Amid the very real hardships Syrian refugees face, little has been said about another major health and humanitarian issue: What to do with the massive accumulations of trash and waste. But one refugee camp in Jordan is doing something about it. With the help of an international nonprofit group, the residents of the Zaatari Refugee Camp launched a recycling program to eliminate the trash left by the tens of thousands of refugees who live there … and provide jobs. Arash Arabasadi reports.
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The political squabbling between China and the United States over trade and other issues affect the world’s two largest economies through a variety of mechanisms with unpredictable results. 

For example, prices of stock in both nations have been hurt as some shareholders sold their shares and other investors were reluctant to buy shares of companies that might be hurt by rising tariffs. These actions cut demand for certain stocks, making prices fall. Shareholders are part-owners of companies who hope to profit when the company prospers and grows. Rising tariff costs make growth less likely, and that hurts investor confidence.

World Trade Organization spokesman Dan Pruzin told Reuters that worries about trade are already being felt.

“Companies are hesitating to invest, markets are getting jittery, and some prices are rising,” he said, adding that further escalation could hurt “jobs and growth,” sending “economic shock waves” around the world. 

Confidence

Trade squabbles can hurt business confidence, because managers are less willing to take the risk of buying new machines, building new factories or hiring new workers. Less expansion means less demand for equipment, and a smaller workforce means fewer people have the money to rent apartments, buy food or finance a new car. Less demand for goods and services ripples through the economy and sparks less economic activity and less growth.

​Agriculture

U.S. farmers are another group feeling the effects of this trade dispute, as Beijing raises tariffs on U.S. soybeans. Higher tariffs raise food costs for Chinese consumers, so demand falls for U.S. farm products, a key American export. Anticipating slackening demand for U.S. soybeans, market prices dropped even before the tariffs were imposed. That means U.S. farmers can no longer afford to buy as many tractors and hire as many workers. Fewer workers mean fewer people with the money to buy products, which slows economic growth in farm states. 

Consumers

Meantime, new U.S. tariffs hit Chinese-made vehicles, aircraft, boats, engines, heavy equipment and many other industrial products. China’s Xinhua news agency said new U.S. tariffs are an effort to “bully” Beijing. The agency says the new tariffs violate international trade rules, and will hurt many companies and “ordinary consumers.” 

Experts say Washington tried to avoid tariffs on China that would directly raise costs to U.S. consumers. Economists say increasing taxes on products that help create consumer goods will still raise costs to consumers, fuel inflation and hurt demand. 

​Currency

PNC Bank Senior Economist Bill Adams, an expert on China’s economy, says one step China could take, but has not, would be to let its currency value drop. A weaker currency would mean Chinese-made products are cheaper and more competitive on international markets. Adams says China has taken steps recently to prop up the value of its currency. While a weaker currency helps exports, it can fuel inflation by raising the costs of imported products like oil or other raw materials needed by Chinese companies.

In the meantime, uncertainty fueled by trade disputes puts upward pressure on the value of the U.S. dollar, because investors see the United States as a safe haven in times of economic strife. But a stronger, more expensive dollar means U.S. products are more expensive for foreign customers, which hurts American exports and economic growth. 

All of this means it is hard to predict how this trade dispute will play out. Experts say it will depend in large measure on how many times the two sides raise tariffs in response to each other, how high the tariffs go, and how long the bickering lasts.

William Zarit, the chairman of the American Chamber of Commerce in China, writes that this is the biggest trade dispute between China and the United States in 40 years.

The two sides must work something out, Zarit says, because a “strong bilateral trade and investment relationship is too important to both countries for it to be mired in verbal and trade remedy attacks and counterattacks.”

He says a new agreement would “significantly benefit both economies.”
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U.S. employers kept up a brisk hiring pace in June by adding 213,000 jobs, a sign of confidence in the economy despite the start of a potentially punishing trade war with China.

The job growth wasn’t enough to keep the unemployment rate from rising from 3.8 percent to 4 percent, the government said Friday. But the jobless rate rose for an encouraging reason: More people felt it was a good time to begin looking for a job, though not all of them immediately found one.

The growing optimism that people can find work suggested that the 9-year old U.S. economic expansion — the second-longest on record — has the momentum to keep chugging along. Yet its path ahead is uncertain. Just hours before the monthly jobs report was released, the Trump administration imposed taxes on $34 billion in Chinese imports, and Beijing hit back with tariffs on the same amount of U.S. goods.

“The tariffs jumble things about what we should expect to see in the next few months,” said Cathy Barrera, chief economist at ZipRecruiter, the online jobs marketplace.

Some companies are likely to respond to the tariffs by putting their hiring plans on hold until the trade picture becomes clearer.

Major U.S. stock indexes were mostly higher in early trading Friday after the jobs report was issued, keeping the market on track for a weekly gain after two weeks of losses.

The June jobs data showed an economy that may be on the cusp of producing stronger pay growth, something that could be disrupted if additional tariffs are imposed. Trump has suggested that more than $500 billion worth of Chinese imports could be taxed in his drive to force Beijing to reform its trade policies, which he insists have unfairly victimized the United States.

Average hourly pay rose just 2.7 percent in June from 12 months earlier. That relatively modest increases means that, after adjusting for inflation, overall wages remain nearly flat. But the average was skewed downward in June because the influx of jobseekers was due mainly to those with only a high school education or less, who are generally paid lower wages,

The ranks of unemployed people seeking jobs jumped by 499,000 in June, which caused the unemployment rate to rise from its previous 18 year-low. With 93 straight months of job growth — a historical record — many employers have said they’re feeling pressure to raise wages. But significant pay gains have yet to emerge in the economic data.

Manufacturers added 36,000 jobs last month; the education and health sector added 54,000. But retailers shed 21,600 jobs, with the losses concentrated at general merchandise stores.

In its report Friday, the government revised up its estimate of job growth in May and April by a combined 37,000. Over the past three months, the economy has produced a robust average monthly job gain of 211,000.

The broader U.S. economy appears sturdy. Economists are forecasting that economic growth accelerated to an annual pace of roughly 4 percent during the April-June quarter, about double the previous quarter’s pace.

Signs of strength have helped bolster hiring despite the difficulty many employers say they’re having in finding enough qualified workers to fill jobs.

Manufacturers and services firms have said in recent surveys that their business is improving despite anxiety about the tariff showdown between the United States and China. Housing starts have climbed 11 percent so far this year. Retail sales jumped a strong 0.8 percent in May in a sign that consumers feel secure enough to spend.

Though economic growth appears to be solid, the gains have been spread unevenly. President Donald Trump’s tax cuts have provided a dose of stimulus this year, but the benefits have been tilted significantly toward wealthy individuals and corporations. Savings from the tax cuts enabled companies in the Standard & Poor’s 500 stock index to buy back a record number of shares in the first three months of 2018.

Yet the tax cuts have done little to generate substantial pay growth. Most economists say they still think the low unemployment rate will eventually force more employers to offer higher pay in order to fill jobs.

The economy also faces a substantial threat from the Trump administration’s trade war with China and from other, ongoing trade disputes with U.S. allies, including Canada and Europe. Any escalation in the conflict with China could disrupt hiring as companies grapple with higher import prices and diminished demand for their exports. On Thursday, Trump floated the prospect of imposing tariffs on more than $500 billion in Chinese imports.

The Trump administration has also applied tariffs on steel and aluminum from allies like Canada and Mexico and has threatened to abandon the North American Free Trade Agreement with those two countries. Trump has also spoken about slapping tariffs on imported cars, trucks and auto parts, which General Motors has warned could hurt the U.S. auto industry and drive up car prices.

Automakers added 12,000 jobs in June, but the tariffs could weigh on that industry’s job growth in the coming months.
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The World Trade Organization is urging nations to resolve trade tensions, warning that restrictive trade measures would have a harmful impact on the global economy.

