become sole owner. But he knew the bottom line in the NFL is championships, and his Dolphins perennially came up short.

Huizenga earned a reputation as a hands-off owner and won raves from many loyal employees, even though he made six coaching changes. He eased Pro Football Hall of Famer Don Shula into retirement in early 1996, and Jimmy Johnson, Dave Wannstedt, interim coach Jim Bates, Nick Saban, Cam Cameron and Tony Sparano followed as coach.

Johnson tweeted: “A great man, one of the nicest individuals I have ever known, Wayne Huizenga passed away. RIP.”

Garbage business

Harry Wayne Huizenga was born in the Chicago suburbs on Dec. 29, 1937, to a family of garbage haulers. He began his business career in Pompano Beach in 1962, driving a garbage truck from 2 a.m. to noon each day for $500 a month.

Huizenga was a five-time recipient of Financial World magazine’s “CEO of the Year” award, and was the Ernst & Young “2005 World Entrepreneur of the Year.”

Regarding his business acumen, Huizenga said: “You just have to be in the right place at the right time. It can only happen in America.”

In 1960, he married Joyce VanderWagon. Together they had two children, Wayne Jr. and Scott. They divorced in 1966. Wayne married his second wife, Marti Goldsby, in 1972. She died in 2017.
…

Randy Poskin, a soybean farmer in rural Illinois, voted for Donald Trump in the 2016 presidential election. But ask him now he feels about that decision, and you get a tepid response.

“I’m not sure,” Poskin said.

Like many farmers in the Midwest, Poskin is concerned about getting caught in the middle of a trade war, as Trump ramps up economic pressure on China.

Those fears were heightened after Trump announced plans Thursday to impose tariffs on as much as $60 billion worth of Chinese imports.

“I’m fearful they will retaliate on those tariffs,” Poskin said. “Soybean exports, wheat, poultry, chicken, beef — [there are] any number of products that we export to their country that they could retaliate with.”

The announcement has unnerved many in Trump’s base of supporters in U.S. agriculture. The trade tensions have also rattled global markets, which until recently had performed strongly.

Intellectual property theft

Trump’s tariff decision was meant to punish Chinese companies that benefit from unfair access to U.S. technology.

U.S. businesses have long bristled at Beijing’s requirement that they transfer technology to Chinese companies as a condition of entering the Chinese market. U.S. businesses have also had their technology stolen through cyberattacks.

“We have a tremendous intellectual property theft situation going on,” Trump said during the signing ceremony Thursday.

Some U.S. companies in China cheered the move and suggested that concerns about a trade war were overblown.

William Zarit, chairman of the American Chamber of Commerce in China, dismissed the “hair on fire” concern that Trump’s proposed moves would hurt the global economy.

“That the U.S. is willing to risk these disruptions indicates how serious the U.S. administration finds China’s forced technology transfer, cybertheft and discriminatory industrial policies,” he said in a statement to VOA.

Zarit pointed to a recent survey suggesting members of his organization wanted the White House to “advocate more strongly for a level playing field and for reciprocal treatment to improve market access” in China.

But it’s not yet clear whether Trump’s words will translate into that kind of action. That’s in part because the president’s move on Thursday did not actually implement tariffs.

Delayed move

Instead, Trump gave the U.S. trade representative 15 days to identify specific Chinese goods that will be subject to the penalties. There will then be a 30-day window for public comment. That means any move is at least 45 days away.

Trump took a similar approach to steel and aluminum tariffs earlier this month. Although the White House initially leaked news that there would be a universal tax on all steel and aluminum imports, at least six countries and the European Union have since received exemptions.

“You have announcements with a lot of big, very aggressive, very dramatic rhetoric, but when it comes time to actually implement the policy, it’s much more toned down, much more in line with historical U.S. trade enforcement policy,” said Geoffrey Gertz of the Brookings Institution.

Such a negotiating tactic often gets Trump the “tough on trade” headlines that he desires, even while reducing the immediate risk of starting a trade war.

But there are still uncertainties. For instance, it still isn’t clear how China will respond to Trump’s protectionist measures.

China’s response

On Friday, China blasted Trump’s move but did little in the way of countermeasures.

“If somebody imposes a trade war on China, we’ll fight to the end,” Cui Tiankai, the Chinese ambassador to Washington, said on state TV.

China also released a list of potential tariffs on $3 billion worth of U.S. goods, including pork, fruit, wine, steel pipes and other products.

“China responded strong verbally but soft in actual countermeasures,” said Allan Von Mehren, a China analyst at the Copenhagen-based Danske Bank.

“This is a very measured reaction, as $3 billion is a drop in the ocean out of the $131 billion the U.S. exports to China every year,” he said.

However, China has signaled it may impose more significant measures should Trump follow through with his tariffs.

Should China retaliate further, a prime target is soybean farmers like Poskin, who are uniquely vulnerable to Chinese retaliation.

One in every three rows of U.S. soybeans is exported to China, according to the American Soybean Association.

