Politics ‘No credit!’: Trump compares himself and his ‘record-setting economy’ to President Obama
President Donald Trump may have decided to suspend imposing new tariffs on Mexico Friday night, but experts say that his willingness to threaten to use tariffs — and his administration’s ongoing tariffs on certain goods — is still enough to harm many Americans.
Experts say existing U.S. tariffs with China are already starting to hurt consumers, and that continued threats to impose new tariffs are creating an uncertain environment for companies to do business. Experts also maintain that it is the American consumer who pays not only for the current tariffs in place, but for the wavering business environment created by President Trump’s threats.
Here’s what you need to know about tariffs, and how the President’s actions might effect the economy.
What is a tariff?
Tariffs are taxes a country imposes on goods or services from other countries. Tariffs may be imposed as a fixed fee for a type of good, or as a percentage of the item’s total value.
Tariffs are typically used as “tools” for a number of economic reasons, including safeguarding a country’s domestic industry or counteracting unfair practices in another country, Mary Lovely, a Syracuse University economics professor who specializes in international trade and investment, told TIME.
While economists disagree about the extent that tariffs should be used, they agree that tariffs create winners and losers within the countries that impose them. For instance, the trouble with steel and aluminum tariffs on China is the demand in the U.S. for steel and aluminum is higher than the amount of workers domestically producing the metals. Therefore tariffs against China would penalize those U.S. companies who need steel and aluminum to make products.
“There’s this fallacy that [tariffs] protects jobs. It doesn’t,” said Lovely.
Who pays for tariffs?
The two biggest factors that are likely to affect most Americans will be higher prices for consumer goods and slowing job growth, including for manufacturing jobs, Lovely says. The price of washing machines, for instance, went up by about 12% as a result of the 2018 tariffs on China.
Lovely says that consumers shouldn’t be fooled by Trump’s claims that other countries are paying for tariffs. Companies typically just pass the cost of the tariffs on to customers, and the government who imposes the tariffs pockets the profits.
“It is a huge tax on Americans, and it’s a very aggressive tax,” Lovely says. “If the question is who pays the tariffs, the answer is we do.”
How do the President’s threats to impose tariffs affect the U.S. economy?
Kyle Handley, an associate professor of business economics and public policy at University of Michigan Ross, said that one of the biggest problems with threatening to create tariffs is that it creates uncertainty for both U.S. and international businesses. Companies faced with uncertainty often have a harder time planning ahead, and may be less inclined to make certain risks — such as hiring new workers, investing in new equipment, or moving into new export markets.
In fact, the federal reserve has already said that business spending has slowed down this year.
“I think that the repeatedly threatening trade partners with tariffs and then pulling back on the threat, or sometimes actually implementing the tariffs, it just creates a business environment where firms aren’t sure what to do,” Handley said. “These repeated threats – taking us to the brink and then pulling back— they don’t correspond to the planning cycles that firms are using to decide, where we’re going to invest and what countries should we operate in.”
Over time, Handley says, Trump’s willingness to use tariffs as a threat may make the United States seem less trustworthy and less fair to other countries that are considering doing business with the country, which could hurt American trade deals such as the as-of-yet unratified USMCA.
“The commitments that President Trump is making – they’re not really commitments. They’re not credible,” Handley says. “And so as soon as those commitments become less credible, or any trade policy becomes more temporary, then the value of these agreements and these trade relationships just goes down.”
Lovely also warned that uncertainty might be the “biggest threat” to the U.S. expansion in the aftermath of the recession.
“The sad part is we’ve had this incredible expansion,” Lovely said. “We had the chance to bring some people back into the workforce who had really been hurt under the recession. And I’m worried that’s going to be jeopardized before those people have a chance to get a full-time job.”
Protesters flooded the streets of Hong Kong Sunday to oppose a bill that would allow China to extradite fugitives from the semiautonomous region, bringing the busiest parts of the city to a standstill and drawing the largest crowds seen here since pro-democracy demonstrations paralyzed its center for months in 2014.
Critics fear the extradition bill would allow Beijing to round up opponents that live in or transit through Hong Kong, threatening the city’s judicial independence and further eroding its democratic freedoms. The former British colony was returned to China in 1997 under an agreement called “one country, two systems,” which granted it a high degree autonomy for 50 years, but an increasingly assertive Beijing has called the deal’s integrity into question.
The Hong Kong government says the extradition bill is meant to plug “loopholes” in the current legal system, and it could be up for a vote before the end of June. If passed, Hong Kong could decide on a case-by-case basis whether to send fugitives to places including China, Macau and Taiwan, with which it has no formal extradition agreements. Taiwan has already said it won’t seek extradition if the bill is passed.
