George Kamau Githome uses a feather duster to clean off hardware and bootleg movies displayed for sale at his kiosk in Mathare, one of Nairobi, Kenya’s largest slums.

Githome and his family of 10 kids recently lost everything they owned in a fire. But he was able to rebuild because he had purchased micro-insurance, a new product making inroads among small-scale African farmers and business owners.

“When they came, they took photos, and saw how helpless I was. I had nothing,” he said. “Then they paid off my loan and supported me with something small. I started this business you see out here and the result you see inside.”

Most African farmers and small businesses operate with no way to protect themselves if disaster strikes. Insurers have been slow to tailor their products to the African continent, experts say, and their methods of operation, using complex contracts distributed through networks of agents, tends to only reach the urban elite.

But that may be starting to change. A handful of companies are now offering inexpensive, tech-driven micro-insurance and are making it easy for ordinary Africans to sign up.

The company Githome used, MicroEnsure, offers micro-insurance to small-business owners, ranging from farmers in the bush to small kiosk owners in downtown Nairobi.

The East Africa regional director for MicroEnsure, Kiereini Kirika, says mobile technology makes micro-insurance cheaper and easy to use.

“We enable them to be able to enroll as simple as using their mobile phone just by dialing a particular short code on their phone and then registering their product just by using their first name and their last name,” he said.

Henry Jaru, a smallholder farmer in northern Nigeria, is buying micro-insurance from another company, Pula, to protect his family farm from the impacts of poor rainfall, army worm infestations and other threats to their crops.

“Normally by this time the crops would have gone far but you see we’re still planting some of them,” he said. “So I think, we’re hoping that [will protect us if] we experience any shortcoming from the rain or the worms this year.”

Pula insures groups of farmers, using publicly available satellite data to track weather patterns, assess the risk and set prices.

“When Pula came into the country, they came with the idea of an index insurance, which means that you don’t need to necessarily visit every smallholder farmers,” said Samson Ajibola, Pula’s senior project manager in Nigeria. “You can insure aggregation of farmers under just one policy without necessarily needing to visit each of them.”

Pula also bundles the policies into small loans or purchases of fertilizer so small-hold farmers are automatically insured.

But older farmers, like Jaru’s father Thomas, are still skeptical because of bad experiences with insurance companies.

“Generally when the time comes for them to pay you, indemnify you, you will not find them,” said Thomas Jaru. “They begin to show you the small print — you didn’t do this, you didn’t do that out of the policy. So, it can ruin the whole thing and people get discouraged.”

Micro-insurance providers hope their services can change that perception  and turn a profit while giving Africa’s small farmers and businesses some protection if and when things go wrong.
…

U.S. President Donald Trump sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports, his administration said Wednesday.

U.S. Trade Representative Robert Lighthizer said Trump directed the increase from a previously proposed 10 percent duty because China has refused to meet U.S. demands and has imposed retaliatory tariffs on U.S. goods.

“The increase in the possible rate of the additional duty is intended to provide the administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens,” Lighthizer said in a statement.

There have been no formal talks between Washington and Beijing for weeks over Trump’s demands that China make fundamental changes to its policies on intellectual property protection, technology transfers and subsidies for high

technology industries.

Two trump administration officials told reporters on a conference call that Trump remains open to communications with Beijing and that through informal conversations the two countries are discussing whether a “fruitful negotiation” is possible.

“We don’t have anything to announce today about a specific event, or a specific round of discussions, but communication remains open and we are trying to figure out whether the conditions present themselves for a specific engagement between the two sides,” one of the officials said.

Derek Scissors, a China scholar at the American Enterprise Institute in Washington, said a 25 percent tariff rate is more likely to shut out Chinese products and shift American supply chains to other countries, as a 10 percent duty could be offset by government subsidies and weakness in China’s yuan currency.

“If we’re going to use tariffs, this gives us more flexibility and it’s a more meaningful threat,” he said, adding that Trump’s pressure strategy will not work if he does not resolve trade disputes with U.S. allies such as the European Union, Mexico and Canada.

Public comment period extended

The higher tariff rate, if implemented, would apply to a list of goods valued at $200 billion identified by the USTR last month as a response to China’s retaliatory tariffs on an initial round of U.S. tariffs on $34 billion worth of Chinese electronic components, machinery, autos and industrial goods.

Trump has ultimately threatened tariffs on over $500 billion in Chinese goods, covering virtually all U.S. imports from China.

The USTR said it would extend a public comment period for the $200 billion list to September 5 from August 30 because of the possible tariff rate rise.

The list, unveiled on July 10, hits American consumers harder than previous rounds, with targeted goods including such items as tilapia, dog food, furniture, lighting products, printed circuit boards and building materials.

China said Wednesday that “blackmail” would not work and that it would hit back if the United States took further steps hindering trade, including applying the higher tariff rate.

“U.S. pressure and blackmail won’t have an effect. If the United States takes further escalatory steps, China will inevitably take countermeasures and we will resolutely protect our legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing.

Investors fear an escalating trade war between Washington and Beijing could hit global economic growth, and prominent U.S. business groups, while weary of what they see as China’s mercantilist trade practices, have condemned Trump’s aggressive tariffs.
…

The Federal Reserve is leaving its benchmark interest rate unchanged while signaling further gradual rate hikes in the months ahead as long as the economy stays healthy.

The Fed’s decision left the central bank’s key short-term rate at 1.75 percent to 2 percent – the level hit in June when the Fed boosted the rate for a second time this year.

The Fed projected in June four rate hikes this year, up from three in 2017. Private economists expect the next hike to occur at the September meeting.

In a brief policy statement, the Fed notes a strengthening labor market, economic activity growing at “a strong rate,” and inflation that’s reached the central bank’s target of 2 percent annual gains. Officials see economic risks as roughly balanced.
…

European Union imports of U.S. soybeans were already rising substantially before a top EU official told President Donald Trump last week that the bloc would buy more.

EU Commission figures released Wednesday show that 37 percent of the bloc’s soybean imports last month were coming from the U.S., compared with 9 percent in July 2017.

Amid a looming trade war over tariffs, Trump and Commission President Jean-Claude Juncker agreed on July 25 to start talks intended to achieve “zero tariffs” and “zero subsidies” on non-automotive industrial goods.

The EU also agreed to buy more U.S. soybeans and build more terminals to import liquefied natural gas from the United States.

“The European Union can import more soybeans from the U.S. and this is happening as we speak,” Juncker said.

But a high level EU official said the increase in soybean purchases from the U.S. is due only to economics, as they are cheaper than imports from Brazil and Argentina. The official, who spoke only on condition of anonymity because of the sensitivity of the issue, said there was no political reason for the increase.

 
…

Each morning, Kamarunisa Poovummada sips her cup of tea while watching waves from the Arabian Sea crash around a water treatment plant opposite her house on Kavaratti island, off India’s southwest coast.

She links the taste of her perfectly brewed cup to the desalination plant that has brought potable water to the doorsteps of islanders, and almost erased the memory of the brackish tea she hurriedly swallowed down until a decade ago.

“We first noticed the difference when we saw the golden color of the tea as we strained it into our cups,” Poovummada recalled. “And then we tasted the tea and it was magical.”

The “tasty” tea is celebrated daily by residents of Kavaratti, the capital of India’s smallest Union Territory Lakshadweep, an archipelago of 36 islands, of which only 10 are inhabited.

Surrounded by pristine beaches, lagoons and coral reefs, the islanders have for decades battled a shortage of clean water – a challenge facing many island inhabitants globally.

Over the years, the sea’s clear blue waters seeped into the islands’ limited groundwater reserves, making every sip saline.

Limited land availability also resulted in groundwater sources being too close to sewage sumps, causing contamination and making water unsafe for drinking, cooking or even bathing.

“The water system was a mess,” said Hidyathulla Chekkillakam, who grew up on the island and is an employee of the public works department that runs the desalination plant.

Different options were tried, from open wells to rainwater harvesting, he said – but they were either ineffective or too expensive.

“Good drinking water was a prized commodity,” he added.

