16. The following are excerpts from the 22 August 2018 AFP news report headlined "US Fed warns of 'consequential' risk from escalating trade wars". (Begin excerpts) An escalation of ongoing US trade disputes poses a "consequential downside risk" to the economy, which will make the job of the central bank more challenging, the US Federal Reserve warned Wednesday. But with the US economy continuing to grow and the job market strengthening further, many Fed members said they likely will need to raise the benchmark interest rate again "soon," according to the minutes of the Fed policy meeting early this month.... The United States has imposed tariffs on hundreds of products, mostly from China, and Fed officials said they are seeing the impact of trade disputes on the ground, as businesses across the country face higher prices for necessary inputs and the uncertainty has caused some to delay investments. All participants in the Fed meeting "pointed to ongoing trade disagreements and proposed trade measures as an important source of uncertainty and risks." In addition, most said "an escalation in international trade disputes was a potentially consequential downside risk for real activity," according to the minutes. A large-scale and prolonged dispute likely would adversely impact business sentiment, investment spending and employment, as well as pressuring inflation, the officials warned. "Moreover, wide-ranging tariff increases would also reduce the purchasing power of US households." The agriculture sector has been hurt by falling crop prices, partly due to the trade battles, the Fed said. It is not the first time central bankers have expressed concern over the consequences of the aggressive trade policies pursued by President Donald Trump but it was expressed in stronger language than previously. .... the central bankers noted that the strong growth in the April-June quarter -- which hit 4.1 percent -- "may have been boosted by transitory factors" including the jump in exports. US exports rose in the second quarter as buyers rushed to grab products like soybeans before retaliatory tariffs hit in July.... (End excerpts) Source: http://www.dailymail.co.uk/wires/af...consequential-risk-escalating-trade-wars.html
17. The following are excerpts from an article, by Justin Worland and Philip Elliott on July 2, 2018, under the headline "Republican Allies Warn Trump on Trade". (Begin excerpts) Republicans are increasingly worried that President Trump’s burgeoning global trade war could cripple the U.S. economy and hand control of Congress to Democrats. A raft of traditional GOP allies are warning about the consequences. On Monday, the U.S. Chamber of Commerce released a report highlighting how international trade supports industries ranging from Texas pork to Oregon plywood. Last week, General Motors told the Department of Commerce that proposed tariffs would lead to reduced employment and lower wages at the company — a development that would have dire implications for suppliers already skittish about continuing to produce the parts used to build vehicles. And on June 26, leading industry trade groups from the American Petroleum Institute to the Alliance of Automobile Manufacturers signed a letter in support of a Congressional effort to impede Trump’s tariffs. “We’re trying to improve trade, but the way it’s being done is backfiring on U.S. companies and will backfire on the U.S. economy,” said Carlos Gutierrez, U.S. Secretary of Commerce under George W. Bush and chair of the Albright Stonebridge Group. The list of fronts in Trump’s trade war is long and affects a host of politically sensitive industries. He has placed tariffs on steel and aluminum from across the globe, including allies like Canada and the European Union. He has targeted a wide variety of Chinese goods valued at $50 billion and told his team to identify $200 billion more. He’s even floated a 25% tariff on all auto imports, many of which come from allies like Germany and Japan. Congress has tried to raise the alarm about how all this could play out in November, when Republicans are defending majorities in the House and Senate. Trump’s protectionist inclinations run counter to what it has meant for years to be a Republican. But these aren’t just academic arguments. An economic downturn brought on by tariffs could help Democrats net the 23 seats they need to recapture the House majority. A trade war could destroy industries at the heart of local economies. Kentucky, for example, faces a $180 million hit in European tariffs on whiskey, $25 million from Canada, $10 million from Mexico and $2 million from China, according to the Chamber’s database of tariffs and targets. The split over trade is hardly the first time that Trump has drawn criticism from Republicans for breaking party orthodoxy. Just last month, for example, the Chamber demanded that Trump end his Administration’s zero-tolerance policy at the border that split parents from their children. The powerful collection of advocacy groups affiliated with billionaires Charles and David Koch have been outspoken critics of Trump’s views and policies on immigration, trade and tariffs. “Keep in mind, 55% of all votes cast in the Republican primaries went for someone not named Trump,” one Republican strategist who worked against the Trump campaign tells TIME. “We tried to stop this.”... (End excerpts) Source: http://time.com/5328475/donald-trump-trade-republicans/