“This bill amounts to the biggest political sellout of Hong Kong,” lawmaker Claudia Mo, a member of the Civic Party, told TIME. She was among the massive crowds that withstood sweltering heat and evening rains to protest. “It would completely destroy the ‘one country, two systems’ promise and put Hong Kong effectively under Chinese law.”
Extradition is just the latest flashpoint in the city as Beijing has sought greater influence in recent years, attempting with varying degrees of success to exert control over Hong Kong’s national security, education and electoral framework. Opponents of the extradition bill say they distrust China’s opaque legal system, whereby forced confessions, torture and closed criminal trials are commonplace, according to rights groups.
Shortly before the demonstration, the Hong Kong government said in a statement that the measure would not “in any way impact on, interfere with, or have a chilling effect on the freedom of assembly, of the press, of speech, of academic freedom or publication; or relate to offenses of a political nature.”
But the proposal has gridlocked the city’s Legislative Council, which is roughly divided between pro-democratic and pro-Beijing camps. The city’s business and diplomatic communities have expressed concern that the bill could undermine the rule of law, while Sunday’s march displayed widespread public opposition from a diverse cross-section of society, from pro-democratic political parties, to small business owners, to a network of housewives mobilized online.
“Today we’re using the sheer volume of people in attendance to make our message clear,” said a spokesperson for the Civil Human Rights Front, a coalition of pro-democracy groups that organized Sunday’s march. Organizers estimated over a million people attended the march, while police estimated more than 150,000 were at the starting point of Hong Kong’s Victoria Park. Solidarity protests were also held in dozens of other major cities including Sydney, Toronto and Vancouver, organizers said.
Aerial images showed massive turnout, clogging up roads and overpasses for more than a mile in the densest parts of the city. Many protesters wore white T-shirts and waved red signs calling for the city’s Beijing-backed Chief Executive, Carrie Lam, to step down. Chants of “Hong Kong people, fight on!” rang through streets lined with skyscrapers.
In the packed streets of Hong Kong, some demonstrators held up bright yellow umbrellas, the emblem of the Umbrella Revolution in 2014, when tens of thousands of people occupied the financial district to demand free elections, ultimately without success. Large-scale protests in 2012 and 2014 were largely spearheaded by students, but the extradition bill has also grabbed the attention of Hong Kong’s business community, which fears it would weaken the rule of law essential to the success of the international finance center.
A U.S. congressional committee warned the bill would pose risks to U.S. security and economic interests, and the American Chamber of Commerce (AmCham), a non-partisan business chamber that counts at least 600 companies as members, has spoken out against the proposal. “AmCham has serious reservations about the Hong Kong extradition bill,” Tara Joseph, the president of AmCham in Hong Kong, told TIME. “It could have significant implications for Hong Kong’s reputation as one of the world’s most important business hubs.”
There have been other signs of Beijing’s tightening grip on the semiautonomous enclave. Press freedom rankings have dropped, a foreign journalist was expelled for hosting a talk with a politician who has advocated for Hong Kong’s independence from China, the leaders of 2014 pro-democracy protests have been jailed and a Chinese businessman was inexplicably abducted from a luxury hotel.
In 2015, five booksellers peddling salacious books about mainland politics disappeared; all of them eventually resurfaced in China. China said the men had voluntarily come to China to aid an investigation, but one bookseller, Lam Wing-kee, later spoke out after returning to Hong Kong, saying that he spent months in solitary confinement and had been forced to read a scripted confession admitting to selling banned books.
Lam has since fled to Taiwan, fearing what the law would mean for him. Speaking to TIME by phone a day before the march, Lam said the proposal would “target people like me,” adding that “if the amendments pass, I can be taken away at any time.”
“We’re not taking this lying down,” said Mo, the Civic Party lawmaker. “Even if we don’t achieve anything, we need to do this to be answerable to history; we are doing this for our children, the next generation, [so] there will be a record saying ‘they put up a heroic fight.’”
— With reporting by Kamakshi Ayyar, Laignee Barron and Aria Hangyu Chen / Hong Kong
Chisinau (AFP) – Moldova’s parliament on Saturday approved a new government that is an unprecedented alliance between pro-Russia and pro-European forces in a bid to see off a political crisis sparked by February elections.
No party won a clear majority in the chaotic polls, throwing the ex-Soviet nation into political uncertainty and raising concerns of turmoil in the tiny nation nestled between Ukraine and Romania.