Piped Dreams

When Purnima Jalihal and her team from the Chennai-based National Institute of Ocean Technology (NIOT) first arrived on Kavaratti in 2004, they were armed with blueprints for a desalination plant and cartons of bottled water.

They found themselves in the midst of a fragile ecosystem, with clear instructions from the island administration to “not destroy” anything. They were also warned about the tea, and soon found even a sip made them queasy.

“The salinity in the water was unbearable, and the people knew it was not good for their health. But they had no choice,” Jalihal said.

The project – and the fact it was headed by a woman – drew curious islanders to the site, where Jalihal’s team had to improvise designs to ensure construction did not harm the ecosystem.

“It was a struggle to get things going,” the scientist said. “There was no infrastructure and we couldn’t bring in heavy machinery. Everything had to be done manually.”

The team built floating structures and towed them into the sea, including an underwater pipeline.

In less than a year, the water treatment plant was up and running, producing 100,000 liters of potable water a day.

Pipelines were laid along the streets, with a community tap set up every 25 meters (82 ft). And in 2005, the water supply started.

“It was almost like a revolution,” housewife Rahiyanath Begum told the Thomson Reuters Foundation as she watched her children play on the beach.

“Tea is a part of our life. We drink it without milk and so the color and taste are important. If the tea is good, it means the water is good,” she said.

Poovummada, Begum and the 11,200 residents of Kavaratti – a tiny island measuring just 5.8 km (3.6 miles) long and 1.6 km wide – neatly line up buckets around the water taps for an hour each day.

Tourist Attraction

Abdul Latif is used to islanders visiting the plant to show it off to their children, and guests from the mainland.

“It’s almost like a tourist spot,” the 43-year-old operator said, smiling.

From walking visitors across the bridge to see the underwater pipeline to urging everyone to drink a glass of treated water, Latif has become a poster boy for the plant, which has withstood storms, including Cyclone Ockhi in 2017.

“It rarely breaks down, and the real challenge is when big jellyfish get stuck in the underwater pumps,” he said.

Built at a capital cost of about 50 million Indian rupees ($727,400) with government funding, the plant technology is robust, environmentally friendly and requires little effort to operate and maintain, Jalihal said.

Developed by the NIOT, it utilizes the temperature difference between sea-surface water and deep-sea water to evaporate the warmer water at low pressure and condense the vapour with the colder water to obtain fresh water.

Buoyed by its success, the NIOT set up two plants on Agatti and Minicoy islands in 2011, providing more than 15,000 residents with clean water. Construction of six more desalination plants is now underway on other inhabited islands.

Only one other water treatment plant in India, off the coast of Chennai city, uses the same home-grown technology. Others purify water with reverse osmosis, a costlier imported method.

Latif and his team work shifts to keep the motors of the plant running, to supply nine liters of water per day for each resident, including three for drinking and five for cooking.

“We discourage people from using it for a bath or washing clothes because we don’t want even a precious drop wasted,” said Chekkillakam. “Everyone understands because we have seen how quickly clean water sources dry up or get contaminated.”

Going Green

A decade after the Kavaratti desalination plant became operational, Jalihal is back at the drawing board, this time working on a new plant for the island that will draw power from the sea instead of running on diesel generators as now.

“It will be completely green, using ocean thermal energy to run. Then the system will be perfect,” she said.

Khadeeja Lavanakkal cannot wait for the second plant. She lives at the end of the pipeline, and sometimes gets only a trickle of clean water because others have filled extra buckets.

“We have an open well, but when officials come to check the water they tell us it is more saline than sea water. We could do with a little more clean water to drink.”

Nonetheless, Lavanakkal is grateful to the scientists.

“It’s not just the tea but even the curries we cook are so much tastier,” she said.

“And the best part is that we can close our eyes and drink a glass of water without worrying about falling ill.”

($1 = 68.7400 Indian rupees)
…

Brazil’s three largest fuel distribution companies are under investigation for fixing prices at the pump, police said on Tuesday, reigniting debate over potential collusion among gas station owners in Latin America’s largest oil producer.

The firms targeted by the probe are Petrobras Distribuidora SA, a subsidiary of state oil company Petroleo Brasileiro SA; Ipiranga, a unit of Ultrapar Participacoes SA; and Raizen, a Cosan SA and Royal Dutch Shell Plc joint venture.

Police in the southern state of Parana were serving eight arrest warrants and 12 search and seizure warrants in connection with the probe in the city of Curitiba, the state capital, according to police.

The probe comes two months after Brazil’s economy was paralyzed by a trucker strike over soaring diesel fuel prices.

While the government resolved that protest with new subsidies and other measures, antitrust regulators also raised concerns about a lack of competition in the highly concentrated sector.

Investigation  a year old

Police said they were targeting managers and sales representatives of the three firms in the investigation, which has been underway for over a year.

They accused the fuel distribution companies of dictating the prices at the pump charged by individual gas station owners, a violation of Brazilian market rules that the owners should have freedom to set prices freely.

Shares in Petrobras Distribuidora, Ultrapar, and Cosan all tumbled at least 3.5 percent in late morning trade, dragging Brazil’s benchmark Bovespa index down some 1.3 percent.

To make sure the dictated prices were being applied by the gas station owners, the distribution companies hired people to ride motorbikes around the city of Curitiba to take pictures of the gas stations and their pricing banners, according to police.

Petrobras, Raizen offer statements

Petrobras Distribuidora, also known as BR Distribuidora, said in a statement that it follows “the best commercial, competitive and ethical practices toward the consumer”and demands the same behavior from its partners and workforce.

Raizen said in a statement fuel prices were set by individual gas station owners with no interference from the distributor.

“The company operates in total conformity with applicable legislation and always acts toward the consumer in a competitive way and in favor of free competition,” it said in a statement.

In a statement late on Tuesday, Raizen said it had access to the probe late in the day and was considering information provided by the investigation reports.

Ipiranga said that it “does not incentivize illegal practices,” and that it operates in compliance with competition regulations.

Three companies under investigation

The three companies under investigation together control more than two-thirds of the national fuel distribution market, according to data from oil regulator ANP.

The operation is the latest effort by Brazilian authorities to clamp down on collusion and price fixing in the fuel distribution market, which has been the most common target of accusations for cartel behavior by antitrust watchdog Cade.

The government had asked Cade earlier this year to investigate fuel stations for potential anticompetitive practices that could account for the large spread between fuel prices at refineries and at pumps.
…

The U.S. Treasury Department said on Tuesday that it had extended the deadline for investors to divest holdings in sanctioned Russian companies EN+, GAZ Group and Rusal to Oct. 23 from Aug. 5.

The U.S. Treasury in April imposed sanctions against billionaire Oleg Deripaska and eight companies in which he is a large shareholder, including aluminum exporter Rusal, in response to what it termed “malign activities” by Russia.

Deripaska has held a controlling interest in En+, which in turn controls Rusal, the world’s largest aluminum producer outside of China. Automaker GAZ is also part of his business empire.

U.S. Treasury Secretary Steven Mnuchin said last week that the United States was in productive talks with Rusal to remove it from Washington’s sanctions list.

The company has taken a number of steps, including revamping its board, in the hope of escaping the U.S. blacklist.
…

Iran said on Tuesday U.S. President Donald Trump was mistaken to expect Saudi Arabia and other oil producers to compensate for supply losses caused by U.S. sanctions on Iran, after OPEC production rose only modestly in July.

The comments, from Iran’s OPEC governor, came a day after a Reuters survey showed OPEC production rose by 70,000 barrels per day in July. Saudi production increased but was offset by a decline in Iranian supply due to the restart of U.S. sanctions, the survey found.

“It seems President Trump has been taken hostage by Saudi Arabia and a few producers when they claimed they can replace 2.5 million barrels per day of Iranian exports, encouraging him to take action against Iran,” Hossein Kazempour Ardebili told Reuters. “Now they and Russia sell more oil and more expensively. Not even from their incremental production but their stocks.”