That vulnerability is leaving Poskin to wonder whether he did the right thing in supporting Trump.

“I mean, I do like the regulation side of things, the way he’s backing things off,” Poskin said. “But just the same, these areas of trade are very important to agriculture. We can’t interrupt this.”
…

New orders for key U.S.-made capital goods rebounded more than expected in February after two straight monthly declines and shipments surged, which could temper expectations of a sharp slowdown in business spending on equipment in the first quarter.

The Commerce Department’s report on Friday could prompt economists to raise their economic growth estimates for the first three months of the year. They were slashed last week after data showed retail sales fell in February for the third month in a row.

The Federal Reserve on Wednesday painted an upbeat picture of the economy when it raised interest rates and forecast at least two more increases for 2018.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 1.8 percent last month. That was the biggest gain in five months and followed a downwardly revised 0.4 percent decrease in January.

Economists polled by Reuters had forecast those orders rising only 0.8 percent in February after a previously reported 0.3 percent decline in January. Core capital goods orders increased 7.4 percent on a year-on-year basis.

Shipments of core capital goods increased 1.4 percent last month, the biggest advance since December 2016, after an upwardly revised 0.1 percent gain in January. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

They were previously reported to have slipped 0.1 percent in January. Business spending on equipment powered ahead in 2017 as companies anticipated a hefty reduction in the corporate income tax rate. The Trump administration slashed that rate to 21 percent from 35 percent effective in January.

U.S. financial markets were little moved by the data as investors worried that President Donald Trump’s announcement on Thursday of tariffs on up to $60 billion of Chinese goods could start a global trade war.

Prices of U.S. Treasuries were mixed while U.S. stock index futures were largely flat. The dollar fell against a basket of currencies.

Strong business spending

The surge in core capital goods orders in February suggests further gains. There had been concerns spending could slow sharply after double-digit growth in the past quarters.

Investment in equipment is likely to be bolstered by robust business confidence, strengthening global economic growth and a weakening dollar, which is boosting demand for U.S. exports.

That is helping to support manufacturing, which accounts for about 12 percent of U.S. economic activity.

The strength in core capital goods shipments, together with a surge in industrial production in February, could help offset the impact of soft consumer spending on first-quarter growth.

The Atlanta Federal Reserve is forecasting gross domestic product increasing at a 1.8 percent annualized rate in the first three months of the year.

The government reported last month that the economy grew at a 2.5 percent pace in the fourth quarter. However, revisions to December data on construction spending, factory orders and wholesale inventories have suggested the fourth-quarter growth estimate could be raised to a 3.1 percent pace. The government will publish its third GDP estimate on Wednesday.

Last month, orders for machinery soared 1.6 percent. There were also hefty increases in orders of primary metals and electrical equipment, appliances and components.

Orders for computers and electronic products fell 0.2 percent, with bookings for communications equipment recording their biggest drop since December 2015.

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, vaulted 3.1 percent last month as demand for transportation equipment soared 7.1 percent.

That followed a 3.5 percent tumble in January. Orders for motor vehicles and parts increased 1.6 percent last month after edging up 0.1 percent in January.
…

Russia will likely prepare a list of restrictions on imported products from the United States in response to U.S. tariffs on steel and aluminum, Moscow’s trade ministry said on Friday, according to Interfax news agency.

The announcement came after China threatened to retaliate to U.S. President Donald Trump’s measures, stoking fears of a looming global trade war.

“We will prepare our position, submit it to the Economy Ministry and apply to the WTO [the World Trade Organization],” Russia’s Deputy Trade Minister, Viktor Yevtukhov, said, according to Interfax.

“We will probably prepare proposals on the response measures. Restrictions against the American goods. I think that all countries will follow this path,” Yevtukhov added.

The United States has said the tariffs are needed to protect its national security and therefore do not need to be cleared by the WTO. Many trade experts disagree saying they fall under the jurisdiction of the Geneva-based global trade body.

Russian steel and aluminum producers have been playing down the potential impact of the U.S. tariffs. But Russia’s Trade Ministry said there would be an impact.

Russian steel and aluminum producers may lose $2 billion and $1 billion, respectively, from the U.S. tariffs introduction, Yevtukhov said, citing preliminary estimates for the Trade Ministry. It was not clear whether he was referring to annual losses.

China’s commerce ministry said on Friday that the country was planning measures against up to $3 billion of U.S. imports to balance the steel and aluminum tariffs, with a list of 128 U.S. products that could be targeted.
…

Just a week after the empire he started announced it is shutting down, Toys R Us founder Charles Lazarus died at 94.

“There have been many sad moments for Toys R Us in recent weeks and none more heartbreaking than today’s news about the passing of our beloved founder,” the company said Thursday.

No cause of death was given.

Lazarus, a World War II veteran, started Toys R Us in 1948 as a single store in Washington, D.C., selling baby furniture.

At customer requests, he soon expanded his line to include toys and began opening large stores the size of supermarkets, devoted to toys and bicycles.