The group refuses to weigh in on what appears to be the start of a trade war between the United States and China, the world’s two biggest economies. China has reacted to Washington’s decision to slap 25 percent tariffs on $34 billion worth of Chinese goods by reciprocating in kind.

While the Geneva-based WTO will not comment on specific actions, the organization’s director-general, Roberto Azevedo, has sent out a series of tweets warning nations against giving in to protectionist impulses.

Azevedo says a new WTO monitoring report on trade measures enacted by the G-20 countries indicates a disturbing increase in trade restrictions by major economies. In his tweet, the WTO chief says recent developments show that more restrictive measures are on the way.

His spokesman, Dan Pruzin, says Azevedo fears the deterioration in trade relations may be worse than previously anticipated and is likely to have very serious consequences.

“The fallout from these measures is already being felt,” Pruzin said. “Companies are hesitating to invest, markets are getting jittery, some prices are rising. With further escalation, the effects would only grow in magnitude, hitting jobs and growth in the countries involved and sending economic shock waves around the world.” 

President Donald Trump has threatened that the United States might quit the WTO if it is not treated fairly.

“I will just say that no U.S. official in Geneva has given any indication in any of the meetings here in Geneva that the United States intends to withdraw from the WTO,” Pruzin told VOA.

WTO chief Azevedo is urging all parties to sit down and discuss ways of tackling the issues at the root of the growing trade tensions.
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The world’s two biggest economies have fired the opening shots in a trade war that could have wide-ranging consequences for consumers, workers, companies, investors and political leaders.

The United States slapped a 25 percent tax on $34 billion worth of Chinese imports starting Friday, and China is retaliating with taxes on an equal amount of U.S. products, including soybeans, pork and electric cars.

The United States accuses China of using predatory tactics in a push to supplant U.S. technological dominance. The tactics include forcing American companies to hand over technology in exchange for access to the Chinese market, as well as outright cyber-theft. Trump’s tariffs are meant to pressure Beijing to reform its trade policies.

Though the first exchange of tariffs is unlikely to inflict much economic harm on either nation, the damage could soon escalate. President Donald Trump, who has boasted that winning a trade war will be easy, said Thursday that he’s prepared to impose tariffs on up to $550 billion in Chinese imports — a figure that exceeds the $506 billion in goods that China actually shipped to the United States last year.

Escalating tariffs would likely raise prices for consumers, inflate costs for companies that rely on imported parts, rattle financial markets, cause some layoffs and slow business investment as executives wait to see whether the Trump administration can reach a truce with Beijing. The damage would threaten to undo many of the economic benefits of last year’s tax cuts.

A full-fledged trade war, economists at Bank of America Merrill Lynch and elsewhere warn, risks tipping the U.S. economy into recession.

And those caught in the initial line of fire — U.S. farmers facing tariffs on their exports to China, for instance — are already hunkered down and fearing the worst. The price of U.S. soybeans has plunged 17 percent over the past month on fears that Chinese tariffs will cut off American farmers from a market that buys about 60 percent of their soybean exports.

“For soybean producers like me this is a direct financial hit,” Brent Bible, a soy and corn producer in Romney, Indiana, said in a statement from the advocacy group Farmers for Free Trade. “This is money out of my pocket. These tariffs could mean the difference between a profit and a loss for an entire year’s worth of work out in the field, and that’s only in the near term.”

Even before the first shots were fired, the prospect of a trade war was worrying investors. The Dow Jones industrial average has shed nearly 1,000 points since June 11.

The Chinese currency, the yuan, has dropped 3.5 percent against the U.S. dollar over the past month, giving Chinese companies a price edge over their U.S. competition. The drop might reflect a deliberate devaluation by the Chinese government to signal Beijing’s “displeasure over the state of trade negotiations,” according to a report Thursday from the Institute of International Finance, a banking trade group.

The Trump administration sought to limit the impact of the tariffs on U.S. households by targeting Chinese industrial goods, not consumer products, for the first round of tariffs. But that step drives up costs for U.S. companies that rely on Chinese-made machinery or components and may force them to pass them along to their business customers, and eventually to consumers.

If you like Chick-fil-A sandwiches, for instance, you may feel the impact of the tariffs. Charlie Souhrada, a vice president of the North American Food Equipment Manufacturers, says the duties could raise the cost of a pressure cooker made by one of its members, Henny Penny. Chick-fil-A uses the cooker for its sandwiches. The administration has placed “these import taxes squarely on the shoulders of manufacturers and by extension consumers,” Souhrada said.

The Federal Reserve is already picking up signs that the threat of a trade war is causing businesses to rethink investment plans. In the minutes from its June 12-13 meeting, the Fed’s policymaking committee noted: “Contacts in some districts indicated that plans for capital spending had been scaled back or postponed as a result of uncertainty over trade policy,”

And if Trump extends the tariffs to $550 billion in Chinese imports, there’s no way consumers could avoid being caught in the crossfire: The taxes would have to hit consumer products like televisions and cellphones.

Consider what happened to the price of washing machines that were subjected to a separate series of Trump tariffs in January. Over the past year, their price has surged more than 8 percent, compared with a slight drop in overall appliance prices.

Even the first round of tariffs means that “American consumers are one step closer to feeling the full effects of a trade war,” said Matthew Shay, president of the National Retail Federation.

“These tariffs will do nothing to protect U.S. jobs, but they will undermine the benefits of tax reform and drive up prices for a wide range of products as diverse as tool sets, batteries, remote controls, flash drives and thermostats,” Shay said. “And students could pay more for the mini-refrigerator they need in their dorm room as they head back to college this fall… a strategy based on unilateral tariffs is the wrong approach, and it has to stop.”
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Drivers of Kenya’s digital taxis shut down operations Monday in protest of what they term as exploitative corporate practices. They say the firms are charging low rates to their clients, yet imposing high commissions on the drivers, leading them to work longer hours with little pay.

The Digital Taxi Association of Kenya, representing more than 2,000 digital taxi drivers, is in the fourth day of a protest that has seen drivers switch off their services, stalling transportation in the country.

The drivers say client charges have reduced over time as more digital taxi apps enter the market, but their commissions to the taxi firms have remained the same.

The drivers are demanding a review of their rates and working conditions. Through their association, they want the digital taxi services to double their client rates and reduce driver commissions to the companies so they can earn decent wages.

“The fare itself, it has been very low from the word go,” said Anthony Maina, an Uber driver in Kenya. “The percentage after they get their commission, we get very little returns.”

The main digital taxi services in Kenya are the American brand Uber and Estonian Taxify, as well as at least three others.

Uber charges a 25 percent commission on each ride, while apps like Taxify charge 15 percent. The drivers want rates at least doubled per kilometer, and commissions slashed to 10 percent.

Kenya Digital Taxi Services Director David Muteru is calling on Kenya’s Ministry of Transport to resolve the issue.

“All these things are happening where we have government agencies who can [take care of all these things] without having pressure from us,” Muteru said. “It is not our wish to come here and start demonstrating. Our demand is that we must have regulations. [The pricing] is very skewed in favor of the app companies to the detriment of drivers.”

Maina says Uber reduced the maximum working hours from 18 to 12 in an effort to better the working conditions, but drivers overwork to earn more to meet expenses.

“We cannot afford daily maintenance, he said. “An example, each and every day you have to fuel the vehicle, you have to wash the car, and if you happen to be in the city center, you have to pay the city council. All those expenses, when you put them together and maybe you do not own the vehicle yourself, you have to pay the partner and you know fuel has been going up every day and they are not adjusting their commission or fare. So that has been a big problem for us.”

Earlier in the week, Uber drivers in South Africa also went on strike to protest the 25 percent fee charged by Uber.

Digital Taxi Association representatives in Kenya are in negotiations with the taxi firms and Kenya’s Ministry of Transport as their strike continues.
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South Africa has become one of the biggest markets for illegal cigarette sales and is losing out on 7 billion rand ($514 million) a year in potential tax revenue, a report funded by a tobacco industry group said on Thursday.