He said oil prices, which Trump has been pressuring the Organization of the Petroleum Exporting Countries to bring down by raising output, will rise unless the United States grants waivers to buyers of Iranian crude.

“They are also calling for the use of the U.S. SPR [Strategic Petroleum Reserve]. This will also mean higher prices. U.S. waivers to our clients if they come is due to the failure of bluffers [Saudi and the other producers] and, if not given, will again push the prices higher,” he said.

“So they hanged him [Trump] on the wall. Now they want to have a mega OPEC, congratulations to President Trump, Russia and Saudi Arabia.”

OPEC governors represent their respective country on the organization’s board of governors and are typically the second most senior person in a country’s OPEC delegation after the oil minister.

“The longer-term solution, Mr President, is to support and facilitate capacity building in all countries, proportionate to their reserves of oil and gas. And we will remain the biggest opportunity,” Kazempour said.

 
…

McDonald’s is fighting to hold onto customers as the Big Mac turns 50, but it isn’t changing the makings of its most famous burger.

The company is celebrating the 1968 national launch of the double-decker sandwich whose ingredients of “two all-beef patties, special sauce, lettuce, cheese, pickles, onions and a sesame seed bun” were seared into American memories by a TV jingle. But the milestone comes as the company reduces its number of U.S. stores. McDonald’s said Thursday that customers are visiting less often. Other trendy burger options are reaching into the heartland.

The “Golden Arches” still have a massive global reach, and the McDonald’s brand of cheeseburgers, chicken nuggets and french fries remains recognizable around the world. But on its critical home turf, the company is toiling to stay relevant. Kale now appears in salads, fresh has replaced frozen beef patties in Quarter Pounders, and some stores now offer ordering kiosks, food delivery and barista-style cafes.

The milestone for the Big Mac shows how much McDonald’s and the rest of fast-food have evolved around it.

“Clearly, we’ve gotten a little more sophisticated in our menu development,” McDonald’s CEO Steve Easterbrook said in a phone interview.

As with many of its popular and long-lasting menu items, the idea for the Big Mac came from a franchisee.

In 1967, Michael James “Jim” Delligatti lobbied the company to let him test the burger at his Pittsburgh restaurants. Later, he acknowledged the Big Mac’s similarity to a popular sandwich sold by the Big Boy chain.

“This wasn’t like discovering the light bulb. The bulb was already there. All I did was screw it in the socket,” Delligatti said, according to “Behind the Arches.”

McDonald’s agreed to let Delligatti sell the sandwich at a single location, on the condition that he use the company’s standard bun. It didn’t work. Delligatti tried a bigger sesame seed bun, and the burger soon lifted sales by more than 12 percent.

After similar results at more stores, the Big Mac was added to the national menu in 1968. Other ideas from franchisees that hit the big time include the Filet-O-Fish, Egg McMuffin, Apple Pie (once deep-fried but now baked), and the Shamrock Shake.

“The company has benefited from the ingenuity of its small business men,” wrote Ray Kroc, who transformed the McDonald’s into a global franchise, in his book, “Grinding It Out.”

Franchisees still play an important role, driving the recent switch to fresh from frozen for the beef in Quarter Pounders, Easterbrook says. They also participate in menu development, which in the U.S. has included a series of cooking tweaks intended to improve taste.

Messing with a signature menu item can be taboo, but keeping the Big Mac unchanged comes with its own risks. Newer chains such as Shake Shack and Five Guys offer burgers that can make the Big Mac seem outdated. Even White Castle is modernizing, recently adding plant-based “Impossible Burger” sliders at some locations.

A McDonald’s franchisee fretted in 2016 that only one out of five millennials has tried the Big Mac. The Big Mac had “gotten less relevant,” the franchisee wrote in a memo, according to the Wall Street Journal.

McDonald’s then ran promotions designed to introduce the Big Mac to more people. Those kind of periodic campaigns should help keep the Big Mac relevant for years to come, says Mike Delligatti, the son of the Big Mac inventor, who died in 2016.

“What iconic sandwich do you know that can beat the Big Mac as far as longevity?” said Delligatti, himself a McDonald’s franchisee.
…

U.S. companies seeking to be exempted from President Donald Trump’s tariff on imported steel are accusing American steel manufacturers of spreading inaccurate and misleading information, and they fear it may torpedo their requests.

Robert Miller, president and CEO of NLMK USA, said objections raised by U.S. Steel and Nucor to his bid for a waiver are “literal untruths.” He said his company, which imports huge slabs of steel from Russia, has already paid $80 million in duties and will be forced out of business if it isn’t excused from the 25 percent tariff. U.S. Steel and Nucor are two of the country’s largest steel producers.

“They ought to be ashamed of themselves,” said Miller, who employs more than 1,100 people at mills in Pennsylvania and Indiana.

Miller’s resentment, echoed by several other executives, is evidence of the backlash over how the Commerce Department is evaluating their requests to avoid the duty on steel imports. They fear the agency will be swayed by opposition from U.S. Steel, Nucor and other domestic steel suppliers that say they’ve been unfairly hurt by a glut of imports and back Trump’s tariff.

U.S. Steel said its objections are based on detailed information about the dimensions and chemistry of the steel included in the requests. “We read what is publicly posted and respond,” said spokeswoman Meghan Cox. Nucor did not reply to requests for comment.

The 20,000-plus waiver applications that the Commerce Department has received illustrate the chaos and uncertainty ignited by Trump’s trade war against America’s allies and adversaries. It’s a battle that critics of his trade policy, including a number of Republican lawmakers, have warned is misguided and will end up harming U.S. businesses.

Trump and European leaders agreed this past Wednesday not to escalate their dispute over trade, but the tariff on steel and a separate duty on aluminum imports remains in place as the U.S. and Europe aim for a broader trade agreement. The metal taxes would continue to hit U.S. trading partners such as Canada, Mexico and Japan even if the U.S. and the EU forge a deal.

Miller bristled over insistence by Nucor and U.S. Steel that steel slab is readily available in the United States. “That’s just not true,” he said.

His company isn’t the only one looking overseas for a product described as being consistently in short supply. California Steel Industries, a mill east of Los Angeles in Fontana, described the slab shortage as “acute” on the West Coast and declared that its waiver request is critical to its survival.

Aiming to rebuild the U.S. steel industry, Trump relied on a rarely used 1962 law that empowers him to impose tariffs on particular imports if the Commerce Department determines those goods threaten national security. He added a twist: Companies could be excused from the tariff if they could show, for example, that U.S. manufacturers don’t make the metal they need in sufficient quantities.

But there are hurdles to clear on the path to securing an exemption. A single company may have to file dozens of separate requests to account for even slight variations in the metal it’s buying. That means a mountain of paperwork to be filled out precisely. If not, the request is at risk of being rejected as incomplete. All this can be time-consuming and expensive, especially for smaller businesses.

The requests are open to objections. The Commerce Department posts the exemption requests online to allow third parties to offer comments — even from competitors who have an interest in seeing a rival’s request denied. But objections are frequently being submitted just as the comment period closes, undercutting the requester’s ability to fire back.

Willie Chiang, executive vice president of Plains All American Pipeline, told the House Ways and Means subcommittee on trade last week that his company had no opportunity to respond to objections that contained “incorrect information” before the Commerce Department denied its exclusion request. Chiang didn’t say who submitted the inaccurate information.

“The intent here is to restrict imports on a broad scale,” said Richard Chriss, executive director of the American Institute for International Steel, a free trade group opposed to tariffs. “It wouldn’t make sense from the administration’s perspective to design a process that readily granted exclusions.”

The Commerce Department declined to comment for this story.

Department officials have so far made public only a small number of their rulings.

An analysis of the numbers by the office of Rep. Jackie Walorski, an Indiana Republican and one of the most vocal opponents of the steel tariff on Capitol Hill, shows that 760 requests have been approved while 552 have been denied. The department hasn’t yet approved a waiver request that triggered objections, according to Walorski’s review.