Toys R Us and its massive selection became a favorite of suburban American families.

Toys R Us opened stores all over the world before Lazarus stepped down as the head of the company in 1994.

In recent years, Toys R Us found itself struggling to compete with other large stores, especially with the onslaught of such online retailers as Amazon.

It declared bankruptcy last year, and announced last week it was shutting down its remaining stores.
…

U.S. President Donald Trump signed a presidential memorandum on Thursday initiating actions to consider imposing tariffs on a long list of nearly 1,300 Chinese imported products worth about $60 billion.

The move could limit China’s ability to invest in the U.S. technology industry, setting the stage for a possible trade war with Beijing.

The decision to take action is a result of an investigation conducted by the U.S. trade representative to determine whether Beijing’s trade practices may be “unreasonable or discriminatory” and may be “harming American intellectual property rights, innovation or technology development.” After a seven-month investigation, the USTR’s office found the policies were in violation.

At the signing ceremony, Trump said, “We have a tremendous intellectual property theft going on.”

He said the U.S. wants reciprocal trade and tariff deals with China and other countries. “If they charge us, we charge them the same thing,” Trump said at the White House ceremony.

He also blamed the “unfair Chinese trade practices” for the U.S. trade deficit with China, which has reached a record $375 billion on his watch.

Campaign promises

Trump campaigned on promises to bring down America’s massive trade deficit — $566 billion last year — by rewriting trade agreements and cracking down on what he called abusive commercial practices by U.S. trading partners.

The investigation concluded that China “uses foreign ownership restrictions, including joint venture requirements, equity limitations and other investment restrictions to require or pressure technology transfer from U.S. companies to Chinese entities.”

Trade associations representing a wide range of the business community said they largely agreed with criticism of China’s intellectual property practices, but criticized the tariffs as a poor remedy that could ultimately harm U.S. businesses and raise prices for consumers.

Earlier this week, some of the largest American retailers and tech companies, including Walmart and Apple, urged Trump to carefully consider the impact the tariffs would have on consumer prices.

“As you continue to investigate harmful technology and intellectual property practices, we ask that any remedy carefully consider the impact on consumer prices,” a coalition of more than 40 business groups, led by the Information Technology Industry Council, said Sunday in a letter to the president.

“As the industry closest to consumers, retailers know firsthand how high tariffs will hurt American families,” the letter continued.

The prospect of a trade war sent markets plummeting, with the Dow Jones industrial average closing down 724 points, almost 3 percent, its biggest drop in six weeks.

Global trade conflagration

Bloomberg Economics estimated a global trade conflagration could wipe $470 billion off the world economy by 2020.

As news of the impending announcement spread, China announced it was preparing tariffs of its own on U.S. soybeans, sorghum and live hogs.

“China will not sit idly to see its legitimate rights damaged and must take all necessary measures to resolutely defend its legitimate rights,” the Commerce Ministry in Beijing said in a statement on its website.

The Trump administration has said it is simply taking long overdue action following years of unfair Chinese trading practices that they argue previous administrations have insufficiently countered.

Peter Navarro, Trump’s hawkish top trade adviser, said that the administration had decided on the tariffs in lockstep and that the U.S. had opted to take tariff actions after dialogues with China over the past 15 years failed to change Chinese behavior significantly.

The tariffs will be subject to a 15-day comment period before the U.S. trade representative finalizes the move. Other measures, including new restrictions on Chinese investment in the U.S., will take longer.
…

Stocks plunged Thursday after the Trump administration slapped sanctions on goods and investment from China. The Dow Jones industrial average dropped more than 700 points as investors feared that trade tensions between the world’s largest economies would escalate.

The planned sanctions include tariffs on $48 billion worth of Chinese imports as well as restrictions on Chinese investments. Trump said he’s taking those steps in response to theft of American technology, and the Chinese government said it will defend itself. Investors are worried that trade tensions would hurt U.S. companies and harm the world economy.

On Thursday they fled stocks and bought bonds, which sent bond prices higher and yields lower. With interest rates falling, banks took some of the worst losses. Technology and industrial companies, basic materials makers and health care companies also fell sharply.

Peter Donisanu, an investment strategy analyst for the Wells Fargo Investment Institute, said the risk of a damaging trade war is still low because the Trump administration is targeting specific goods that aren’t central to China’s economy. That could change if it puts tariffs on products like electronics or appliances imported from China.

“If the Trump administration really wanted to hurt China and start a trade war, then they would go after those larger sectors,” he said. Still, Donisanu said that after last year’s rally, investors are looking for new reasons to feel optimistic about stocks. With trade tensions in focus over the last month, they’ve had trouble finding any.

The S&P 500 index skidded 68.24 points, or 2.5 percent, to 2,643.69. The Dow Jones industrial average sank 724.42 points, or 2.9 percent, to 23,957.89. The Nasdaq composite gave up 178.61 points, or 2.4 percent, to 7,166.68. The Russell 2000 index of smaller-company stocks lost 35.43 points, or 2.2 percent, to 1,543.87.