The study carried out by Ipsos found illegal cigarette trade spiked between 2014 and 2017 after a probe into the underground industry was dropped by the South African Revenue Service (SARS) under suspended commissioner Tom Moyane.

Moyane, an ally of former President Jacob Zuma, is the main focus of an ongoing SARS commission of inquiry over allegations of widespread corruption at the tax agency under his watch. He denies any wrongdoing.

Former head of enforcement at SARS, Gene Ravele, told the inquiry last week the decision to drop the investigation into illegal tobacco trade was intended to let it continue.

“After I left [in 2015], there was no inspections at cigarette factories. It was planned,” said Ravele.

A packet of cigarettes should incur a minimum tax of 17.85 rand ($1.31), yet packs are sold on the black market for as little as 5 rand as manufacturers dodge official sales channels to avoid paying tax, the Ipsos study found.

Three-quarters of all South Africa’s informal vendors — totaling 100,000 — sell illegal cigarettes in an industry that was worth 15 billion rand ($1.10 billion) over the last three years, the report said.

“Independent superettes, corner cafes and general dealers are the key channels for ultra-cheap brands, with hawkers providing a key entry point, mainly through the loose cigarette sales,” Ipsos head of measurement Zibusiso Ngulube said. “These manufacturers are perfectly primed to continue to grow at a fast rate.”

The study was funded by The Tobacco Institute of Southern Africa, which includes arms of global manufacturers like Philip Morris International, Alliance One and British American Tobacco.
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German Chancellor Angela Merkel said on Thursday she would back lowering European Union tariffs on U.S. car imports, responding to an offer from Washington to abandon threatened levies on European cars in return for concessions.

“When we want to negotiate tariffs, on cars for example, we need a common European position and we are still working on it,” Merkel said.

U.S. President Donald Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the United States.

According to an industry source, the U.S. ambassador to Germany told German car bosses from BMW, Daimler and Volkswagen at a meeting on Wednesday that Trump could abandon such threats if the EU scrapped duties on U.S. cars imported into the bloc.

Merkel said any move to cut tariffs on U.S. vehicles would require reductions on those imported from other countries to conform with World Trade Organization rules.

“I would be ready to support negotiations on reducing tariffs, but we would not be able to do this only with the U.S.,” she said.

German automotive trade body VDA said any suggestions about mutually removing tariffs and other trade barriers were positive signals.

“But it is clear that the negotiations are exclusively being held at a political level,” it said in a statement.

Current U.S. import tariff rates on cars are 2.5 percent and on trucks 25 percent. The EU has a 10 percent levy on car imports from the United States.

Trump hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminum at the start of June, ending exemptions that had been in place since March.

The EU executive responded by imposing its own import duties of 25 percent on a range of U.S. goods, including steel and aluminum products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.

Trump’s protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.

 
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Trade rhetoric is spilling into the real world of jobs and consumer goods. The United States is set to impose tariffs on $34 billion worth of goods from China on July 6. Beijing is fighting back with its own $34 billion of tariffs on American goods. As VOA’s Arash Arabasadi reports, investors are understandably on edge.
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United States Ambassador to Germany Richard Grenell reportedly told German auto makers Wednesday the U.S. would back off threats of tariffs on European car imports in exchange for the European Union’s elimination of duties on U.S. cars.

The German newspaper Handelsblatt reported Grenell told BMW, Daimler and Volkswagen executives of the proposal during a meeting Wednesday at the embassy in Berlin.

Daimler and Volkswagen declined to comment and BMW was not immediately available for comment, the report said.

The reported proposal comes after the European Union warned U.S. President Donald Trump last Friday the potential indirect costs of imposing tariffs on cars could amount to $294 billion.

The EU report, submitted to the U.S. Commerce Department, maintained the tariffs would disrupt cross-border supply chains in the automotive industry. The report said the tariffs could possibly trigger higher U.S. industrial costs, raise consumer prices, hurt exports and cost jobs.  

The World Trade Organization said Wednesday trade barriers being set by world economic powers could jeopardize the global economic recovery.

“This continued escalation poses a serious threat to growth and recovery in all countries, and we are beginning to see this reflected in some forward-looking indicators,” WTO Director General Roberto Azevendo said.

Azevendo did not expound on his remarks, but the WTO’s quarter trade outlook indicator in May suggested trade growth in the second quarter would decelerate.

 
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European businesses are unsettled as they watch the U.S. and China collide over trade. And for good reason: the nascent global trade war could represent the biggest single threat to the economic upswing that has helped the region get past its financial crisis.

In theory, some European companies could benefit, jumping into market niches if Chinese businesses are kept out of the U.S. market. But that would only be a few companies or sectors.

When your entire economy is heavily dependent on trade, an overall slowdown in global commerce caused by tit-for-tat import taxes provokes fear and undermines confidence.

And that’s just what’s happening in Europe. By one measure, business confidence has fallen in six of the past seven months in Germany, where exports are almost half of annual economic output.

“It’s worth all our efforts to defuse this conflict, so it doesn’t become a war,” German Chancellor Angela Merkel said Wednesday.

The U.S. is due to put tariffs on $34 billion worth of Chinese goods on Friday. The Chinese will respond with tariffs on an equivalent value of U.S. products such as soybeans, seafood and crude oil.

Amid all this, Europe has its own trade dispute with the U.S. After the U.S. put tariffs on steel and aluminum from many allies, including the European Union, the 28-country bloc responded with import taxes on some $3.25 billion of U.S. goods. The Trump administration is also studying the option of putting tariffs on cars, which would significantly escalate the confrontation.

The head of the EU’s executive, Jean-Claude Juncker, will head to Washington in late July to try to personally persuade Trump against further measures targeting Europe.

The disputes over trade threaten to spoil the good times for Europe’s economy.

Growth last year was the strongest in a decade, since before the global financial crisis. While that has eased in recent quarters, the economy is still strong enough to create jobs. The number of unemployed fell by 125,000 in May, leaving unemployment in the 19 countries that use the euro at 8.4 percent, the lowest since 2008 and down from a high of 12.1 percent in 2013.

“Trade tensions stoked by U.S. President Donald Trump are clouding the economic outlook in Europe,” wrote analysts at Berenberg bank in London. They rated the trade risk ahead of troubles from Italy’s heavy debt load or faster than expected interest rate increases from the U.S. Federal Reserve.

Many European companies would suffer because they both produce and sell goods in the U.S. and China, the world’s biggest economies.

For example, tariffs that China is expected to impose Friday on U.S.-made autos would hit German carmakers Daimler and BMW since they both make vehicles in the United States and export them to China.

Daimler has already lowered its outlook for profits, citing higher than expected costs from the new tariffs. BMW warned in a letter to Commerce Secretary Wilbur Ross on Friday that tariffs would make it harder for it to sell in China the vehicles it builds at its factory in Spartanburg, South Carolina, “potentially leading to a strongly reduced export volumes and negative effects on investment and employment in the United States.”

Last year, BMW exported 272,000 vehicles from the Spartanburg plant, more than half its total production. Of those, 81,000 — worth $2.37 billion — went to China. BMW says its exports reduced the U.S. trade deficit by around $1 billion.

By themselves, the tariffs that take effect Friday won’t immediately have a dramatic impact on global trade. The fear is that retaliation will spiral, hitting the total amount of global commerce.

Even if the overall effect is to harm growth, there could be benefits for some European companies and sectors. Economists Alicia Garcia Herrero and Jianwei Xu at the French bank Natixis say that European makers of cars, aircraft, chemicals, computer chips and factory machinery could in theory snare market share by substituting for Chinese or American products in the two markets. But that’s only if Europe’s own trade dispute with the U.S. does not escalate — a big if.