The congresswoman’s office also examined the more than 5,600 publicly available comments and found they were submitted on average about four days before the end of the 30-day comment period. More than 50 percent of the comments weren’t delivered until 48 hours or less before the comment window closed. It took department an average of nine days to post comments online after receiving them, according to the analysis. The most prolific commenters were Nucor and U.S. Steel with 1,064 and 1,009, respectively.

A waiver request Seneca Foods Corporation submitted for tinplated steel it had already agreed to purchase from China was among the denials. U.S. Steel had objected, calling the tinplate a “standard product” that’s readily available in the United States. In fact, U.S. Steel said it currently supplies the material to Seneca Foods, the nation’s largest vegetable canner.

The New York-based Seneca Foods declined to comment. But in its waiver application, the company said domestically made tinplate “is of inferior quality to imported material.” Seneca Foods also said it’s unclear, at best, if U.S. suppliers have the ability or willingness to expand their production in the long term to meet the company’s annual demand for the material.

Philadelphia-based Crown Cork & Seal, a manufacturer of metal packaging for food and beverages, submitted a sharply worded attachment to its waiver application that anticipated pushback from domestic manufacturers. American steel mills, the document said, cannot meet aggregate demand for tinplate and have no plans to increase their capacity.

“We anticipate the U.S. mills will attempt to rebut this statement when they object to this exclusion request, but we encourage the Department of Commerce to see through their manipulative attempt to exploit the rules of the exclusion request process,” the application said.

Daniel Shackell, Crown Cork & Seal’s vice president for steel sourcing, said he’s not optimistic about the company’s chances of getting all 70 of its waiver requests approved. Eight have been granted so far primarily because the metal specified in those requests is not made in the United States. Twelve others have been denied, leaving 50 still to be decided.

“It’s hard not to interpret that the Commerce Department wants domestic suppliers to have an edge,” Shackell said.

Jay Zidell, president of Tube Forgings of America, a small company in Portland, Oregon, said he’s filed 54 exclusion requests and U.S. Steel has objected to 38 of them. U.S. Steel declared it is “willing and ready to satisfy” Tube Forgings’ demands for carbon steel tubing. But Zidell said the comments ignored past problems with metal quality and workmanship that led his company to sever a prior relationship with U.S. Steel.

Still, he’s worried the Commerce Department won’t approve all of the requests. Tube Forgings already has spent $600,000 on tariffs, he said, and may be on the hook for much more than that.

“The entire system is just screwed up,” Zidell said.
…

Turkish steel makers are looking to expand in West Africa and other emerging markets in response to tariffs and planned quotas which threaten their sales to the United States and the European Union, a senior sector official said.

Namik Ekinci, board chairman for the Turkish Steel Exporters Association (TSEA), told Reuters that Turkey was looking to boost its trade with West Africa and sub-Saharan countries, where there is demand for the less capital-intensive steel products that Turkey mainly exports.

“Looking at the product types these countries consume, it’s products that we have the capability to produce like rebar and pipes. Therefore, these countries are markets where we have a chance,” Ekinci said.

“This is why the market we are working with in the first stage is West Africa,” he said, adding that the Caribbean, South America and Southeast Asia were the next targets.

According to TSEA data, more capital-intensive products, used in the automotive and white goods sectors, account for a quarter of Turkey’s steel production, while products like rebar and pipes account for 53 percent.

The world’s eighth biggest steel producer, Turkey ranks second in global exports of rebar, figures from the World Steel Association show.

In a move that ignited fears of a global trade war, U.S. President Donald Trump in March imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, leading to a 56 percent slump in Turkey’s exports to the United States between January and May.

In early July European Union countries also voted in favor of a combination of quota and tariffs to prevent a surge of steel imports into the bloc that could follow the U.S. levies.

In order to tackle the U.S. tariffs and protectionist measures, Ekinci said Turkey wanted to increase its effectiveness in other emerging markets “as the United States and the European Union adopt measures to make trade harder.”

He said a union of Turkish exporters would jointly start a new firm to penetrate the target markets through time charter shipments, aiming to increase Turkey’s market share in West Africa from below 5 percent to 15 percent by cutting shipping costs.

The project is expected to cut transport costs of steel exported to West Africa to around $30 per tonne, from nearly $100, making it significantly more competitive, Ekinci said.
…

The United States has eased export controls for high technology product sales to India, granting it the same access as NATO allies, Australia, Japan and South Korea, U.S. Commerce Secretary Wilbur Ross said on Monday.

Ross, speaking at U.S. Chamber of Commerce event, said the move to grant Strategic Trade Authorization status STA1 to India reflects its efforts to improve its own export control regime, its adherence to multilateral export rules and its growing status as a U.S. defense partner.

“STA1 provides India greater supply chain efficiency, both for defense, and for other high-tech products,” Ross said, adding that the elevated status would have affected about $9.7 billion worth of Indian goods purchases over the past seven years.
…

Iran’s currency hit new lows with just under a week before new U.S. economic sanctions are due to take effect on August 4, despite the appointment of a new central bank governor and a new economic team.

Arab and Iranian media reported the Iranian riyal hit a new low of 111,000 to the dollar Sunday, a bad omen for newly appointed Central Bank head Abdolnasser Hemmati.

Vice President Ishaq Jahangiri announced the new economic program Sunday as the newly-appointed central bank chief took office.

The Islamic Republic News Agency quoted Hemmati as saying “enemies are trying to destroy the country’s assets and create disappointment to the public through [the new U.S. economic] sanctions.”

Former Iranian President Abolhassan Bani Sadr, however, told VOA economic and military inside the regime are trying to profit from the situation in order to seize power.

He suggested that the powerful Revolutionary Guard,  which controls much of the Iranian economy, is trying to pressure Rouhani to stop him from negotiating with U.S. President Donald Trump.

He said these elements are threatening to push the dollar even lower in order to stop an eventual normalization of relations with Washington. But he argued that the value of the riyal is “mostly hypothetical, since there isn’t really a lot of trading going on.”

He said the powerful “militaro-economic mafia,” as he called it, is trying to gain the upper hand on Rouhani by creating economic turbulence as a warning not to negotiate with Washington.

Ali Larijani, speaker of the Iranian parliament, told the body Monday Iran needs to modernize its economy. He spoke of building what he called a “resistance economy” in order to counter U.S. sanctions. The country’s Supreme Leader Ayatollah Ali Khamenei first used the term “resistance economy” to describe Tehran’s attitude toward new U.S. sanctions.

Iran analyst Gary Sick of Columbia University said Iran “has been going through a very, very difficult period for some time,” and that it has structural problems not related to the U.S. sanctions:

“There are serious problems in their management of natural resources and their dealings with what, in effect, are environmental problems, which have been badly handled over a matter of decades and are just coming to a head right now,” he told VOA.

Sick mentioned that entire regions have dried up due to poor water management and that the building of dams has compounded the problem in some places.

He said Iranians in various regions have been protesting due to the water situation, which is unrelated to the new U.S. economic sanctions.

But he added that the situation “has of course been exacerbated by the threat of U.S. sanctions going into effect, and it isn’t surprising that Iran’s currency is being impacted, because people don’t really know what is going to happen next.”
…

White House economic adviser Larry Kudlow said Sunday he believes the 4.1 percent growth the U.S. recorded in the last three months is sustainable in the coming months despite skepticism expressed by independent economists.

“There’s just a lot of good things going on,” Kudlow told CNN.  He said President Donald Trump “deserves a victory lap,” with “low tax rates, rolling back regulations, opening up energy, for example. Trade reform I think is already paying off. The fundamentals of the economy look really good.”

He said “business investment spending is really booming. That’s a productivity creator. That’s a job creator. That’s a wage creator for ordinary mainstream folks, terribly important.”

Kudlow said the five calendar quarters occurring fully during Trump’s 18-month presidency have now been recorded with average economic growth of 2.9 percent for the world’s largest economy.

“I don’t see why we can’t run this for several quarters,” Kudlow said.

As the 4.1 percent growth rate for the April-to-June period was announced Friday, Trump boasted that the U.S. was on track to hit its highest annual growth rate in its gross domestic product in 13 years and predicted that as the country reaches new trade deals with other countries, the U.S. would exceed its second quarter advance.