Construction equipment maker Caterpillar fell $8.90, or 5.7 percent, to $146.90, for its worst loss since mid-2016. Aerospace company Boeing slid $17.49, or 5.2 percent, to $319.61.

Investors also sold some of the market’s biggest recent winners. Among technology companies, Microsoft fell $2.69, or 2.9 percent, to $89.79 and Alphabet, Google’s parent company, fell $40.85, or 3.7 percent, to $1,053.15. Online retailer Amazon slid $36.94, or 2.3 percent, to $1,544.92.

Recent tariffs

Earlier this month the Trump administration ordered tariffs on imported steel and aluminum, and stocks dropped as investors worried about the possibility of tougher restrictions on international trade and smaller profits for corporations.

Their fears eased when the administration said some countries will be exempt from the tariffs. That continued Thursday, as U.S. Trade Representative Robert Lighthizer said the tariffs won’t apply to the European Union, Canada, Mexico, Argentina, Brazil and Australia.

Donisanu, of Wells Fargo, said the Trump administration isn’t hostile to trade necessarily, but wants to get other countries to revise the terms of America’s trade deals.

“This is probably intended to get China to get more serious in discussions around violations of intellectual property rights and addressing those issues,” he said.

Bond prices climbed, sending yields lower. The yield on the 10-year Treasury note slipped to 2.82 percent from 2.88 percent. Falling bond yields are bad for banks because they force interest rates on loans lower. Bank of America lost $1.32, or 4.1 percent, to $30.55 and JPMorgan Chase gave up $4.79, or 4.2 percent, to $109.95.

Utility companies and real estate investment trusts moved higher. When bond yields decline, investors often bid up those stocks and others that pay big dividends.

The decline in rates comes a day after the Federal Reserve raised interest rates and said the U.S. economy and the job market continued to improve over the last two months. The Fed expects to raise rates three times this year, although some investors think a fourth increase is possible. The Fed also said it might raise rates three more times next year instead of two.

Overseas markets closed mostly lower.
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U.S. Federal Reserve officials voted to raise the central bank’s benchmark interest rate by a quarter of a percent this week, signaling perhaps three or more rate hikes this year as economic conditions improve. But as Mil Arcega reports, rising rates mean higher borrowing costs for consumers, many who have yet to see a significant increase in wages.
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U.S. President Donald Trump is expected at any time to fire a salvo directly at China in what could escalate into a full-scale trade war between the world’s two largest economies.

Trade actions against China, partly in response to the theft and improper transfer of American technology to Chinese companies, are expected to be announced by Trump as soon as Thursday. His schedule includes a midday signing of a memorandum “targeting China’s economic aggression.”

On the anticipated eve of the measures, U.S. officials spoke to reporters about their monthslong investigation under Section 301 of the Trade Act of 1974 of Beijing’s trade practices.

China has long been considered by many in the international community to have contravened fundamental principles of global trade, despite joining the World Trade Organization in 2001.  

There have been a “number of specific failings by China to live up to its WTO obligations,” said an official of the U.S. Trade Representative in a Wednesday background briefing for reporters.  

The briefing and other comments not for attribution by officials are seen as clear signals the administration, in response to an Aug. 14 memo by Trump, intends to use the Section 301 trade tool.

The last time it was wielded was by the Clinton administration against Japan to pry open that country’s automotive sector.

‘Ripping off’

China has been “ripping off” the United States, Trump has emphasized numerous times in public remarks during which he has harshly criticized his predecessors for not doing anything about it.  

According to published reports, Trump is expected to impose tariffs, valued at tens of billions of dollars, on a number of Chinese products. Sources say that in addition to tariffs, restrictions on Chinese investment in the United States are likely as a response to Beijing using state funds and enterprises under the government’s control to purchase intellectual property here.

Trump in January hit the Chinese-dominated solar panel and cell industry with tariffs. Earlier this month, he launched global tariffs on steel and aluminum (from which Canada and Mexico were quickly given indefinite exemptions), a move China’s commerce ministry said it “strongly opposed.”   

U.S. Trade Representative officials on Wednesday declined to specify what new actions will be taken, but they did not disagree that an announcement is expected as soon as Thursday.

“We’re getting very close,” said a USTR official speaking to reporters on condition of not being named. “The president will have the final say.”

Bracing for an anticipated harsh reaction from China, the official noted, “We recognize the potential gravity of the situation here.”

Depending on the severity of the measures taken by Trump, stock markets in Asia and elsewhere could be roiled, according to market analysts.

Trade groups representing American retail giants, such as Walmart, and tech companies, including Apple, warn that sweeping tariffs would raise prices for consumers in the United States and might not do much to reduce the trade deficit.
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U.S. congressional leaders have reached a deal on a $1.3 trillion spending bill as a budget deadline looms.