Europe is waiting to see whether the Trump administration will go ahead separately with tariffs on auto imports. European companies like BMW, Daimler’s Mercedes-Benz, Volkswagen’s Porsche and Audi divisions, and Fiat Chrysler send $46.6 billion worth of vehicles every year to the U.S. Some 13.3 million people, or 6.1 percent of the employed population of the EU, work in the automotive sector, according to the European Automobile Manufacturers Association.

“Europe cannot win anything” on an overall basis “for one obvious reason: we are net exporters,” said Garcia Herrero, chief economist for Asia Pacific at Natixis and a senior fellow at European research institute Bruegel. “But we should not understate the view that some sectors could get something out of a U.S.-China trade war.”

Amid the brewing conflict, China has sought to get Europe on its side, putting on a diplomatic charm offensive during visits by Merkel and French Prime Minister Edouard Philippe. The EU and China agreed last month to deepen commercial ties and support trade rules. But the EU remains a close, longtime ally of the U.S. on a range of issues, despite the current tensions with the Trump administration.

One negative outcome for Europe, Herrero said, would be if Trump can push the Chinese into a trade agreement aimed at reducing the U.S. trade deficit. The additional U.S. goods to China could come at the expense of European competitors.

“If China concedes to the U.S. proposed agreement, the whole situation faced by the EU would be much tougher,” she and Xu wrote in a research note. “For China to massively reduce its trade surplus with the U.S., it has to in some way substitute its imports away from the EU to the U.S., which would have a significant negative impact on the EU producers.”
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China is putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit

this month, but it’s facing resistance, European officials said.

In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill.

One proposal has been for China and the European Union to launch joint action against the United States at the World Trade Organization.

But the European Union, the world’s largest trading bloc, has rejected the idea of allying with Beijing against Washington, five EU officials and diplomats told Reuters, ahead of the Sino-European summit in Beijing on July 16-17.

Instead, the summit is expected to produce a modest communique that affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO, EU officials said.

Liu has said privately that China is ready to set out for the first time what sectors it can open to European investment at the annual summit, expected to be attended by President Xi Jinping, China’s Premier Li Keqiang and top EU officials.

Chinese state media have promoted the message that the EU is on China’s side, officials said, putting the bloc in a delicate position. The past two summits, in 2016 and 2017, ended without a statement because of disagreements about the South China Sea and trade.

“China wants the European Union to stand with Beijing against Washington, to take sides,” said one European diplomat. “We won’t do it and we have told them that.”

China’s Foreign Ministry did not immediately respond to a request for comment on Beijing’s summit aims.

In a commentary on Wednesday, China’s official Xinhua news agency said China and Europe “should resist trade protectionism hand in hand.”

“China and European countries are natural partners,” it said. “They firmly believe that free trade is a powerful engine for global economic growth.”

China’s moment?

Despite Trump’s tariffs on European metals exports and threats to hit the EU’s automobile industry, Brussels shares Washington’s concern about China’s closed markets and what Western governments say is Beijing’s manipulation of trade to dominate global markets.

“We agree with almost all the complaints the U.S. has against China. It’s just we don’t agree with how the United States is handling it,” another diplomat said.

Still, China’s stance is striking, given Washington’s deep economic and security ties with European nations. It shows the depth of Chinese concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars’ worth of Chinese imports on Friday.

It also underscores China’s new boldness in trying to seize leadership amid divisions between the United States and its European, Canadian and Japanese allies over issues including free trade, climate change and foreign policy.

“Trump has split the West, and China is seeking to capitalize on that. It was never comfortable with the West being one bloc,” said a European official involved in EU-China diplomacy.

“China now feels it can try to split off the European Union in so many areas — on trade, on human rights,” the official said.

Another official described the dispute between Trump and Western allies at the Group of Seven summit last month as a gift to Beijing because it showed European leaders losing a longtime ally, at least in trade policy.

European envoys say they already sensed a greater urgency from China in 2017 to find like-minded countries willing to stand up against Trump’s “America First” policies.

No ‘systemic change’

An April report by New York-based Rhodium Group, a research consultancy, showed that Chinese restrictions on foreign investment were higher in every single sector save real estate, compared with the European Union, while many of the big Chinese takeovers in the bloc would not have been possible for EU companies in China.

China has promised to open up. But EU officials expect any moves to be more symbolic than substantive.

They say China’s decision in May to lower tariffs on imported cars will make little difference because imports make up such a small part of the market.

China’s plans to move rapidly to electric vehicles mean that any new benefits it offers traditional European carmakers will be fleeting.

“Whenever the train has left the station, we are allowed to enter the platform,” a Beijing-based European executive said.

However, China’s offer at the upcoming summit to open up reflects Beijing’s concern that it is set to face tighter EU controls, and regulators are also blocking Chinese takeover attempts in the United States.

The European Union is seeking to pass legislation to allow greater scrutiny of foreign investments.

“We don’t know if this offer to open up is genuine yet,” a third EU diplomat said. “It’s unlikely to mark a systemic change.”
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President Donald Trump continues to turn up the heat on trade, a tactic that he insists will result in better deals for the American people. But the president’s rhetoric has economists concerned about a trade war. White House Correspondent Patsy Widakuswara has more.
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In the busy summer travel period in Cuba, a long line of people wait for hours in the sweltering heat outside the Havana office of state-owned airline Cubana, many of them eager to visit families in the provinces.

But they are not waiting to book flights. Instead, they hope to get their money back on plane tickets or exchange them for bus tickets across the island.

Cubana, which has a virtual monopoly on domestic flights, has suspended nearly all of them due to a lack of working aircraft, plunging travel on the Caribbean’s largest island into chaos and highlighting problems at what was once a vanguard of Latin American aviation.

The flight suspensions were made a month after a Cubana flight crashed after takeoff from Havana airport in May, killing 112 people. They come at a time when Communist-run Cuba is trying to stimulate tourism, one of the few bright spots in its economy, by promoting beach resorts and colonial towns hundreds of kilometers (miles) from the capital.

“Now I will have to take a 16-hour bus ride to Guantanamo, but what other options do I have?” said kindergarten teacher Marlene Mendoza, who was bathed in sweat and got a bus ticket to eastern Cuba after queuing for more than seven hours.

Analysts say Cubana’s troubles stem largely from dual ills that afflict the whole state-run economy: the U.S. trade embargo and a problematic business model.

Cubana did not reply to requests for comment for this story.

Founded in 1929 as one of Latin America’s first airlines, Cubana was nationalized after Fidel Castro’s leftist 1959 revolution. In its heyday, it flew Cuban troops to Africa and passengers to allied socialist countries around the globe.

For decades it got around U.S. sanctions that restricted it from buying planes with a certain share of U.S. components — including European Airbus and Brazilian Embraers — by acquiring first Soviet and then Russian aircraft.

The carrier maintained a decent safety record, but its reputation for mediocre service and delays prompted many foreign tourists to use mostly land transport.

Then, over the past year, it started canceling more flights than usual, often putting passengers up in hotels for days, without commenting publicly on the disarray.

After the Boeing 737 crashed on May 18, Cubana said it had leased the plane from Mexican company Damojh due to a lack of its own aircraft. A second Damojh plane has been grounded pending a safety audit of its fleet by Mexican authorities, data from Flightradar24 shows, aggravating the shortage.

Cuban, Mexican and U.S. authorities are still investigating the crash and have not commented on possible causes. Damojh has said in a press release that is fully cooperating with those investigations into the “lamentable accident.”

Just four of Cubana’s own 16 planes are flying, according to a Reuters examination of data on Flightradar24 and Planespotters.net.

Not flying high

Over the past month, the airline announced it was axing several routes mainly used by Cubans and reducing the frequency of flights to Santiago, Holguin and Baracoa, all popular tourist destinations. In a statement, it said it was working to resolve the situation and apologized for the disruption.

Cubana also suspended all international routes except to Buenos Aires and Madrid, several staff told Reuters. The company did not comment publicly, leaving would-be travelers sharing their confusion on online forums.