“These numbers are very, very sustainable,” he said. “This isn’t a one-time shot.”

On Sunday, Trump said on Twitter, “The biggest and best results coming out of the good GDP report was that the quarterly Trade Deficit has been reduced by $52 Billion and, of course, the historically low unemployment numbers, especially for African Americans, Hispanics, Asians and Women.”

Skeptics less upbeat

Some independent economists, however, voiced skepticism that the $18.6 trillion annual U.S. economy would continue to advance at the same pace as the last three months.

Some forecasters said the gains in recent months were mostly, although not totally, the result of temporary factors, such as the initial boost from tax cuts Trump supported that took effect earlier this year. Most analysts say that for all of 2018 the U.S. could reach 3 percent growth, which would be the best since a 3.5 percent gain in 2005, but not again hit the annual 4.1 percent growth rate recorded last quarter.

“We believe quarter two will represent a growth peak as the boost from tax cuts fades, global growth moderates, inflation rises, the Fed tightens monetary policy and trade protectionism looms over the economy,” said Gregory Daco, chief U.S. economist at Oxford Economics.

Mark Zandi, chief economist at Moody’s Analytics, said, “The second quarter was a strong quarter, but it was juiced up by the tax cuts and higher government spending.”

In the U.S., consumer spending accounts for about 70 percent of the economy, with Ian Shepherdson, the chief economist of Pantheon Macroeconomics, saying that such spending accounted for the robust second quarter.

“Consumers were really on a tear,” he said. “So to grow at 4 [percent] probably tells you people were spending the tax cuts that they enjoyed back in January, but that’s extremely unlikely to happen again.”

 
…

Agriculture ministers from the G-20 countries criticized protectionism in a joint statement Saturday and vowed to reform World Trade Organization (WTO)

rules, but did not detail what steps they would take to improve the food trade system.

In the statement, they said they were “concerned about the increasing use of protectionist nontariff trade measures, inconsistently with WTO rules.”

The ministers from countries including the United States and China, in Buenos Aires for the G-20 meeting of agriculture ministers, said in the statement they had affirmed their commitment not to adopt “unnecessary obstacles” to trade, and affirmed their rights and obligations under WTO agreements.

The meeting came amid rising trade tensions that have rocked agricultural markets. China and other top U.S. trade partners have placed retaliatory tariffs on American farmers after the Trump administration put duties on Chinese goods as well as steel and aluminum from the European Union, Canada and Mexico.

U.S. growers are expected to take an estimated $11 billion hit due to China’s retaliatory tariffs. Last week, the Trump administration said it would pay up to $12 billion to help farmers weather the trade war.

U.S. Agriculture Secretary Sonny Perdue told Reuters in an interview on the sidelines of the meeting that Trump’s plan would include between $7 billion and $8 billion in direct cash relief that U.S. farmers could see as early as late September.

Despite the payments, the measures are “not going to make farmers whole,” Perdue said.

Citing the Trump administration’s relief measures, German Agriculture Minister Julia Kloeckner said farmers “don’t need aid, [they] need trade.”

“We had a very frank discussion about the fact that we don’t want unilateral protectionist measures,” Kloeckner said in a news conference after the meeting.

The ministers, whose countries represent 60 percent of the world’s agricultural land and 80 percent of food and agricultural commodities trade, did not specify which measures they were referring to in the statement. Asked for details, Kloeckner said the ministers did not want to “criticize a single

country.”

“We all know what happens if a single person or country doesn’t adhere to WTO rules, trying to get a benefit for themselves through protectionism,” she said. “This will usually lead to retaliatory tariffs.”

In the statement, the ministers said they agreed to continue reforming the WTO’s agricultural trade rules.

“Independent of all the news there was surrounding [the meeting], we managed to reach a unanimous consensus,” Argentine Agriculture Minister Luis Miguel Etchevehere said.

U.S. President Donald Trump and European Commission President Jean-Claude Juncker struck a surprise deal on Wednesday that ended the risk of further escalating trade tensions between the two powers.

After the meeting, Trump said the European Union would buy “a lot” of U.S. soybeans.

Earlier, Kloeckner told Reuters that the trade relationship between the United States and the European Union was improving, but that there was no guarantee the bloc would import the quantity of soybeans that Washington expects.
…

Some European companies are rethinking their strategies to cushion the impact of trade tensions between the world’s two biggest economies, the United States and China.

The focus will switch back to China after a truce on tariffs emerged from U.S. President Donald Trump’s meeting with European Commission President Jean-Claude Juncker on July 25.

Trump and Juncker agreed to suspend any new tariffs on the European Union, including a proposed 25 percent levy on auto imports, and hold talks over duties on imports of European steel and aluminum.

However, Trump retained the power to impose tariffs, if no progress is made.

In the case of China, Trump threatened this month that he was ready to impose tariffs on an additional $500 billion of imports.

The United States has already imposed tariffs on $34 billion of Chinese imports. In return, China has levied taxes on the same value of U.S. products.

Below are recent comments from European companies on trade tensions:

• Mercedes maker Daimler blamed U.S.-China tariffs for a 30 percent drop in second-quarter profit announced on July 26 and prefigured in a profit warning last month.

• French electrical equipment company Schneider Electric said on July 26 that it foresaw growth slowing in the second half of the year and expected the first extra costs linked to higher U.S. tariffs, which could reach 20 million

euros.

• “If the trade war escalates we are more concerned about the consequences that it can have on global macro environment,” STMicro’s new Chief Executive Jean-Marc Chery, said on July 25, adding that direct impact of trade war risks were currently “negligible.”

• Fiat Chrysler cut 2018 outlook on July 25, hurt by weaker performance in China. Its operating profit for the second-quarter was negatively impacted by China import duty changes.

• French mining group Eramet warned that current favorable markets could be hurt by trade rows.

• Chief Executive Frans van Houten confirmed Philips’ sales growth target for this year on July 23, but added that trade worries and the unknown consequences of Brexit continued to cause uncertainty.

• Finnish steel maker Outokumpu sees two-fold impact from the U.S. tariffs, with surging imports to Europe resulting in heavy price pressure, whilst in the Americas, base prices have risen throughout spring benefiting local manufacturers, including the company.

• Fellow Finnish company Valmet said tariff increases could derail the recovery and depress its medium-term growth prospects.

• Chinese-owned Volvo Cars (IPO-VOLVO.ST) said it was shifting production of its top-selling SUV production for the U.S. market to Europe from China to avoid Washington’s new duties on Chinese imports.

• German automaker BMW said this month that it would be unable to “completely absorb” a new 25 percent Chinese tariff on imported U.S.-made models and would have to raise prices on the vehicles made in South Carolina.

• The Alliance of Automobile Manufacturers, whose members include General Motors Co, Volkswagen AG and Toyota Motor Corp, also warned on the impact of the tariffs. A study released by a U.S. auto dealer group warned

that the tariffs could cut U.S. auto sales by 2 million vehicles.

• Sweden’s Electrolux said on July 18 that the U.S. tariffs announced at the beginning of July would have an impact of $10 million plus this year. In the third quarter, it expects raw material costs to rise by 0.5 billion Swedish

crowns.

• Belgian steel wire maker Bekaert reported on the same day that it sees underlying operating profit 20 percent below analysts’ estimates in the first half, blaming wire rod costs partly driven up by tariffs.

• Swedish lock maker Assa Abloy’s CEO said on July 18 that he sees an important further increase in steel prices in the second part of the year in U.S., partly due to new import tariffs. He expects price hikes to compensate better for the higher cost in the last six month of the year than in the second quarter.

• Austrian steelmaker Voestalpine said on June 6 that about a third of its U.S. sales would be impacted by Washington’s steel import tariffs, adding that it was talking to its customers about who would bear the cost.

• Norway’s REC Silicon booked an impairment charge of $340 million “due to the market disruption from the curtailment of solar incentives in China, as well as continued trade barriers that prevent access to primary markets inside

China.”