18. Iris Pang is the economist for Greater China, joining ING Wholesale banking in 2017. She was previously employed by Natixis and OCBC Wing Hang Bank. She earned a PhD in economics from Hong Kong University of Science and Technology. The following are excerpts from her 11 July 2018 article headlined "China: Changing the nature of retaliation on trade". (Begin excerpts) It may not be until September that we'll be able to assess the extent of China's qualitative retaliation to the overnight announcement by the US of an additional 10% tariff on $200 billion worth of goods. Qualitative retaliation, but how? Chinese imports from the US reached only $168 billion in 2017. So, after tariffs on $34 billion worth of goods, with an additional $16 billion in the pipeline, the overnight announcement (11 July) of a 10% tariff on a further $200 billion of goods means that China will likely retaliate "qualitatively", as previously indicated by the Chinese authorities. Here are some measures we believe are possible (definitely not an exhaustive list). The uncertainty surrounding such qualitative retaliation could be a cause of concern for markets. 1. We believe that the most likely "qualitative" retaliation is a version of the "Lotte Department store model" (a Korean store forced to shut down by the Chinese government after missiles were installed on land the company sold to the South Korean government). As they are opening up their market to the rest of the world, China should tread cautiously in making life difficult for US companies operating in China. But, they could, if they feel they need to, make US business operations on the mainland more cumbersome, making it clear that this is only a retaliation to US tariffs and specific to US companies. It is likely that European and domestic brands would emerge as winners. 2. China can also limit tourists visiting the US, bringing business worth $115 billion in 2017 according to Xinhuanet.... 3. The final weapon is not the currency, but US treasuries. Even reshuffling the foreign exchange reserve portfolio slightly by selling some US treasuries and investing more in other sovereign bonds could push up US borrowing rates. Quantitative retaliation is on the cards Apart from qualitative measures, China could continue its retaliation quantitatively. China could impose a higher tariff rate on US goods. They could also impose import quotas on US goods though this would probably violate WTO rules, and as China wants to maintain its strong reputation in the WTO, this would not be ideal. China is more likely to win the trade war When the US started the trade war, it turned away from a free-market model to a more planned economy. China had previously operated as a planned economy for many years. China has already announced that the tariffs collected from US would be given back to Chinese companies affected by the trade war. China can also provide tax relief for affected exporters and provide incentives for exporters to sell their goods, either in the domestic market or through exploring possibilities in non-US foreign markets. All these measures could come into effect more quickly in China than in the US, which has a more complicated administrative process…. (End excerpts) Source: https://think.ing.com/articles/chin...edium=native&utm_campaign=human_equation_2018
19. Cheang Ming works as a news assistant for CNBC's Asia-Pacific digital team. The following are excerpts from her 12 July 2018 article headlined "'The US is on track to lose this trade war,' economist Stephen Roach says". (Begin excerpts) The U.S. and China are in the early innings of a trade war, and prominent economist Stephen Roach says it's the United States that's on track to lose. "Trade wars are not easy to win. They're easy to lose, and the U.S. is on track to lose this trade war," Roach, a senior fellow at Yale University and former Morgan Stanley Asia chair, told CNBC's "Squawk Box" on Thursday. "This is live ammunition. This is not just rhetorical discussion anymore," he said. "We're in the early stages of fighting skirmishes in a real, live trade war. The question is, how far does it go? And how significant will the ammunition be in the future?"... China imported only about $130 billion in U.S. goods last year, compared with the $505 billion in Chinese goods imported by the United States. But that doesn't mean China will run out of ammunition in the trade fight, Roach argued. "The U.S. is hugely dependent on China as a source for low-cost goods to make ends meet for American consumers. We’re hugely dependent on China to buy our Treasury to fund our budget deficits, which as you know, are getting larger," Roach explained. "The idea that China has a math problem misses the fact that America has a few problems of our own."... (End excerpts) Source: https://www.cnbc.com/2018/07/12/the...-trade-war-with-china-yales-stephen-roac.html