“It has lost a lot of prestige. It’s already not the famous Cubana that used to fly to all parts of the world,” said one former employee, who asked to remain anonymous, who retired 6-1/2 years ago after working for Cubana for 40 years. “Anywhere else in the world, a company like Cubana would have folded.”

Cubana said in mid-June it did not have enough aircraft largely because of maintenance issues and lack of parts, which aviation experts say can cost millions of dollars.

The airline sells tickets to Cuban citizens at heavily subsidized prices. Its budget is also stretched by ferrying official delegations around sometimes at a financial loss, a former Cuban diplomat familiar with Cubana operations said.

Cash-strapped Cuba points the finger at the 56-year-old U.S. trade embargo, saying it has cost its flagship carrier millions of dollars.

The coup de grace was possibly the purchase of six AN-158 regional jets from Ukrainian manufacturer Antonov since 2013.

Cubana has said those planes have had technical problems and getting parts for the joint Russian-Ukrainian project has proven difficult since Russia’s annexation of Crimea in 2014.

An Antonov representative told Reuters that Cubana had not been paying for the necessary work, but it had signed a deal in April with the airline to cooperate “to resume the use of AN-158 planes before the end of the current year.”

Typically, airlines lease planes when theirs are undergoing maintenance or there is a spike in demand, but the U.S. embargo and financial constraints likely complicate this for Cuba, said Richard Aboulafia, vice president of U.S. aviation consulting company the Teal Group.

In May, Lithuanian lessor Avion Express and Italian lessor Blue Panorama both ended their contracts with Cubana, the companies told Reuters, without explaining why. Data from Flightradar24 shows they withdrew respectively four Airbus A320s and one Boeing 737.

That is around the time when Cubana turned to the little-known Damojh, leasing the 39-year-old Boeing 737.

Damojh has faced safety concerns in other countries in the region. Guyana’s aviation authority told Reuters it had revoked Damojh’s permit to fly there last year due to issues such as overloading planes. The airline declined to comment on the matter.

The crash in May has undermined trust in Cubana.

“I like to travel by plane. It’s faster and more comfortable,” said Maylin Lopez, 48, waiting at Havana’s bus station for her 15-hour ride to eastern Cuba. “But I can’t even imagine doing that now.”
…

Major U.S. trading partners including the European Union, China and Japan voiced deep concern at the World Trade Organization (WTO) on Tuesday about possible U.S. measures imposing additional duties on imported autos and parts.

Japan, which along with Russia had initiated the discussion at the WTO Council on Trade in Goods, warned that such measures could trigger a spiral of countermeasures and result in the collapse of the rules-based multilateral trading system, an official who attended the meeting said.

More than 40 WTO members — including the 28 countries of the European Union — warned that the U.S. action could seriously disrupt the world market and threaten the WTO system, given the importance of cars to world trade.

The United States has imposed tariffs on European steel and aluminum imports and is conducting another national security study that could lead to tariffs on imports of cars and car parts. Both sets of tariffs would be based on concerns about U.S. national security.

U.S. President Donald Trump said on June 29 that the probe would be completed in 3 to 4 weeks.

But the European Union has warned the United States that imposing import tariffs on cars and car parts would harm its own automotive industry and likely lead to countermeasures by its trading partners on $294 billion of U.S. exports.

A Russian official told the WTO meeting that the issue of U.S. investigations had been raised over the past year in different WTO meetings, only to see things change for the worse.

The United States was losing its reputation as a trusted trade partner, the Russian delegate told the meeting, adding that the United States could soon start an investigation into the case for import tariffs on uranium products.

China, Canada, Switzerland, Norway, Turkey, Costa Rica, Hong Kong, Venezuela, Singapore, Brazil, South Korea, Mexico, Qatar, Thailand and India all echoed the same concerns and said they doubted the U.S. tariffs were in line with WTO rules.

The U.S. diplomat at the meeting said the matter was already the subject of formal disputes at the WTO, so it should not be on the committee’s agenda, the official who attended the meeting said.
…

Worried that Walmart’s $16 billion deal to takeover India’s biggest e-commerce company will force millions of mom and pop stores out of business, hundreds of shop owners in several cities have led protests against the U.S. retail giant.

India’s fast-growing retail trade is dominated by millions of small traders that have long opposed efforts by Walmart to establish its stores in the country. Now they are concerned its entry in the online market will drive down prices, making them uncompetitive, and are demanding the government block the deal.

WATCH: Anjana Pasricha’s video report

Raising slogans such as “Walmart Go Back” at a sit-in protest Monday in New Delhi, Praveen Khandelwal, the secretary general of the Confederation of All India Traders expressed fears that “Walmart will dump globally sourced material in India and ultimately the level playing field will be vitiated.” He says they fear practices like “deep discounting and predatory pricing” by large chains with deep pockets will “kill the competition.”

Although Walmart has eyed India’s retail market for more than a decade, its efforts to make inroads have been hampered by tough regulations for overseas retailers in opening brick and mortar stores. The regulations are meant to protect the livelihood of 15 million small store owners.

Flipkart Deal

But Walmart’s deal with Indian e-commerce retailer Flipkart, which sells goods ranging from soaps to appliances, clothes and accessories, will allow it to access Indian consumers through the online route and establish a foothold in a fast growing market. In the past five years, millions in India have begun logging onto websites to shop and the e-commerce market is expected to grow exponentially during the next decade. Flipkart has approximately 100 million users.

In a statement, Walmart said it has been supporting local manufacturing in India by sourcing from small and medium suppliers, farmers and businesses run by women. “Our partnership with Flipkart will provide thousands of local suppliers and manufacturers access to consumers through the marketplace model,” Rajneesh Kumar, senior vice president, Walmart India, stated.

But that has failed to reassure Indian shopkeepers and traders. Ajay Bajaj, of Bajaj Vacco in New Delhi, has been selling household appliances for more than five decades and sells his goods through online companies like Flipkart. He is not opposed to e-commerce, but he says he worries Walmart will make his business unviable as it procures cheaper goods from countries like China.

“Our apprehension is only that instead of me or my colleagues who are producing in India, if foreigners were to come here and make produce [goods] elsewhere and then sell here, first of all we will be out, because it will certainly be survival of the fittest and also the money game,” says Bajaj.

$700 billion market

But retail analysts dismiss worries that cheaper goods sourced from outside India would be a threat to small shop owners.

Ankur Bisen of retail consultancy, Technopak, points out that such products already flood the Indian market and are sold in thousands small stores across the country. “You are getting containers of Diwali lighting, containers of idols, of cheap stationery in India, why are you not stopping that?” he questions. “Same mom and pop stores are selling Chinese goods, they are selling imported goods.”

The protests against Walmart this week were however much smaller than those witnessed about a decade ago when traders feared the U.S. retailer would be allowed to open stores.

India’s retail market is worth about $700 billion. “It’s a growing space, it’s a profitable space,” says Bisen pointing out there is ample space for big and small retailers.

But traders continue to be suspicious, pointing out that Walmart has traditionally been a brick and mortar retailer. “Walmart is an off-liner, why Walmart is coming through e-commerce? Naturally there is a hidden agenda to control the vibrant retail trade of the country,” says Khandelwal.
…

Zimbabwe’s government is denying a report from Human Rights Watch that documented extensive child labor on the country’s tobacco farms. Some of the children are as young as 10 years old, and the report says many have experienced acute nicotine poisoning from handling tobacco plants.

The 105-page report, titled “A Bitter Harvest,” documents how children working on tobacco farms in Zimbabwe are denied time in school and have to perform tasks that threaten their health and safety.

According to Human Rights Watch, one of the most serious risks is “Green Tobacco Sickness,” which is caused by absorbing nicotine through the skin from tobacco plants.

The rights group said the 14 child workers it interviewed, and most of the adults, said they had experienced at least one symptom consistent with acute nicotine poisoning, such as nausea, vomiting, headaches, or dizziness.