“We need the U.S. and Chinese governments to cooperate in ending the solar trade dispute … to prevent additional job losses and to enhance the value of the solar industry in the U.S. and China.”
…

Starbucks and other employers in California must pay workers for minutes they routinely spend off the clock on tasks such as locking up or setting the store alarm, the state Supreme Court ruled Thursday.

The unanimous ruling was a big victory for hourly workers in California and could prompt additional lawsuits against employers in the state.

The ruling came in a lawsuit by a Starbucks employee, Douglas Troester, who argued that he was entitled to be paid for the time he spent closing the store after he had clocked out.

Troester said he activated the store alarm, locked the front door and walked co-workers to their cars — tasks that he said required him to work for four to 10 additional minutes a day.

Starbucks said it was disappointed with the ruling. In a brief filed with the California Supreme Court, attorneys for Starbucks said Troester’s argument could lead to “innumerable lawsuits over a few seconds of time.” The U.S. Chamber of Commerce in a court filing also warned of the possibility of “significant liability” to businesses in the state.

A U.S. District Court rejected Troester’s lawsuit on the grounds that the time he spent on those tasks was minimal. But the California Supreme Court said a few extra minutes of work each day could “add up.”

Troester was seeking payment for 12 hours and 50 minutes of work over a 17-month period. At $8 an hour, that amounts to $102.67, the California Supreme Court said.

“That is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares,” Associate Justice Goodwin Liu wrote. “What Starbucks calls ‘de minimis’ is not de minimis at all to many ordinary people who work for hourly wages.”

Trivial and not trivial

The ruling also applies to tasks done before the workday begins, said Bryan Lazarski, an attorney in Los Angeles who handles wage claims against employers.

Lazarski said he expects the ruling to open the door to additional lawsuits by workers in similar situations as Troester. But he also expects lawsuits that “test the boundary of what this case says” to determine how much time spent doing work off the clock is enough to get paid.

The court in Thursday’s ruling said it was not closing the door on all claims by employers that the amount of additional work was too negligible.

“The court is saying, ‘We haven’t really drawn a line with regard to what is trivial and what is not trivial, but in this case, the time that the employee was not compensated was significant,'” said Veena Dubal, a labor law expert at the University of California, Hastings College of the Law.

Associate Justice Leondra Kruger wrote separately to say that there may be some periods of time that are “so brief, irregular of occurrence, or difficult to accurately measure or estimate,” that requiring an employer to account for them would not be reasonable.

She cited as examples a glitch that delays logging in to a computer to start a shift or having to read and acknowledge an email or text message about a schedule change while off the clock.

Tracking time

The federal court that threw out Troester’s lawsuit also said it would be hard for an employer to track the additional time that he worked. But Liu said employers could use technology for that or restructure employees’ work so they don’t have any tasks after they clock out.

Employers can also estimate the additional time, he said.

Troester appealed the U.S. District Court’s decision to the 9th U.S. Circuit Court of Appeals. The appeals court asked the California Supreme Court to determine whether a federal rule permitting employers under some circumstances to require employees to work as much as 10 minutes a day without compensation applied under state law.

The lawsuit now returns to the 9th Circuit. 
…

Mattel, home of Barbie dolls and Hot Wheels, is cutting 2,200 jobs in order to save money after the closing of U.S. toy retail giant Toys R Us.

The toymaker said the cuts amount to 22 percent of its nonmanufacturing employees worldwide. Mattel has about 28,000 employees.

It also plans to sell factories in Mexico as part of a $650 million cost-saving plan.

Mattel’s stock fell nearly 9 percent to $14.85 in after-hours trading Wednesday, after dropping 1 percent during the regular trading day.

Mattel reported a loss of $240.9 million in the second quarter, bigger than the $56.1 million loss in the same period a year ago.

Revenues fell nearly 14 percent to $840.7 million, below the $863.1 million analysts had predicted.

Ynon Kreiz, who was named CEO in April, said Wednesday that he expects the negative impact of Toys R Us closing to subside by next year.

The toymaker has lagged behind its competitors in digital media, analysts say, and is trying to catch up with other brands that have spawned apps, movies and TV shows.

Kreiz said the company is working closely with other retailers and looking for more ways to sell its toys online.
…

Mexican and Canadian officials are stressing that talks on the North American Free Trade Agreement will remain a three-way negotiation, despite suggestions by U.S. President Donald Trump that he might pursue separate trade deals with both countries.

Mexican Foreign Minister Luis Videgaray says “Canada and Mexico not only share geography, history and friendship, but also principles and common goals, and we are a team and act as a team.”

Visiting Canadian Foreign Affairs Minister Chrystia Freeland also stressed that NAFTA is a three-country agreement. She said that Canada also opposes a “sunset” clause proposed by Trump that would allow countries to opt out of the pact every five years.

Freeland also met Wednesday with Mexican President-elect Andres Manuel Lopez Obrador, who will take office on December 1.
…

Leaders from the five BRICS nations sounded the alarm over what South Africa’s president described as recent threats to multilateralism and sustainable global growth — a not-so-coded reference to a brewing trade war between the U.S. and BRICS’ wealthiest member, China.

Chinese President Xi Jinping raised his concerns as the three-day summit began in South Africa.

“A trade war should be rejected because there will be no winner,” he said. “Economic hegemony is even more objectionable, because it will undermine the collective interest of the international community. Those who pursue this cause will only hurt themselves.”

WATCH: Leaders of BRICS Economic Bloc Cite Concerns at Protectionist Policies

South African President Cyril Ramaphosa echoed his sentiments.

“We are meeting here, ladies and gentlemen, at a time when the multilateral trading system is facing unprecedented challenges,” Ramaphosa said. “We are concerned by the rise in unilateral measures that are incompatible with World Trade Organization rules and we are worried about the impact of these measures, especially as they impact developing countries and economies. These developments call for thorough discussion on the role of trade in growing and in promoting sustainable development, particularly inclusive growth.”

BRICS comprises Brazil, Russia, India, China and South Africa. The bloc admitted South Africa in 2010 as part of its aim of leveling the global playing field by representing nontraditional powers.

U.S. President Donald Trump has threatened to slap tariffs on all $505 billion worth of Chinese imports, a move that has caused global concern. Summit watchers say his blunt rhetoric will influence this year’s summit.

“I think that something that is pertinent that relates to the United States and President Trump’s administration is of course their protectionist measures that they have put on in terms of trade, and the trade wars that have every country in the globe speaking,” analyst Luanda Mpungose told VOA. “But something that the BRICS have actually come out and actually spoken about quite strongly, is that they want to support multilateralism and a rules-based world order.”

But, she says, BRICS may use that adversity to seek to build a new world order, even beyond the five-member bloc.

“Something that’s different about BRICS this year, specifically about South Africa as a host country, is that this initiative is not only about the BRICS member countries, the five countries, but actually, we’ve actually seen an outreach of neighborhood countries being invited,” she said. “So this is taking along the Africa developmental agenda and bringing it Into the BRICS agenda, I mean countries like Rwanda, like Senegal, like Togo have been invited to come and attend.”

The summit continues through Friday.
…

Sergio Marchionne, a charismatic and demanding leader who engineered two long-shot corporate turnarounds to save both Fiat and Chrysler from near-certain failure, died Wednesday. He was 66.

The holding company of Fiat’s founders, the Agnelli family, announced in a statement Marchionne’s death after complications from surgery in Zurich.

“Unfortunately what we feared has come to pass,” Fiat heir John Elkann said. “Sergio Marchionne, man and friend, is gone.”

Marchionne built the dysfunctional companies into the world’s seventh-largest automaker almost by personal force of will, living on a corporate jet crossing the Atlantic to push employees to accomplish what most people thought was impossible amid a devastating global recession.

Marchionne, who was Italian and Canadian, had revived Fiat by 2009 when he was picked by the U.S. government to save U.S.-based Chrysler from its trip through bankruptcy protection after being owned by a private equity company.

“It’s highly unlikely that Chrysler would exist today had he not taken that gamble,” said Autotrader.com analyst Michelle Krebs. “The company was in such bad shape, being stripped of any kind of resources by the previous owners.”