Lawmakers now have until midnight Friday to approve it and prevent the year’s third government shutdown. Passage of the massive bipartisan effort seems certain.

The bill, which will keep the government funded until the end of September, has President Donald Trump’s support, the White House said in a statement released Wednesday.

“The president had a discussion with (House) Speaker (Paul) Ryan and (Senate) Leader (Mitch) McConnell, where they talked about their shared priorities secured in the omnibus spending bill,” said White House Press Secretary Sarah Huckabee Sanders.

Deadline late Friday

The bill will give Trump a huge budget increase for the military, including a 2.4 percent pay raise for military personnel.

It also will include a measure strengthening the federal background check system for gun purchases.

WATCH: Federal Budget Explainer

The “Fix NICS” measure would provide funding for states to comply with the existing National Instant Criminal Background Check system and penalize federal agencies that don’t comply.

It also will include money to improve school safety, including money for training school officials and law enforcement officers on how to identify signs of potential violence and intervene early, installing metal detectors and other steps to “harden” schools to prevent violence.

GOP aides said that Trump will win $1.6 billion for a wall and physical barriers along the U.S.-Mexico border. But Trump would be denied a far larger $25 billion request for multiyear funding for the project.

To the Democrats’ disappointment, the bill makes no mention of protections for so-called Dreamers, undocumented immigrants brought to the United States as children.

No insurer subsidies

It also won’t provide subsidies to health care insurers who cut costs for low-earning customers. And it won’t have federal payments for carriers to help them afford to cover their costliest clients.

Both parties touted the $4.6 billion in total funding to fight the nation’s opioid addiction epidemic and a record $3 billion increase for medical research at the National Institutes of Health.

The House is expected to vote on the bill by Thursday, followed quickly by the Senate, to meet Friday’s midnight deadline.
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When Nestle executive Stephan Canz attended the German school in Nairobi in the early 1980s, it was surrounded by lush coffee farms.

Today, the trees have long since been uprooted and replaced by a shopping mall and upmarket homes, driving a sharp drop in

production of Kenya’s premium beans.

“The coffee has disappeared,” said Canz, who co-manages Swiss-based Nestle’s partnerships with coffee farmers globally. “You have to go almost to the slopes of Mount Kenya to find coffee.”

Kenya accounts for just 1 percent of the global crop, but its high-quality arabica beans are sought-after for blending with other varieties.

Alarmed by a steep drop in the country’s production, Nestle, which buys 10 percent of the world’s coffee and has the leading packaged coffee business, is working with farmers to guarantee its supplies.

In a $1 million project, begun in 2010, it says it is boosting bean production and quality.

Mary Wanja, with 350 coffee trees on her plot in rural Kirinyaga at the foot of Mount Kenya, is one of more than 40,000 of Kenya’s 600,000 coffee farmers participating in the project.

She harvested 1,200 kg of coffee last year, double the previous year, and saw her annual earnings rise to 100 shillings ($0.99) per kg, from 70 shillings.

“We are planting more trees so we can harvest more,” she said, standing amid newly planted seedlings provided by the Nestle project, which she joined three years ago.

Multiplier effect

Since Kenya’s production peaked at 129,000 tonnes in 1988/89 it has dropped steadily due to poor management and global price swings. Farmers have switched crops or sold their land.

Nestle, which is counting on growth in its coffee business as it overhauls its business to improve performance, works with a local milling and marketing company, Coffee Management Services (CMS), to train farmers regularly on fertilizer application, pest and disease control. It provides seedlings for farmers wishing to plant more.

“People didn’t know how and when to apply fertilizer properly. Nestle has taught us a lot,” said William Njeru, a farmer who harvested 7,600 kg last year, up from around 1,200 kg a year before he joined the project five years ago.

“If we can have other partners who are doing what Nestle is doing, the multiplier effect on productivity in Kenya can be very high,” said Peter Kimata, deputy head of Nestle’s partner CMS.

A half hour drive up the road from his office sits an abandoned coffee factory with rusting machinery.

Farmer Moses Wachira says it was closed in 2013 after its management embezzled farmers’ money. That forced 500 farmers to start selling their coffee to brokers who offer lower prices.

“These problems are causing production to fall because nobody watches to ensure managers do not misappropriate farmers’ money,” said the white-bearded farmer.

Kenya’s harvest fell 12 percent in the 2016/17 season to 40,700 metric tonnes, according to government data.

Government efforts to revive the sector have faltered. Last year, a judge stopped the government from acting on the recommendations of an official report on ways to boost coffee production after farmers claimed they were not consulted.

Some Kenyan farmers will miss out on expanding the crop to meet 2-3 percent annual growth in global demand for coffee, according to Nestle, as consumers discover new ways of consuming coffee, including capsules and cold brews.

Demand for coffee is also growing locally.

In Kenya, cafe chain Java, owned by Dubai-based private equity firm Abraaj, opened its first shop in 1999 and has grown to 68 retail outlets, as an emerging middle class and young professionals develop a taste for lattes and mocha.