After months of negotiations, a coalition was agreed between the Socialist Party of President Igor Dodon, which took 35 out of 101 parliamentary seats in February’s vote, and the pro-European ACUM alliance, which had 26 seats.
The agreement goes against the opinion of the Constitutional Court, which on Friday judged that parliament should be dissolved and new elections held.
It aims to freeze out the second biggest parliamentary force, the Democratic party, which is led by powerful oligarch Vlad Plahotniuc and took 30 seats at the elections.
Plahotniuc, whose party previously had a majority, was also the subject of strong criticism in a resolution in the parliament that compared Moldova to a state held „captive” by powerful oligarchs.
„The oligarchs have established a dictatorship driven by manipulation, terror, lies and disinformation. The country is wallowing in corruption,” said a statement read out by the new interior minister Andrei Nastase.
Both Dodon and Nastase have previously accused the Democratic Party of massive electoral fraud that involved bringing in people from Moldova’s breakaway region of Transnistria and telling them how to vote.
Dodon is a close ally of President Vladimir Putin of Russia, which also backs separatists in the breakaway region of Transnistria.
But many Moldovans hope for a future within Europe — following the lead of Romania, with which the former Soviet republic shares close cultural links.
Moldova has struggled to find its place since gaining independence with the 1991 collapse of the Soviet Union.
The economy is propped up by remittances from workers abroad, which has caused the working-age population to fall sharply.
Moldova last year ranked 117 out of 180 nations in Transparency International’s Corruption Perceptions Index.
LONDON (Reuters) – Britain’s ruling Conservative Party will decide the country’s next prime minister in late July in a contest that will bring in a new leader who could pursue a cleaner break with the European Union.
Theresa May resigned as the party’s leader on Friday, having failed to deliver Brexit on schedule or find a way to get parliament to approve her exit plan.
May’s announcement does not trigger a parliamentary election. So far, 11 candidates are running to replace her. The winner of the contest will become party leader and prime minister.
Here is how that process, which is overseen by an internal party group known as the 1922 Committee, is expected to work:
Candidates putting themselves forward for the leadership must be backed by eight other Conservative lawmakers. This is higher than in previous contests because the committee made rule changes designed to cull weaker candidates.
Nominations will be received from 0900 GMT until 1600 GMT on June 10.
BALLOT OF LAWMAKERS
Conservatives lawmakers then hold several rounds of votes from June 13 to whittle down the number of candidates. Each vote is a secret ballot and lawmakers are allowed to vote by proxy if unable to vote in person.
Voting takes place in a parliament room that will be set up with voting booths. The color of the ballot paper is chosen the day before the vote and will be different for each round. Completed papers will be placed in a metal ballot box.
The first round will take place between 0900 GMT and 1100 GMT on June 13, with the result expected around 1200 GMT. Any candidate with 16 votes or fewer is eliminated. If all candidates have more than 16 votes, the one with the fewest votes is eliminated.
The second round will be on June 18, between 1400 GMT and 1600 GMT, with the result due around 1700 GMT. Any candidate with 32 votes or fewer is eliminated. If all candidates have more than 32 votes, the one with the fewest is eliminated.
Further ballots are scheduled for between 1400 GMT and 1600 GMT on June 19 and between 0900 GMT and 1100 GMT on June 20. Voting continues until two candidates remain, so further rounds will be held if necessary.
The 1922 Committee will host two rounds of hustings in parliament for candidates. The first will be over June 11 and 12, ahead of the first vote, with the second on June 17.
The final two candidates are put to a postal ballot of the wider Conservative Party membership, with the winner named as the new leader.
The party said it wanted to complete this stage in the week commencing July 22.
The party has about 160,000 members. It said the first membership hustings would take place on June 22.
WHO IS PRIME MINISTER DURING THE CONTEST
In her resignation speech, May said she would serve as prime minister until the leadership contest was concluded. She will also remain acting Conservative Party leader during that time.
(Reporting by Kylie MacLellan and William James; Editing by Toby Chopra and David Goodman)
By Nia Williams and Devika Krishna Kumar
CALGARY, Alberta/NEW YORK (Reuters) – Upheavals in the Canadian crude market are providing unique opportunities for firms with sizeable long-term leases on Alberta storage tanks, a cluster that sources say includes Mercuria Energy Group and oil major BP Plc’s trading arm.
Canada holds the world’s third-largest crude reserves, but years of delay in building new pipelines has led to oil production outpacing takeaway capacity. A glut of crude has thus been created, increasing demand for storage tanks in the oil sands province of Alberta, which this year introduced production cuts to deal with the oversupply.