Marchionne met most of his goals, even though at times he was doubted by nearly everyone in the automobile business. But he didn’t live long enough to complete his last two: personally hand over the reins of Fiat Chrysler Automobiles to a hand-picked protege and lay out plans for transforming supercar maker Ferrari.

Marchionne had shoulder surgery in summer 2018, and the company said last weekend that complications meant he would not be able to return.

The manager, known for his folksy, colorful turns of phrase and for his dark cashmere sweaters no matter the occasion, was the darling of the automotive analyst community. Even when expressing doubts at his audacious targets, they expressed admiration for his adept deal-making. That included getting GM to pay $2 billion to sever ties with Fiat, key to relaunching the long-struggling Italian carmaker, and the deal with the U.S. government to take Chrysler without a penny down in exchange for Fiat’s small-car technology.

Marchionne joined Fiat after being tapped by the Agnelli family to save the company. Fiat had for generations been a family-run enterprise, and having someone at the helm from outside Italy’s clubby management circles — even a dynamo like Marchionne — was an enormous change.

Other key corporate moves included the spinoff of the heavy industrial vehicle and truck maker CNH and of the Ferrari supercar maker. Both deals unlocked considerable shareholder value for Agnelli family heirs led by John Elkann. Elkann came into his own under Marchionne’s stewardship, taking over as chairman in 2010 having been tapped more than a decade earlier by his grandfather, the late Gianni Agnelli, to run the family business.

As Marchionne’s health failed following surgery, a clearly emotional Elkann delivered what amounted to an impromptu eulogy and message of gratitude to a man he called his mentor.

“He taught us to think differently and to have the courage to change, often in unconventional ways, always acting with a sense of responsibility for the companies and their people,” Elkann said over the weekend. “He taught us that the only question that’s worth asking oneself at the end of every day is whether we have been able to change something for the better, whether we have been able to make a difference.”

It was Marchionne’s success in turning around a pair of Swiss businesses that drew the attention of the Agnelli family. He joined Fiat’s board in May 2003, four months after the death of Gianni Agnelli. He became CEO in June 2004, following the death of Gianni Agnelli’s brother, Umberto, Fiat’s chairman, leaving a family void in the company.

As an outsider, Marchionne was unfettered by local loyalties and he set about cutting jobs and expenses, slimming management ranks and increasing shareholder value along the way. He brought in other outsiders to key positions and relaunched the iconic 500, which became one of the new Fiat’s calling cards as it expanded abroad.

While he started small with limited industrial alliances, his ambitions soon grew. The bankruptcy of Chrysler gave him the opportunity to create a global car company with brands including Jeep, Ram, Alfa Romeo, Ferrari and Maserati that he envisioned would grow to 6 million cars a year. A global economic crisis that bottomed out car sales in key U.S. and European markets prevented him from reaching that goal, but his industrial vision never faltered as he spun off CNH and Ferrari into stand-alone entities.

His most quoted presentation to analysts, titled “Confessions of a Capital Junkie,” argued that consolidation was inevitable in the investment-heavy car industry. But though he tried for another merger with General Motors, talks never led to a deal. Still, newspaper photographs of a chain-smoking Marchionne awaiting talks with German Chancellor Angela Merkel outside the Chancellery in Berlin on the role of GM’s then-subsidiary, Opel, made clear just how personally he took the negotiations.

Marchionne had planned to step down as CEO of FCA after the close of 2018, with the presentation of the year-end results in April. He always insisted that his successor would come from inside — so it was no surprise when British manager Mike Manley, who helped boost Jeep to global success and get Fiat a foothold in Asia, was named as his successor as Marchionne’s health failed.

He had never indicated plans for Ferrari or CNH, leaving many to speculate that the tireless manager known for his short sleep cycles and globe-trotting style would use those positions to keep a foothold in the automotive world.

In June, he laid out FCA’s five-year plan — raising the eyebrows of analysts who pointed out he would not be the one to execute the plans. He responded by expressing confidence in his hand-picked team that helped draft the targets.

The plans included launching electrified powertrains across Fiat brands — a tacit acknowledgement that the company had lagged in introducing hybrid, hybrid-electric and full-electric engines. They also were to put Ferrari engines in Maserati cars as Marchionne sought to take on electric-car pioneer Tesla — but unlike at Tesla, which has so far failed to turn a profit, earnings were fundamental at FCA.

Marchionne’s penchant for numbers was always clear in his attentive quarterly presentations. He let his real satisfaction show during the June 2018 presentation when he announced the company had reached zero debt, by donning a necktie for the first time in a decade — albeit briefly.

His next major move was to be the presentation of a new business plan in September for Ferrari, which he aimed to turn into a luxury company beyond just cars to further boost earnings.

At his last public appearance in his role as CEO, Marchionne in June attended a ceremony in Rome where a Jeep was presented to the paramilitary Carabinieri police. Marchionne began his brief remarks noting that he grew up in a household where his father was a Carabinieri officer.

He said he recognized in the Carabinieri “the same values at the basis of my own education: seriousness, honesty, sense of duty, discipline and spirit of service.”

Marchionne was divorced. He is survived by his companion, Manuela Battezzato, and two adult sons.

 
…

Tariffs are set to top the agenda in a meeting Wednesday between U.S. President Donald Trump and European Commission President Jean-Claude Juncker.

Juncker is coming to Washington with the hopes the European Union can avoid an all-out trade war by convincing Trump to hold off punitive tariffs on European cars. The potential car tariffs would hurt Germany’s thriving automobile industry and come on top of hefty tariffs that Trump has already imposed on aluminum and steel imports.

But on the eve of the meeting, Trump appeared pessimistic the two sides would come to any agreement after the U.S. leader threatened more tariffs on U.S. trading partners. In a tweet late Tuesday, Trump said both the United States and the European Union should drop all tariffs, barriers and subsidies.

“That would finally be called Free Market and Fair Trade!” Trump said. “Hope they do it, we are ready — but they won’t!” he added.

Earlier Tuesday, the U.S. president declared “Tariffs are the greatest!” and threatened to impose additional penalties on U.S. trading partners. “Either a country which has treated the United States unfairly on trade negotiates a fair deal, or it gets hit with tariffs. It’s as simple as that.”

Trump again complained the world uses the United States as a “piggy bank” that everyone likes to rob. 

The European Commission has responded with retaliatory tariffs, but new levies on cars could prompt Europe to take further action.

German Foreign Minister Heiko Maas said Tuesday Europe won’t cave in to Trump’s threats.

“No one has an interest in having punitive tariffs, because everyone loses in the end,” Maas wrote on Twitter. “Europe will not be threatened by President Trump If we cede once, we will often have to deal with such behavior in the future.”

Republican Speaker of the House Paul Ryan told reporters Tuesday he does not think “the tariff route is the smart way to go.”

Ryan said he understands Trump is seeking “a better deal for Americans” but added the U.S. should instead “work together to reduce trade barriers and trade restrictions between our countries.”

Trump appeared to take offense to Ryan’s comments, questioning on Twitter Wednesday morning why a “weak politician” would call for a reduction of trade restraints.

Trump also erroneously claimed the U.S. lost $817 billion on trade last year, a much higher number than the $568.4 billion reported by the U.S. Bureau of Economic Analysis.

He also and questioned if the government is going to continue to let “our farmers and country get ripped off.”

Without mentioning Ryan and other critics, Trump said “people snipping at your heels” during trade talks prevents the consummation of a trade agreement that will “never be as good as it could have been with unity.”

 
…

Qian Zhiya may be Starbucks’ worst nightmare.

The 42-year-old Chinese entrepreneur says she is betting that her fledgling Luckin Coffee brand will eventually have more cafes in China than Starbucks, and she has Singapore’s sovereign wealth fund and other investors bankrolling her plan.

Luckin, which only officially launched in January, has opened more than 660 outlets in 13 Chinese cities thanks to a supercharged growth plan based on cheap delivery, online ordering, big discounts and premium pay for its staff.