In an interview with VOA, the secretary for the Ministry of Labor and Social Welfare, Ngoni Masoka, said the Human Rights Watch report is “not factual” and has not been independently confirmed.

But he acknowledged that the youngsters face hazards working on Zimbabwean farms.

“What we need to do, we need to do a survey to determine the nature and extent of the child labor problems in our farms; that’s what we want to do,” said Masoka.

Masoka noted the problem is not limited to Zimbabwe. Millions of children around the world perform work on farms for little or no pay. Some are helping their families; others are working for low wages. In Zimbabwe, kids on tobacco farms earn less than $10 per day.

Ida Tsitsi Chimedza is programs coordinator of the International Labor Organization in Zimbabwe. She said the issue of child labor persists because of chronic poverty, which she called “the key driver of child labor,” and the HIV/AIDS pandemic, which forces children to support themselves when a parent dies.

Zimbabwe’s government has ratified the ILO convention that calls for the elimination of the worst forms of child labor, she notes. She says employers now have to get the message.

“We also talk of sensitization because it’s important that the people who employ should be aware that it is not right to employ children who are underage.”

Labor Secretary Masoka said the government has a commitment toward eliminating child labor in all forms.
…

Tesla Inc nearly produced 5,000 Model 3 electric sedans in the last week of its second quarter, with the final car rolling off the assembly line on Sunday morning, several hours after the midnight goal set by Chief Executive Elon Musk, two workers at the factory told Reuters.

The 5,000th car finished final quality checks at the Fremont, California, factory around 5 a.m. PDT (1200 GMT), one person said. It was not clear if Tesla could maintain that level of production for a longer period.

Musk said the company hit its target of 5,000 Model 3s in a week, according to an email sent to employees on Sunday afternoon and seen by Reuters. Tesla also expects to produce 6,000 Model 3 sedans a week “next month.”

“I think we just became a real car company,” Musk wrote. The company hit the Model 3 mark while also achieving its production goal of 7,000 Model S and Model X vehicles in a week, Musk said in the email.

Tesla confirmed the contents of the email.

After repeatedly pushing back internal targets, Tesla vowed in January to build 5,000 Model 3s per week before the close of the second quarter on Saturday to demonstrate it could mass produce the battery-powered sedan.

Money-losing Tesla has been burning through cash to produce the Model 3, and delays have also potentially compromised Tesla’s first-to-market position for a mid-priced, long-range battery electric car as a host of competitors prepare to launch rival vehicles.

Production of the Model 3, which began last July, has been plagued by a number of issues, including problems from an over-reliance on automation on its assembly lines, battery issues and other bottlenecks.

As the end of the quarter neared, Musk spurred on workers, built a new assembly line in a huge tent outside the main factory, and fanned expectations that Tesla could hit its target, including tweeting pictures of rows of auto parts and robots over the final days of the quarter.

“It was pretty hectic,” said one worker who described the atmosphere as “all hands on deck.”

Another worker speaking after the 5,000th car was made described the factory as a “mass celebration.”

Tesla is likely to announce production and delivery numbers for the quarter later this week, and investors will watch to see whether the company can keep up its end-of-quarter production speed and increase efficiency to produce the cars at a profit.

Repeatable?

Tesla will have to prove to investors that it can sustain and increase its production pace, and some skeptics have bet against the company.

Short sellers lost over $2 billion in June due to Tesla’s rising share price and this latest achievement could buoy the company’s shares at market open on Monday.

Shares of Tesla, which closed on Friday at $342.95, are up 40 percent since a year low in April.

In recent months, the company has engaged in so-called “burst builds,” temporary periods of fast-as-possible production, which it uses to estimate how many cars it is capable of building over longer periods of time.

Analyst Brian Johnson of Barclays warned investors in March to be wary of brief “burst rates” of Model 3 production that were not sustainable.

One worker told Reuters that, to meet the goal, employees from other departments were dispatched to parts of the Model 3 assembly line to keep it running constantly, and breaks were staggered “so the line didn’t stop moving.”

The worker also said some areas within the factory were shut down to divert their workers to help out on the Model 3, such as the Model S line.

That suggests that Tesla was able to generally meet its production target through manual labor, rather than the automation Musk originally promised would make Tesla a competitive force in manufacturing. Earlier this year, Musk – who has described his vision for the Fremont factory as an “alien dreadnought” – acknowledged error in adding too much automation, too fast, to the Model 3 assembly line.

In May, Tesla sent a new battery assembly line via cargo planes to its Gigafactory battery plant outside Reno, Nevada, in order to speed production, as first reported by Reuters.

When first unveiled in March 2016, the Model 3 generated thousands of reservations from consumers in an unprecedented show of support for the new vehicle. Most recently in May, Tesla said that despite the delivery delays, its net Model 3 reservations – accounting for new orders and cancellations – exceeded 450,000 at the end of the first quarter.

Despite touting the Model 3 as a $35,000 vehicle, Tesla has yet to begin building that basic version and instead is currently building a higher-priced version. It is not clear how many of the orders are for the more premium version.

Steady progress has enthused others, however, and Tesla’s market value is close to that of General Motors Co.

The company has said it will not need to raise cash this year.

 
…

Canada’s retaliatory tariffs on U.S. goods take effect Sunday following the Trump administration’s new tariffs on Canadian steel and aluminum.

Canadian Prime Minister Justin Trudeau’s office said in a statement that the prime minister “had no choice but to announce reciprocal countermeasures to the steel and aluminum tariffs that the United States imposed on June 1, 2018.”

Trudeau and U.S. President Donald Trump spoke late Friday to discuss trade and other economic issues, the White House said Saturday.

“The two leaders agreed to stay in close touch on a way forward,” according to the prime minister’s office.

The telephone conversation between the two leaders was their first encounter since the G-7 summit in Quebec in June. After that meeting, Trump tweeted that Trudeau was “weak” and “dishonest.”

Trudeau also spoke Friday with Mexican President Enrique Pena Nieto to keep him up-to-date on Canada’s response to the U.S. tariffs.

The American goods that Canada has placed tariffs on include ketchup, lawn mowers and motorboats.

Canadian Foreign Minister Chrystia Freeland said the tariffs are regrettable. She said, however, Canada “will not escalate and we will not back down.”

Some of Canadian tariffs on U.S. items are politically targeted.

For example, Canada imports $3 million in yogurt, most of it coming from a plant in Wisconsin, the home state of House Speaker Paul Ryan. U.S. yogurt will now be hit with a 10 percent duty.

Whiskey is also on Canada’s list of tariffs for the U.S. Whiskey comes largely from Tennessee and Kentucky.

Kentucky is the home state of Republican Senate leader Mitch McConnell.
…

Iran is studying ways to keep exporting oil and other measures to counter U.S. economic sanctions, state news agency IRNA reported Saturday.

Since last month, when U.S. President Donald Trump pulled out of the nuclear deal that lifted most sanctions in 2015, the rial currency has dropped up to 40 percent in value, prompting protests by bazaar traders usually loyal to the Islamist rulers.

Speaking after three days of those protests, supreme leader Ayatollah Ali Khamenei said the U.S. sanctions were aimed at turning Iranians against their government.

Other protesters clashed with police late Saturday during a demonstration against shortages of drinking water.

“They bring to bear economic pressure to separate the nation from the system … but six U.S. presidents before him [Trump] tried this and had to give up,” Khamenei said on his website Khamenei.ir.

With the return of U.S. sanctions likely to make it increasingly difficult to access the global financial system, President Hassan Rouhani has met with the head of parliament and the judiciary to discuss countermeasures.

“Various scenarios of threats to the Iranian economy by the U.S. government were examined and appropriate measures were taken to prepare for any probable U.S. sanctions, and to prevent their negative impact,” IRNA said.

One such measure was seeking self-sufficiency in gasoline production, the report added.