“The coffee has to come from somewhere,” said Canz.

 
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French commuters face major train service disruptions on Thursday due to an unexpectedly large walkout by railway workers angry at the government’s plans to shake up the state-owned and highly indebted SNCF rail company.

Labor unions said last week they would launch rolling strikes in early April, but France’s transport minister said many were planning to join a wider day of public service protests on Thursday, reducing rail services by 50 percent.

“There will ultimately be serious disruption tomorrow,” Transport Minister Elisabeth Borne said.

Unions are on a collision course with the government over its plans for the biggest shake-up of SNCF (Societe Nationale des Chemins de Fer) since the nationalization of the railways in the 1930s. Among the government’s plans are the trimming of benefits received by SNCF’s 260,000 employees and a cut in its 45 billion euro ($56 billion) debt.

The showdown was due to start with strikes two days a week over three months from April 3. It is shaping up as the biggest test of Emmanuel Macron’s presidency since the 40-year-old came to power last May on a promise of sweeping economic reforms.

Thursday’s stoppages are not part of the programmed rolling strikes. They are being organized to dovetail with a day of demonstrations by civil servants and public service employees opposed to plans to change the retirement system.

Minister Borne said the stoppages would halve regional rail services nationally and that high-speed TGV connections between major cities would be cut to 40 percent of normal levels.
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Peter G. Peterson, a billionaire and business executive who became one of the most prominent voices to argue for entitlement reform and reducing the U.S. national debt, died of natural causes early Tuesday, his family said. He was 91.

Born in the small town of Kearney, Nebraska, to Greek immigrants, Peterson was CEO of two major U.S. companies and co-founded one of the world’s largest private-equity firms.

He was a national figure in business by the early 1960s, serving as chairman and CEO of Bell and Howell, one of the largest manufacturers of movie cameras at the time.

He left Bell and Howell to work for the Nixon administration in the early 1970s, eventually serving as secretary of commerce from 1972 to 1973.

Lehman Brothers 

He took over as chief executive of the investment bank Lehman Brothers in 1973 after leaving the Nixon administration. In 1985, he co-founded the private-equity firm Blackstone Group with Stephen Schwarzman.

“His intelligence, wit and vision made him an inspirational leader who brought people together from the White House to Wall Street,” his family said in a statement.

Blackstone went on to become one of biggest private-equity firms in the world, with $434 billion in assets under management at the end of last year. When the firm went public in 2007, Peterson’s stake in the company made him a billionaire. His wealth was estimated at $2 billion, according to Forbes Magazine.

Fiscal challenges

Peterson dedicated the rest of his life to what he called “key fiscal challenges threatening America’s future,” donating $1 billion to create the Peter G. Peterson Foundation in 2007.

He never publicly endorsed the fiscal ideals of the Tea Party. However, his ideas did give him some common ground with them.

He long argued that the United States’ entitlement programs, principally Medicaid, Medicare and Social Security, had to be restructured or benefits cut back to avoid bankrupting the government. Through his foundation, he disseminated his ideas among the public and politicians.

“The fact he was able to start a serious debate about the future of Social Security and other entitlement programs was a huge accomplishment,” said Fred Bergsten, founder of the Peterson Institute for International Economics, who worked with Peterson in various capacities going back to the 1970s.

Raising taxes

Peterson was not considered ideological when it came to dealing with Social Security and Medicare. A life-long Republican, he still believed that raising taxes should be considered as part of any major restructuring of the U.S. budget, Bergsten said.

The foundation quickly became a major voice on all budget-related matters, repeatedly quoted in national media outlets. In 2008, his organization helped bankroll the documentary “I.O.U.S.A,” with the goal of making the federal government’s ballooning national debt, then around $10 trillion, a central campaign issue.

“What is most significant is most of our challenges are not really being discussed,” Peterson told The Associated Press in 2008 when he created his foundation. “I’ve been a very lucky beneficiary of the American dream as the son of immigrants. And, the more I look at some of these problems, the more persuaded I am they will pose a serious threat to this country.”

Peterson is survived by his wife, Joan Ganz Cooney, who co-founded the Children’s Television Workshop, and children John Peterson, Jim Peterson, David Peterson, Holly Peterson and Michael Peterson, and nine grandchildren.
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The World Bank agreed on a $600 million loan and grant for Ethiopia on Tuesday to pay for roads and other infrastructure in urban areas.

The Washington-based bank said the funds would “help strengthen the capacity and performance of local urban governments, expand sustainable urban infrastructure and services, as well as promote local economic development.”

Ethiopia’s urban population is growing by 3.8 percent annually on average, one of the fastest rates in sub-Saharan Africa, and that is presenting challenges to infrastructure, services and jobs, the bank said.

“To successfully manage urbanization … cities are likely to require fiscal transfers for the foreseeable future. This program will help cities to realize their revenue potential,” Abebaw Alemayehu, the World Bank’s team leader for the project, said in a statement.