The opportunity for traders comes from monthly pipeline „apportionment”, when demand to ship crude on certain pipelines exceeds capacity, forcing pipeline operators to ration the number of barrels each shipper can move.
The practice is a long standing source of frustration for Canadian producers but offers a lucrative, though risky, play for traders able to swoop in and capitalize on post-apportionment price volatility.
Bulging storage tanks are contributing to high apportionment on Canada’s main conduit to the United States, the 2.85 million barrel-per-day (bpd) Enbridge Mainline network.
Even with the Alberta cuts, oil inventories in western Canada hit a record 37.1 million barrels in April and are close to 34 million barrels in May, according to energy information provider Genscape.
One Calgary-based trader said that 37 million barrels is as full as storage can get and that anybody with tankage has been making money.
Genscape monitors roughly 62 million barrels of storage in western Canada but at most only 67% is utilized because of pipeline operations and the need to separate grades.
Some traders and storage companies are benefiting.
Mercuria holds leases on about 3 million barrels of western Canadian storage capacity, according to a source familiar with the matter. Mercuria declined to comment.
BP does not disclose its storage lease position in Canada but the company owns large refineries in the U.S. Midwest which run Canadian heavy crude. BP also declined to comment.
Traders with access to space in tanks can snap up cheap barrels, store them for a month, and sell them on at the start of the next trade cycle when prices are typically stronger.
Storage rates are not publicly disclosed and vary widely, with long-term tankage cheaper than short-term. One trading source said three-month deals were being offered at around $2 per barrel per month.
A four-year deal in Canada costs about $1.50 a barrel a month compared to 30-40 cents per barrel in the U.S. Gulf Coast, other sources said. Monthly storage rates at the U.S. futures hub of Cushing, Oklahoma, are about 30 cents a barrel.
Rates in Canada are expensive, said another source, „but I guess if you can make that all back after apportionment, it’s well worth it.”
Companies including Gibson Energy Inc, Enbridge Inc and TC Energy Corp own most of the storage in western Canada, and are also benefiting from high demand to lease their tanks.
Gibson is the dominant storage owner in Hardisty, with 10 million barrels built and this year sanctioned another 2.5 million barrels. Its storage contracts are all long-term leases, averaging 10 years, and its main customers are large oil sands producers.
„We get requests all the time for short-term storage but we do not have tanks to do that,” Gibson Chief Executive Officer Steve Spaulding said.
Delays building pipelines mean Canadian production is likely to remain above takeaway capacity, keeping tanks in high demand, said Genscape analyst Mike Walls.
„Storage is so valuable because you need somewhere to put barrels right now. That’s what Gibson is taking advantage of,” Walls said.
(Reporting by Nia Williams in CALGARY and Devika Krishna Kumar in NEW YORK; Additional reporting by Julia Payne in London; editing by Grant McCool)
France is ready to consider cutting its stake in Renault in the interests of consolidating the automaker’s alliance with Nissan, Finance Minister Bruno Le Maire said Saturday.
He was speaking in Japan after Italian-US carmaker Fiat Chrysler pulled the plug on its proposed merger with Renault, saying negotiations had become „unreasonable” due to political resistance in Paris.
In an interview with AFP on the sidelines of the G20 finance ministers meeting in Japan, Le Maire said Paris might consider reducing the state’s 15-percent stake in Renault if it led to a „more solid” alliance between the Japanese and French firms.
„We can reduce the state’s stake in Renault’s capital. This is not a problem as long as, at the end of the process, we have a more solid auto sector and a more solid alliance between the two great car manufacturers Nissan and Renault,” he told AFP.
Last week, FCA stunned the auto world with a proposed „merger of equals” with Renault that would — together with Renault’s Japanese partners Nissan and Mitsubishi Motors — create a car giant spanning the globe.
The combined group would have been by far the world’s biggest, with total sales of some 15 million vehicles, compared to both Volkswagen and Toyota, which sell around 10.6 million apiece.
But the deal collapsed suddenly on Thursday, with FCA laying the blame at the door of Paris.
„It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” FCA said in a statement.
Le Maire said Renault should concentrate on forging closer ties with its Japanese partner Nissan before seeking other alliances.
Things need to be done „in the right order…. First the alliance (between Nissan and Renault) should be consolidated and then consolidation (more generally) and not one before the other.”
„Otherwise, everything risks collapsing like a house of cards,” he warned.
The minister said it would be up to the bosses of Renault and Nissan to decide how to push the alliance forward as ties between the two firms have been strained after the shock arrest of former boss Carlos Ghosn.
Renault is pushing for a full merger between the pair but there is deep scepticism of the plan at Nissan.