Looking for buyers

The government and parliament have also set up a committee to study potential buyers of oil and ways of repatriating the income after U.S. sanctions take effect, Fereydoun Hassanvand, head of the parliament’s energy committee, was quoted as saying by IRNA.

“Due to the possibility of U.S. sanctions against Iran, the committee will study the competence of buyers and how to obtain proceeds from the sale of oil, safe sale alternatives which are consistent with international law and do not lead to corruption and profiteering,” Hassanvand said.

The United States has told allies to cut all imports of Iranian oil by November, a senior State Department official said Tuesday.

In the separate unrest, demonstrators protesting against shortages of drinking water in oil-rich southwestern Iran clashed with police late Saturday after officers ordered about 500 protesters to disperse, IRNA reported.

Shots could be heard on videos circulated on social media from protests in Khorramshahr, which has been the scene of demonstrations for the past three days, along with the nearby city of Abadan. The videos could not be authenticated by Reuters.

A number of protests have broken out in Iran since the beginning of the year over water, a growing political concern because of a drought that residents of parched areas and analysts say has been exacerbated by mismanagement.

Speaking before the IRNA report on the clash, Khamenei said the United States was acting with Sunni Muslim Gulf Arab states, which regard Shiite Muslim Iran as their main regional foe, to try to destabilize the government in Tehran.

“If America was able to act against Iran, it would not need to form coalitions with notorious and reactionary states in the region and ask their help in fomenting unrest and instability,” Khamenei told graduating Revolutionary Guards officers, in remarks carried by state TV.
…

President Donald Trump said Saturday that he had received assurances from King Salman of Saudi Arabia that the kingdom will increase oil production, “maybe up to 2,000,000 barrels” in response to turmoil in Iran and Venezuela. Saudi Arabia acknowledged the call took place, but mentioned no production targets.

Trump wrote on Twitter that he had asked the king in a phone call to boost oil production “to make up the difference…Prices to (sic) high! He has agreed!”

A little over an hour later, the state-run Saudi Press Agency reported on the call, but offered few details.

“During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy,” the statement said.

It added that there also was an understanding that oil-producing countries would need “to compensate for any potential shortage of supplies.” It did not elaborate.

Oil prices have edged higher as the Trump administration has pushed allies to end all purchases of oil from Iran following the U.S. pulling out of the nuclear deal between Tehran and world powers. Prices also have risen with ongoing unrest in Venezuela and fighting in Libya over control of that country’s oil infrastructure.

Last week, members of the Organization of the Petroleum Exporting Countries cartel led by Saudi Arabia and non-cartel members agreed to pump 1 million barrels more crude oil per day, a move that should help contain the recent rise in global energy prices. However, summer months in the U.S. usually lead to increased demand for oil, pushing up the price of gasoline in a midterm election year. A gallon of regular gasoline sold on average in the U.S. for $2.85, up from $2.23 a gallon last year, according to AAA.

If Trump’s comments are accurate, oil analyst Phil Flynn said it could immediately knock $2 or $3 off a barrel of oil. But he said it’s unlikely that decrease could sustain itself as demand spikes, leading prices to rise by wintertime.

“We’ll need more oil down the road and there’ll be nowhere to get it,” said Flynn, of the Price Futures Group. “This leaves the world in kind of a vulnerable state.”

Trump is trying to exert maximum pressure on Iran while at the same time not upsetting potential U.S. midterm voters with higher gas prices, said Antoine Halff, a Columbia University researcher and former chief oil analyst for the International Energy Agency.

“The Trump support base is probably the part of the U.S. electorate that will be the most sensitive to an increase in U.S. gasoline prices,” Halff said.

Trump’s comments came Saturday as global financial markets were closed. Brent crude stood at $79.42 a barrel, while U.S. benchmark crude was at $74.15.

Saudi Arabia currently produces some 10 million barrels of crude oil a day. Its record is 10.72 million barrels a day. Trump’s tweet offered no timeframe for the additional 2 million barrels — whether that meant per day or per month.

However, Saudi Aramco CEO Amin Nasser told journalists in India on Monday that the state oil company has spare capacity of 2 million barrels of oil a day. That was after Saudi Energy Minister Khalid al-Falih said the kingdom would honor the OPEC decision to stick to a 1-million-barrel increase.

“Saudi Arabia obviously can deliver as much as the market would need, but we’re going to be respectful of the 1-million-barrel cap — and at the same time be respectful of allocating some of that to countries that deliver it,” al-Falih said then.

The Trump administration has been counting on Saudi Arabia and other OPEC members to supply enough oil to offset the lost Iranian exports and prevent oil prices from rising sharply. But broadcasting its requests on Twitter with a number that stretches credibility opens a new chapter in U.S.-Saudi relations, Halff said.

“Saudis are used to U.S. requests for oil,” Halff said. “They’re not used to this kind of public messaging. I think the difficulty for them is to distinguish what is a real ask from what is public posturing.”

The administration has threatened close allies such as South Korea with sanctions if they don’t cut off Iranian imports by early November. South Korea accounted for 14 percent of Iran’s oil exports last year, according to the U.S. Energy Department.

China is the largest importer of Iranian oil with 24 percent, followed by India with 18 percent. Turkey stood at 9 percent and Italy at 7 percent.

The State Department has said it expects the “vast majority” of countries will comply with the U.S. request.
…

Editor’s note: A look at the veracity of claims by political figures

President Donald Trump has elevated his tax cuts to an act of biblical proportions, misleadingly claiming at a White House speech Friday that they triggered an “economic miracle.”

Not quite.

Also Friday, the president’s top economics aide, Larry Kudlow, appeared on the Fox Business Network to address one of the major problems with the tax cuts — that they’ll heap more than $1 trillion onto the national debt. Kudlow falsely countered that the budget deficit was falling because of growth generated by the tax cuts. The deficit is actually rising.

A look at the statements and the fact:

TRUMP: “Six months ago, we unleashed an economic miracle by signing the biggest tax cuts and reforms … the biggest tax cuts in American history.”

THE FACTS: The president is exaggerating, if not being outright deceptive.

Rather than achieving a miracle, his tax cuts have helped stoke additional growth in an economic expansion that was already approaching its 10th year. The additional growth is largely fueled by government borrowing, as the federal deficit rises because of the tax cut. The pace of growth is expected to taper off after next year, according to the Congressional Budget Office, the Federal Reserve and outside analysts.

And while the $1.5 trillion worth of tax reductions over the next decade are substantial, they’re far from the largest in U.S. history as a share of the overall economy. The Trump tax cut ranks behind Ronald Reagan’s in the early 1980s, post-World War II tax cuts and at least several more, according to the Committee for a Responsible Federal Budget, which advocates for deficit reduction.

Trump proudly went through a list of economic achievements that build on the progress begun under former President Barack Obama. The 3.8 percent unemployment rate and the historically low level of requests for jobless aid are both the result of a steady and gradual recovery from the worst economic meltdown since 1929.

Several hundred companies responded to the tax cuts by paying workers bonuses or hiking hourly wages, but any significant income growth has yet to surface in the overall economy.

The tax cuts have added on average $17 a month to people’s incomes, according to an analysis by Ernie Tedeschi, head of fiscal policy analysis at the investment firm Evercore ISI and a former Treasury Department economist. The analysis is based off consumer spending, income and inflation data released Friday.

That $17 monthly gain is helpful, but it’s far from miraculous.

​KUDLOW: “As the economy gears up, more people working, better jobs and careers, those revenues come rolling in, and the deficit, which is one of the other criticisms, is coming down, and it’s coming down rapidly.”

THE FACTS: Nope.

Since the fiscal year started in October, Treasury Department reports show the federal government has recorded a $385.4 billion deficit, a 12 percent jump from the same period in the previous year.

The Congressional Budget Office was even more blunt in a long-term assessment released Tuesday.