20. The following are excerpts from Jack Brewster's July 21, 2017 article headlined "Donald Trump Keeps Taking Credit for the Economy. How Much Should He Get?" (Begin excerpts) Since taking office, President Trump has routinely touted stock market gains and positive jobs reports as evidence that he is succeeding. Economists say that while he can take some credit for the stock market, it’s far too soon for his policies to have affected the job market. That’s because the stock market tends to react to expectations as much as reality, so it’s reasonable to assume that traders responded to some of Trump’s campaign promises, such as cutting taxes. But employers make hiring decisions based on fundamental factors like the health of the economy, which a president can only influence indirectly. “In the short term, presidents do have a major impact on the rise and fall of the stock market,” said Bob Bruner, current economics professor and former dean of the Darden School of Business at the University of Virginia. “Presidents can declare intentions to adjust taxes, impose antitrust enforcement on industries–such as Jack Kennedy did–declare war, or undertake military actions without the sanctions of Congress. All of those things dramatically affect the expectations of the capital markets.” The growth in the stock market during Trump’s first 100 days was the most under any president during that period since 1989–the first year of George H. W. Bush’s presidency. This boom–which has been coined the “Trump Bump”–was likely driven by Trump’s promises to slash taxes and pass an infrastructure bill. “No one ever knows why the stock market does what it does,” says Alan Blinder, an economics professor at Princeton University. “But it’s not an unreasonable supposition that the election of Donald Trump had something to do with it. Maybe a lot to do with it.” However, despite the success of the stock market under Trump, its gains are somewhat contingent on the president actually getting that agenda signed into law, something he has struggled with. “Markets react to sentiment but they are sustained by facts and commitments,” added Bruner. Trump has yet to succeed on getting any major part of his agenda passed. The Obamacare repeal recently died in the Senate, and little to no progress has been made on passing an infrastructure bill or tax reform–two other signature parts of Trump’s agenda. If nothing continues to get done, the gains in the stock market ignited by Trump could disappear. Blinder says that in terms of economic policy Trump has “basically done nothing,” besides cutting back regulations in a “minor” way. However, Blinder also noted that Trump has “not done anything bad macro-economically either.” The president’s ability to influence economic growth is sometimes overstated, economists agree. Presidents can affect the economy through the decisions they make, but it often takes years to gauge the impact. For instance, most economists now say President Obama’s stimulus package helped pull the U.S. out of the recession, even though a majority of Americans at the time believed it didn’t work. Likewise, President George W. Bush’s decision to launch the Iraq War could have contributed to the Great Recession, economists note. But, even so, the president, Bruner says, is just one of the “many cooks in the kitchen” that influence the economy. So, while Trump may deserve some credit for the boost in the stock market, his impact on job creation and overall growth remains to be seen. Yet the president, on Twitter, has repeatedly taken credit for the positive jobs reports.... “It’s premature,” said Stephen Moore, a visiting fellow at the Project for Economic Growth at The Heritage Foundation, of Trump’s tweets on jobs growth. “It takes a while for policies to translate into jobs. Stock markets react instantaneously to things. For jobs to come back–that takes longer.” Job growth has increased steadily under Trump. Through the president’s first five full months in office, employers added 863,000 jobs and the unemployment rate decreased from 4.8 percent to 4.4 percent–an indication the economy is doing well. But the job growth under Trump is also similar to the last five months of Obama’s presidency, when 908,000 jobs were added, showing that the increase is likely just a continuation. “The jobs results are the outcomes of many people,” said Bruner. “Trump is merely basking in the afterglow of solid economic news. The roots of which extend well back in time.” Also, by taking credit for a robust economy so early in his presidency, Trump may be digging himself into a hole if there’s an economic downturn later on in his four year term. “It’s dangerous for a president to take a lot of explicit credit for a good economy this early in a presidency because the economy won’t stay good,” said former Labor Secretary Robert Reich. “It’s the application of Isaac Newton’s theorem to economics–what goes up must come down. Recessions are inevitable.” Reich added that Trump will have to “figure out a way” to avoid blame when the “inevitable” downturn happens. “But Trump being Trump, he will…” (End excerpts) Source: http://fortune.com/2017/07/20/donald-trump-economy-stock-market-jobs-reports-credit/