Its assault comes at a crucial time for Starbucks, which has 3,400 stores in China — its second biggest market after the U.S. — and plans to almost double that number by 2022.

And the speed of the attack is a warning to other established consumer brands in China that they too could be vulnerable to a start-up’s attempt to reinvent a market, brand consultants say.

Starbucks’ shares were pummeled in June after it warned same store sales growth in China had plunged to zero or worse last quarter, against 7 percent growth a year earlier.

Its fiscal third-quarter results are due out on Thursday.

Starbucks said some new café openings were cannibalizing customer visits at nearby stores and it also blamed a drop-off in orders through delivery firms.

While it did not mention increased competition, investors and analysts said it is clear that Luckin does represent a threat.

However, they also point out that Starbucks’ brand has been very resilient to challenges from rivals around the world over the years, largely because of the ambience of its stores, its service and the consistent quality of the coffee served.

There is also no sign that Chinese consumers have turned against such a very American brand as a protest over U.S. President Donald Trump’s imposition of punitive tariffs on Chinese exports.

Big Promotions

Reuters spoke to 30 consumers in Beijing Yintai Center, a shopping mall that has a Starbucks, Costa Coffee and Luckin outlet, among others. Half of those polled said they had tried Luckin; most said they liked it, though more than two-thirds said their top choice remained Starbucks.

The majority drank coffee in-store or bought to take away, with only a small number saying they had coffee delivered, a potential challenge for Luckin’s delivery-focused strategy.

Taste, convenience and environment were their top three priorities, more than price.

Luckin’s customers can order coffee via an app, watch a livestream of their coffee being made, and have it delivered to their door in an average of 18 minutes, the company says.  A regular latte, roughly the size of a Starbucks grande, costs 24 yuan plus 6 yuan for delivery (free delivery for orders of more than 35 yuan), but can be half price after promotions. A grande latte at Starbucks costs 31 yuan.

More than half of Luckin’s stores are larger “relax” outlets or pick-up stores with some seating. The rest are delivery kitchens.

The speed of Luckin’s growth is extraordinary — it took Starbucks about 12 years to open as many stores. In many ways it echoes the way in which some major Chinese technology firms, such as ride hailing platform Didi Chuxing, have burned through cash to grab market share and been valued highly as a result.

Qian, who was previously chief operating officer at Chinese ride hailing firm Ucar, says Luckin’s focus now is all about increasing customers.

“I don’t have a timeline for profit,” Qian told Reuters at the firm’s Beijing headquarters as she sipped her third Luckin coffee of the day. “For us, what we care about now is the number of users and if they are coming back to us, whether they recognize us, whether we can take market share.”

The firm raised $200 million this month to help fund its expansion, including an undisclosed sum from Singapore government fund GIC, a funding round which Luckin said valued the firm at $1 billion.

“In the future we will have more cafes than Starbucks,” she declared.

One of the investors in the latest fundraising said it is the logical time for there to be a shake-up of the coffee world in China.

“This model will appeal to young customers amid the country’s consumption upgrade,” said David Li, former head of Warburg Pincus Asia Pacific. He led the financing round for Luckin via his new investment firm Centurium Capital.

The use of online ordering and delivery should be  enough to unnerve many established brands, said Bruno Lannes, Shanghai-based partner with consultancy Bain & Co.

“It’s a big threat, that’s why western brands need to pay attention,” he said.

“Flash Mob”

Still, not everyone agrees the internet model translates easily to the coffee business, given the need for costly stores and quality control.

“It remains to be seen if they can really hook consumers in and create a monopoly in the market, like those we see in sectors like cab-hailing,” said Liu Xingliang, president of tech consultancy China Internet Data Center.

And some of the consumers Reuters spoke to in the Beijing mall saw hurdles ahead for Luckin.

Liu Xu, 23, an advertising professional, who compares Luckin to a “flash mob” that came out of nowhere, said he tried the firm’s coffee out of curiosity but prefers hand-drip single-origin coffee.

And Lian Yiheng, 22, a student, said she was attracted by Luckin’s promotions and the convenience of delivery, but felt it needed to improve its selection of coffees and store decoration to lure people in the longer run.

Qian said the plan was to have more sit-in stores and reduce the proportion of delivery-only outlets, which would require higher spending on setting up in better locations and on décor.

On the question of quality, she says that it uses select arabica beans from Ethiopia.

Luckin’s expansion comes as Starbucks’ global rivals, like Canadian chain Tim Hortons, are also pushing hard in China. Tim Hortons plans to open 1,500 outlets in China over the next 10 years, while smaller local chains are also popping up fast.

As China’s middle class continues to increase in size and the coffee chains move into many smaller towns and cities, the market is growing at 5-7 percent a year, according to research firm Mintel.

Li Yibei, owner of Double Win Café, which has a chain of eight coffee shops in Shanghai, said Luckin would have an impact on the market, but there was plenty of space left.

“Maybe they will hit Starbucks to some extent, but remember Starbucks has many die-hard fans. Maybe they can grab some followers from them, but I don’t think that many,” she said.

Starbucks may also soon be moving more formally into online delivery in China.

Howard Schultz, Starbucks’ departing executive chairman, said in Shanghai this month that he was close friends with Jack Ma, the head of Alibaba Group Holding Ltd., which controls food delivery platform Ele.me., and suggested the two could work together on Starbuck’s online delivery in China.

Schultz also said he isn’t wasn’t worried about the China slowdown.

“The more good coffee and competition that comes into the market, the more the Chinese people will be exposed to good coffee,” he said. “Emerging new players that are coming into the market will actually benefit Starbucks.”

($1 = 6.8142 Chinese yuan renminbi)
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Harley-Davidson executives said Tuesday they had seen no U.S. sales hit so far over its decision to relocate some American manufacturing overseas as it navigates amid trade conflicts.

“We’ve actually done quite a lot of consumer research… and we see no discernible shift in the sales patterns” or to brand favorability, chief executive Matt Levatich said on an analyst conference call.

The motorcycle company found itself in the firing line of President Donald Trump, who repeatedly attacked the company on Twitter after Harley announced the move on June 26 in response to European Union tariffs on US-made bikes.

Trump’s attacks on Harley for being the first to “wave the White Flag” had raised fears among investors that the company’s sales could be impacted given the president’s popularity in areas of the United States where Harleys sell well.

But Harley executives said direct consumer research, as well as sales, showed no evidence of a hit due to the uproar.

“We’ll continue to be sure we monitor it… and correct errors in interpretation that seem to pop up from time to time,” he said. “We’re on it.”

Trump’s name did not come up during a 60-minute earnings conference call, although Levatich did say at one point that the company was working with US administration officials and other governments to “get these tariffs removed.”

Shares of Harley-Davidson jumped after it reported a second-quarter dip of six percent in profits to $242.3 million. But the results topped analyst expectations in terms of earnings-per-share and revenues.

Harley-Davidson suffered another fall in US motorcycle sales, this time by 6.4 percent from the year-ago period to 46,490.

Executives characterized the drop as part of a longterm challenge as it steps up marketing campaigns to lure in young consumers that have so far shown lackluster interest in motorcycles.

Harley signaled it expects lasting business impacts from the EU tariffs, which targeted Harley and other brands from politically consequential regions of the United States and were taken in response to US tariffs on imported steel and aluminum.

Harley is based in Wisconsin, home to House Republican leader Paul Ryan.

The EU tariffs add $90 to $100 million in annual costs to EU sales. Executives said they hope to mitigate those effects in 2019 through corporate efficiencies and by shifting production from the US to an overseas plant.

Harley-Davidson has not reached a decision whether the EU-market bikes will be manufactured at existing overseas plants in Brazil or India or at a new plant being built in Thailand.

The company trimmed its 2019 profit margin to a range of 9 to 10 percent from the prior 9.5 to the 10.5 percent. Trade actions will subtract $45 to $55 million in 2018, with $30 to $35 million due to the EU tariffs and the rest coming from US tariffs on steel and aluminum.

“We never contemplated moving our European volume out of the United States,” Levatich said.

Shares jumped nine percent to $45.16 in late- morning trading.

 
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