It estimates that the national debt — the sum of yearly deficits — will be $2.2 trillion higher in 2027 than it had previously forecast, largely a consequence of Trump’s 10 year, $1.5 trillion tax cut. The size of the debt could be even higher if provisions of the tax cut that are set to expire are, instead, renewed.
…

General Motors Co warned on Friday that higher tariffs on imported vehicles under consideration by the Trump administration could cost jobs and lead to a “a smaller GM” while isolating U.S. businesses from the global market.

The administration in May launched an investigation into whether imported vehicles pose a national security threat, and U.S. President Donald Trump has repeatedly threatened to impose a 20 percent vehicle import tariff.

The largest U.S. automaker said in comments filed with the U.S. Commerce Department that overly broad tariffs could “lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs.”

Higher tariffs could also hike vehicle prices and reduce sales, GM said.

​Less investment, fewer workers

Its comments echoed those from two major U.S. auto trade groups Wednesday, when they warned that tariffs of up to 25 percent on imported vehicles would cost hundreds of thousands of auto jobs, dramatically raise prices on vehicles and threaten industry spending on self-driving cars.

Even if automakers opted not to pass on higher costs “this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies,” GM said.

GM operates 47 U.S. manufacturing facilities and employs about 110,000 people in the United States. It buys tens of billions of dollars worth of parts from U.S. suppliers every year, and has invested more than $22 billion in U.S. manufacturing operations since 2009.

Still, 30 percent of the vehicles GM sold on the U.S. market in 2017 were manufactured abroad, according to the Michigan-based Center for Automotive Research. Eighty-six percent of those vehicles came from Canada and Mexico, while others came from Europe and China.

Detroit automakers Ford Motor Co and Fiat-Chrysler Automobiles NV also import many of the vehicles they sell in the United States.

“The overbroad and steep application of import tariffs on our trading partners risks isolating U.S. businesses like GM from the global market that helps to preserve and grow our strength here at home,” GM said.

GM shares closed down about 2.8 percent on Friday at $39.40. 

National security probe

Some aides have said that Trump is pursuing the national security probe to put pressure on Canada and Mexico to agree to concessions in talks to renegotiate the North American Free Trade Agreement.

Toyota Motor Corp filed separate comments opposing the tariffs on Friday saying they would “threaten U.S. manufacturing, jobs, exports, and economic prosperity.”

The company noted that Trump has repeatedly praised the Japanese automaker for investing in the United States, including a new $1.3 billion joint venture assembly plant in Alabama with Mazda.

“These investments reflect our confidence in the U.S. economy and in the power of the administration’s tax cuts,” Toyota said.

Toyota noted that international automakers assembling vehicles in the United States are based in countries including Japan, German and South Korea “that are America’s closest allies.”

The Commerce Department plans two days of public hearings next month, and Commerce Secretary Wilbur Ross said last week he aimed to wrap up the probe into whether imported vehicles represent a national security threat by late July or August.

“We have received approximately 2,500 comments already,” Ross said in a statement Friday, adding that he expected more before a midnight deadline.

“The purpose of the comment period and of the public hearing scheduled for July 19th and 20th is to make sure that all stakeholders’ views are heard, both pro and con. That will enable us to make our best informed recommendation to the president,” the statement said.
…

Minnesota regulators on Thursday approved Enbridge Energy’s proposal to replace its aging Line 3 oil pipeline across the northern part of the state.

All five members of the Public Utilities Commission backed the project, though some cited heavy trepidation, and a narrow majority later approved the company’s preferred route despite opposition from American Indian tribes and climate change activists.

In discussion before the vote, several commissioners cited the deteriorating condition of the existing line , which was built in the 1960s, as a major factor in their decision.

“It’s irrefutable that that pipeline is an accident waiting to happen,” Commissioner Dan Lipschultz said ahead of the vote. “It feels like a gun to our head … All I can say is the gun is real and it’s loaded.”

Some pipeline opponents reacted angrily when it became clear commissioners would approve the project. Tania Aubid, a member of the Mille Lacs Band of Ojibwe, stood and shouted, “You have just declared war on the Ojibwe!” Brent Murcia, of the group Youth Climate Intervenors, added: “We will not let this stand.”

Opponents argue that the pipeline risks spills in pristine areas in northern Minnesota, including where American Indians harvest wild rice. Ojibwe Indians, or Anishinaabe, consider wild rice sacred and central to their culture.

Winona LaDuke, founder of Honor the Earth, said opponents would use every regulatory means possible to stop the project — and threatened mass protests if necessary.

“They have gotten their Standing Rock,” she said, referring to protests that drew thousands of people to neighboring North Dakota to rally against the Dakota Access pipeline. 

Others welcomed Thursday’s vote, including Bob Schoneberger, founder of Minnesotans for Line 3. He said Minnesota needs the line now “and will need it even more into the future.”

After commissioners agreed the pipeline upgrade was needed, the commission voted 3-2 in favor of Enbridge’s preferred route, which departs from the existing pipeline to largely avoid two American Indian reservations currently crossed.

The approved route does clip a portion of the Fond du Lac Band of Chippewa’s land, and commissioners said they would adjust the route if the Fond du Lac don’t agree. Tribal leaders had reluctantly backed a route that went much farther south as the least objectionable option.

After the commission’s work is formalized in the next few weeks, opponents may file motions asking it to reconsider. After that, they can appeal the decision to the state Court of Appeals. 

Several commissioners said the overall issue posed a difficult decision. Chairwoman Nancy Lange choked up and took off her glasses to wipe her eyes as she described her reasoning for approving the project. Another commissioner, Katie Sieben, said it was “so tough because there is no good outcome.”

The pipeline currently runs from Alberta, Canada, across North Dakota and Minnesota to Enbridge’s terminal in Superior, Wisconsin. Enbridge has said it needs to replace the pipeline because it’s increasingly subject to corrosion and cracking, and that it would continue to run Line 3 if regulators rejected its proposal.

Much of the debate has focused on whether Minnesota and Midwest refineries need the extra oil. Enbridge currently runs Line 3 at about half its original capacity of 760,000 barrels per day for safety reasons, and currently uses it only to carry light crude. 

The project’s opponents, including the Minnesota Department of Commerce, have argued that the refineries don’t need it because demand for oil and petroleum products will fall in the coming years as people switch to electric cars and renewable energy sources. Opposition groups also argue that much of the additional oil would eventually flow to overseas buyers.

Enbridge and its customers strongly dispute the lack of need in the region. They said Line 3’s reduced capacity is already forcing the company to severely ration space on its pipeline network, and that failure to restore its capacity would force oil shippers to rely more on trains and trucks, which are more expensive and less safe. Business and labor groups support the proposal for the jobs and economic stimulus. 

The Public Utilities Commission’s decision likely won’t be the final word in a long, contentious process that has included numerous public hearings and the filings of thousands of pages of documents since 2015. Lange said earlier this year that the dispute was likely to end up in court, regardless of what the commission decides.

Opponents have threatened a repeat of the protests on the Standing Rock Reservation against the Dakota Access pipeline, in which Enbridge owns a stake. Those protests in 2016 and 2017 resulted in sometimes violent skirmishes with law enforcement and more than 700 arrests. 

Similar concerns over the role of tar sands oil in climate change, indigenous rights and the risk of spills has fueled opposition to other pipelines out of Alberta’s oil sands region. Opponents of TransCanada’s Keystone XL pipeline to Nebraska are still fighting that project in court. The Canadian government agreed last month to buy Kinder Morgan’s Trans Mountain pipeline across Canadian soil to the Pacific Coast for $4.5 billion Canadian (US$3.4 billion) to ensure completion of the company’s plan to triple the line’s capacity. 

Enbridge has already replaced the short segment of Line 3 in Wisconsin and put it into service. Construction is underway on the short segment that crosses northeastern North Dakota and on the longer section from Alberta to the U.S. border, and Enbridge plans to continue that work. Enbridge has estimated the overall cost of the project at $7.5 billion, including $2.6 billion for the U.S. segment.

 
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