21. James Pethokoukis, a columnist for The Week, is the DeWitt Wallace Fellow at the American Enterprise Institute where he runs the AEIdeas blog. He has also written for The New York Times, National Review, Commentary, The Weekly Standard, and other places. The following is full text of his August 10, 2017 opinion piece entitled "This is not Trump's economy". (Begin text) How much credit should President Trump get for a U.S. economy that's generating lots of jobs and for a stock market that keeps setting record highs? Very little. Trump, of course, thinks MAGAnomics is doing the trick, as do his most ardent supporters. After the July jobs numbers came out last week, Fox News and other members of Team Trump were touting the more than 1 million private-sector jobs created since Inauguration Day. Over on Trump TV, former CNN pundit Kayleigh McEnany was even crediting the president with personally creating them. That Obama created the same number of jobs during his final six months was considered less newsworthy, apparently. Presidents are always given too much credit or blame for economic performance on their watch. So many factors are outside their control. But beyond that, the idea that this is already "Trump's economy" is ridiculous. None of Trump's big agenda items — at least the ones corporate America and Wall Street really care about — have become law. No ObamaCare repeal. No massive tax cuts. No trillion-dollar infrastructure. Nothing. To the extent that any president "owns" an economy's performance, we're still in the Obama era. Indeed, we really ought to credit the economic performance during the first year of any president's term to his predecessor — after all, it's mostly that other guy's budgets and policies directly influencing the economy. So for instance, George W. Bush's economy wasn't from 2001 through the end of 2008 — it was 2002 through the end of 2009. And so on. This change would make a big difference. During George W. Bush's two terms, GDP growth averaged 2.1 percent as 1.4 million new jobs were added. Pretty unimpressive. But recalculated — Bush gets Obama's first year and loses his first year to Bill Clinton — and the 43rd president's record looks even worse: just 1.5 percent growth and a loss of 1.1 million jobs. This isn't to say Trump should get zero credit for anything good that's happened this year. It's certainly reasonable that the stock market's 10 percent rise since Trump took the oath of office at least partially reflects investor expectations about his growth plan. But how much? It's always tough to parse these things. Believe it or not, there's more going on in the world than Trump, such as a synchronized upswing in the global economy for the first time since the Great Recession. There are more complications that don't easily fit the GOP's pro-Trump narrative: First, even when new policies or the expectations of policy changes matter, too much weight shouldn't be given to short-term performance. The very large Reagan tax cuts in the early 1980s were supposed to improve U.S. productivity growth. But there was no upturn until the mid-1990s. This time around, tax cuts might boost growth, but probably not too much if they are temporary and greatly worsen the deficit. Second, don't forget the Federal Reserve. The Obama recovery is as much if not more the Bernanke-Yellen recovery, just as easing by the Volcker Fed helped ignite the Reagan boom. With the Yellen Fed thinking the economy is near or at full employment, the central bank could offset further fiscal stimulus with more rapid and continued tightening of monetary policy. Or monetary policy could stay loose and continue as a tailwind to growth. Third, Washington isn't the whole ballgame. While one might partially credit the 1990s boom to Reaganomics' tax and regulatory changes, one should also credit Moore's Law, the PC revolution, and the emergence of the internet. Whatever Trump does might pale compared to what's happening in Silicon Valley. As I wrote last week, the IT revolution is far from over and might still have a huge impact on productivity and growth. This isn't the Trump economy. If anything, it's the Obama economy — or the AmazonAppleFacebookGoogle economy. (End text) Source: http://theweek.com/articles/717156/not-trumps-economy