The program will also support projects in 73 towns and benefit more than 6.6 million people, he said.

Under a 2015-2020 development plan, Ethiopia plans to set up thousands of “rural development centers” in a bid to ease the influx of people to its capital, Addis Ababa.

Earlier this month, the World Bank also approved a $375 million loan to Ethiopia to fund a national electrification project.
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Alphabet’s Google is launching the Google News Initiative to weed out fake news online and during breaking news situations, it said in a blog post Tuesday.

Google said it plans to spend $300 million over the next three years to improve the accuracy and quality of news appearing on its platforms. 

The changes come as Google, Facebook and Twitter face a backlash over their role during the U.S. presidential election by allowing the spread of false and often malicious information that might have swayed voters toward Republican candidate Donald Trump.

In a separate blog post, Google said it was launching a tool to help subscribe to news publications.

Subscribe with Google will let users buy a subscription on participating news sites using their Google account and manage all their subscriptions in one place.

Google said it would launch the news subscription with the Financial Times, The New York Times, Le Figaro and The Telegraph among others. The search engine said it plans to add more news publishers soon.
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An Egyptian court on Tuesday ordered authorities to revoke the operating licenses of the Uber and Careem ride-hailing services and block their mobile apps and software.

The government and the companies are expected to appeal the administrative court verdict, which would prevent it from being implemented until a higher court weighs in.

The administrative court in Cairo ruled that it is illegal to use private vehicles as taxis.

Both companies provide smartphone applications that connect passengers with drivers who work as independent contractors.

In a brief statement posted on its Facebook account, Careem said it “hasn’t been notified officially to stop its operations” and was operating normally. There was no immediate comment from Uber.

Uber was founded in 2010 in San Francisco, and operates in more than 600 cities across the world. Careem was founded in 2012 in Dubai, and operates in 90 cities in the Middle East and North Africa, Turkey, and Pakistan.

The applications took off in Cairo, a city of 20 million people with near-constant traffic and little parking. The services have recently started offering rides on scooters and tuk-tuks, three-wheeled motorized vehicles that can sometimes squeeze through the gridlock.

The apps are especially popular among women, who face rampant sexual harassment in Egypt, including from some taxi drivers. Cairo’s taxi drivers are also notorious for tampering with their meters or pretending the meters are broken in order to charge higher rates.

In 2016, taxi drivers protested the ride-hailing apps. They have complained that Uber and Careem drivers have an unfair advantage because they do not have to pay the same taxes or fees, or follow the same licensing procedures.
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Indonesian president Joko “Jokowi” Widodo has instructed ministers to keep fuel prices stable over the next two years, said Energy Minister Ignasius Jonan, which would, in effect, continue a controversial fuel subsidy scheme that analysts say has negatively impacted growth and the environment. 

The Ministry said it would increase the per-liter subsidy for diesel and regular petrol from 500 Indonesian rupiah (about $0.35) to 700-1000 rupiah ($0.49-$0.70) while keeping pump prices unchanged.

The measure indicates how protectionist measures have been hard to shake for the initially reform-minded Jokowi, who made several inroads against subsidies in 2014 and 2015. 

Meanwhile, the rupiah continues to sink in the global market, due in part to Indonesia’s widening current-account deficit. On Monday, Credit Suisse said “the rupiah is among the most vulnerable emerging market currencies in Asia.”

Political Context

“Subsidizing fuel does tend to exacerbate currency depreciation, because the bulk of Indonesia’s petrol is imported,” said Kevin O’Rourke, a veteran Indonesian political analyst. “Fixed retail prices cause over-consumption, as the price remains the same even though the currency is declining; ordinarily, what should happen is that petrol prices rise as the currency declines, thereby discouraging consumption of the imports.”

In 2014, the year he was elected president, Jokowi raised fuel prices and capped the diesel subsidy within months of taking office. Last year he also pushed to phase out electricity subsidies, but was already facing pushback from consumers amid rising inflation. Consumer expectations are perhaps looming larger now that he is in the latter half of his term, and gearing up for a competitive reelection campaign in 2019. 

“Widodo hopes to keep retail prices stable through the April 2019 election, despite the gap between the Indonesia Crude Price (ICP) and the budget’s oil price assumption,” said O’Rourke. “Ostensibly, this subsidization aims to preserve consumer purchasing power; in reality, Widodo clearly hopes to avoid sacrificing popularity ahead of his re-election bid.” Ironically, he said, artificially low fuel prices end up creating inflation anyway, since people tend to then over-consume imported petrol, which further sinks the rupiah.

The subsidy may also imperil Indonesia’s public transport ambitions, said Jakarta-based energy policy researcher Lucky Lontoh. “Jokowi’s massive infrastructure development actually was started with a fuel subsidy reduction back in 2014, which freed some fiscal space needed to fund the infrastructure projects. More subsidies means the government will have less money to fund other development activities.” 

Environmental Impact

Fuel subsidies are considered a regressive form of spending because their benefits are captured by people wealthy enough to drive and own vehicles, said Paul Burke, an economist at Australian National University who focuses on energy and transportation. 

But they also aggravate traffic jams — including in cities like the notoriously traffic-choked Jakarta — air pollution, and oil dependence, said Burke, citing a recent paper he authored on the topic. 

Burke said Indonesia’s substantial progress on electricity subsidies are a hopeful sign and possible roadmap for fuel subsidy reform. 

“Over recent years, Indonesia has achieved substantial success in reducing electricity subsidies, by increasing some electricity tariffs to cost-reflective levels,” he said. “Poor households are among those that have been exempted from the reforms… [which] have made an important contribution to improving the efficiency of Indonesia’s electricity use. As electricity prices have increased, electricity use has shifted to a lower-growth trajectory. This has helped Indonesia to avoid the need to build too many expensive new power stations.”

In the fuel realm, Burke said a reform option that economists often suggest is a “fuel excise,” which is a tax on the sale of fuel and the opposite of a fuel subsidy. “Fuel excise would be a progressive form of revenue raising, would help to reduce pollution and traffic jams, and would help Indonesia reduce its budget deficit and fund key priorities.”

Fossil fuel subsidies have existed in Indonesia since its independence in 1949 and, per the International Energy Agency, accounted for nearly 20 percent of fiscal expenditure by the 1960’s. In that context, the reforms of modern-day Indonesia and the Jokowi administration are not inconsiderable: by 2014, about 3 percent of the GDP was spent on fossil fuel subsidies, and by 2016, after Jokowi’s initial spate of reforms, it was less than 1 percent. 

But, due to consumer expectations, the political climate, and the unique challenges of the fuel industry — Indonesia both has a lot of natural resources itself and a burgeoning consumer class — the current subsidy apparatus may prove sticky for the near future. 
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Air bags in some Hyundai and Kia cars failed to inflate in crashes and four people are dead. Now the U.S. government’s road safety agency wants to know why.

The National Highway Traffic Safety Administration says it’s investigating problems that affect an estimated 425,000 cars made by the Korean automakers. The agency also is looking into whether the same problem could happen in vehicles made by other companies.

In documents posted on its website Saturday , the safety agency says the probe covers 2011 Hyundai Sonata midsize cars and 2012 and 2013 Kia Forte compacts. The agency says it has reports of six front-end crashes with significant damage to the cars. Four people died and six were injured.

Electrical circuits 

The problem has been traced to electrical circuit shorts in air bag control computers made by parts supplier ZF-TRW. NHTSA now wants to know if other automakers used the same computer.

On Feb. 27, Hyundai recalled nearly 155,000 Sonatas because of air bag failures, which the company blamed on the short circuits.Hyundai’s sister automaker Kia, which sells similar vehicles, has yet to issue a recall.

In a statement Saturday, Kia said that it has not confirmed any air bag non-deployments in its 2002-2013 Kia Forte models arising from “the potential chip issue.” The company said it will work with NHTSA investigators.

“Kia will act promptly to conduct a safety recall, if it determines that a recall would be appropriate,” the company said.

But a consumer complaint cited in NHTSA’s investigation documents said Kia was informed of a crash near Oakland in which air bags failed to deploy and a passenger was killed.

In October 2015, the complainant told NHTSA that a 2012 Forte was involved in a serious front-end crash that occurred in July 2013. A passenger was killed and the driver was injured. According to the complaint, Kia was notified, the air bag computer was tested and it was “found not to be working.”

Kia spokesman James Bell said he could not comment beyond the company’s statement.

Hyundai recall

In addition, no deaths or injuries were disclosed in Hyundai’s recall documents, which were posted by NHTSA in early March.

Hyundai spokesman Jim Trainor says the problem occurred in rare high-speed head-on collisions that were offset from the center of the vehicles. “It’s very unusual to have that kind of collision,” he said Saturday.

Dealers will consider offering loaner cars to owners until the problem can be repaired, he said. “We certainly would do everything we can to help our customers,” Trainor said.

Hyundai said in a statement that the air bag control circuitry was damaged in three crashes and a fourth crash is under investigation.

ZF-TRW said in a statement that it is prevented by confidentiality agreements from identifying other automakers that bought its air bag control computers. The company said it is working with customers and supports the NHTSA investigation.

According to NHTSA, Hyundai investigated and found the problem was “electrical overstress” in the computers. The company didn’t have a fix developed at the time but said it was investigating the problem with ZF-TRW. Hyundai does not yet have a fix for the problem but said it expects the Sonata recall to start April 20. The problem also can stop the seat belts from tightening before a crash.

In the documents, NHTSA said it understands that the Kia Fortes under investigation use similar air bag control computers made by ZF-TRW. The agency noted a 2016 recall involving more than 1.4 million Fiat Chrysler cars and SUVs that had a similar problem causing the air bags not to deploy. Agency documents show those vehicles had air bag computers made by ZF-TRW.
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