Lawmakers Worried About What Concessions US May Be Offering China

Reports China has agreed to import large amounts of U.S. ag goods as part of a tentative framework deal to resolve a trade dispute between the nations have prompted some lawmakers to express concern about what kind of concessions the administration may be offering China.Leading up to the latest round of talks, China lifted tariffs on U.S. sorghum and the U.S. eased sanctions on the Chinese telecom equipment maker ZTE Corp., allowing the company to stay in business.U.S. lawmakers from both political parties have pointed questions about what the administration has agreed to give up in exchange for a truce with China. The Commerce Department had banned ZTE from receiving imports from its U.S. suppliers, a move that crippled the corporation. The administration would face a "real backlash" if it offers concessions to ZTE as part of the trade talks, Sen. Lindsey Graham, R-S.C., told Fox News.Larry Kudlow, Trump's top economic advisor, told ABC that although there may be "perhaps some small changes around the edges" in U.S. action on ZTE, there will still be big fines and other remedies, and, he added, "do not expect ZTE to get off scot-free. It ain't gonna happen."

Washington Insider: New Tariffs on Hold for Chinese Goods

Well, it appears that the administration has changed its mind on tariffs on Chinese goods. On Sunday, Treasury Secretary Steven Mnuchin told the press said that the administration put its trade war with China “on hold” after two days of talks in Washington that he said had produced an agreement on increased Chinese purchases of American products and measures to make it easier for U.S. companies to operate in China, the Washington Post and most other urban media reported.Even though the agreement lacked specifics, it halted tariffs that the administration had threatened to impose on up to $150 billion in Chinese products.In an earlier sign of softening, the president directed administration officials to consider easing harsh penalties on a prominent Chinese telecom company that had violated US sanctions on Iran and North Korea.Responses to the decision were mixed. The Washington Post said that “President Trump’s tough-guy persona is taking a beating from China, judging from the reaction of some of his allies on Capitol Hill and in the trenches of the trade wars.”“The former business executive, who prides himself on his negotiating savvy, is now facing criticism for bending to the Chinese government on two key trade disputes in the space of a week,” the Post said.“It’s a huge disappointment, given the expectations,” said Scott Paul, president of the Alliance for American Manufacturing, a partnership between steelworkers and their employers. “It plays right into Beijing’s hands ... and is more of the same old failed policies we saw under the Bush and Obama administrations.”Administration officials on Sunday scrambled to cast the Chinese talks as a victory.“Not good enough. Time to take the gloves off,” Dan DiMicco, former chief executive of the steelmaker Nucor, tweeted Saturday.Sen. Marco Rubio, R-Fla., warned in a tweet Sunday that by continuing to talk while putting the tariffs on hold “China has out-negotiated the U.S. again.”The president personally demonstrated an appetite for harsher measures, saying at one point that trade wars were “good and easy to win.”The administration’s rocky handling of relations with China reflects a complex intermingling between economic and national security, the Post said. Trump on Friday proclaimed that the United States “has entered a new era in trade policy that is based on the recognition that our economic security is critical to our national security.”In March, he cited national security to justify imposing tariffs on imported steel and aluminum, a move designed to boost domestic employment. But now, national security concerns are causing him to give ground on other economic objectives.Dennis Wilder, a former China analyst for the Central Intelligence Agency, said the president’s softer line was linked to his desire for a successful June 12 summit with North Korean leader Kim Jong Un, a Chinese ally.The recent visit to Beijing of a North Korean delegation of municipal and provincial officials—the first such visit in eight years—suggested that Beijing might have been preparing to relax its sanctions on Pyongyang, perhaps in retaliation for Trump’s tariff threats, Wilder said.“The administration has been a little rattled by how quickly the China-North Korea rapprochement occurred,” he said. “He probably believes that China is using the North Korea card in the trade negotiations.”Mnuchin said the two sides have agreed on a “framework” to avoid the sanctions that require China to lower tariffs on unspecified American goods, protect US technology and buy more made-in-the-USA items.“Right now we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin said on Sunday.Commerce Secretary Wilbur Ross will be dispatched to Beijing “immediately” to work out the details of accelerated Chinese purchases, said Mnuchin, who led the U.S. delegation in the talks with a Chinese team headed by Vice Premier Liu He.Amid concerns that Trump was also preparing to soften the punishment for a major Chinese telecom company that had illegally traded with Iran and North Korea, Mnuchin said the administration “didn’t agree to any quid pro quo.” Last week, after Trump directed the Commerce Department in a tweet to help the company return to normal operations, lawmakers from both parties objected. The Republican-controlled House Appropriations Committee amended a must-pass annual spending bill to bar the department from lifting the penalties.“I can assure you that the president wants us to be very tough on ZTE, and all he did was ask the secretary to look into this,” Mnuchin said.Kudlow on Friday said that ZTE would have to overhaul its top management ranks before the United States would ease the enforcement action.Mnuchin also suggested that Trump was prepared to wait until 2019 to wrap up negotiations aimed at a new North American trade deal. He confirmed that the United States, Mexico and Canada remain “far apart” after nine months of talks, having missed a deadline set by House Speaker Paul Ryan, R., Wis., last week to reach a deal on which lawmakers could vote this year.“The president is more determined to have a good deal than he is worried about any deadline,” the treasury secretary said.So, we will see. Cynics see the growing anger among producer groups as the fall elections near as important, along with the talks with North Korea. But, whatever the source of the policy shift, it is a new trend that producers should watch closely as the season progresses, Washington Insider believes. 

House Farm Bill Dormant Amid Immigration Dispute

House Republican leadership is currently struggling with immigration issues and it’s put the House farm bill that didn’t pass on Friday right on the back burner. The Hagstrom Report describes the bill as “dormant.” Speaker Paul Ryan called for reconsideration of the bill immediately after the vote on Friday. He declared that the “ayes” had won the voice vote but didn’t call for a roll call vote. The schedule of bills considered on Monday evening didn’t contain the farm bill. Under House rules, it has two legislative days to take a vote on reconsideration of a bill. The House is scheduled to leave on Thursday afternoon for a week-long Memorial Day break. Every House Democrat and 30 Republicans voted against the House farm bill. The Republicans were a mix of the Freedom Caucus members, as well as moderate Republicans, who consider the bill’s changes to the Supplemental Nutrition Assistance Program to be too restrictive. Members of the House Freedom Caucus want leadership to bring up a restrictive immigration bill. Moderate Republicans are attempting to force a vote on a proposal to protect the immigrant students without legal status, known as Dreamers.

USDA Official Hopeful by Recent Trade Advancements with China

While a trade war may be on hold between the U.S. and China, a Department of Agriculture official says the Trump administration remains ready to support farmers and ranchers, if needed. China and the U.S. put the trade war tariffs on hold, for now, as the two sides are negotiating. Speaking at the ONE18: The Alltech Ideas Conference, USDA Undersecretary Bill Northey told attendees “we’ll see how that all plays out.” Northey told attendees Agriculture Secretary Sonny Perdue and President Trump are committed to “make sure that we have protection for agriculture,” through a trade war “if and when those things happen.” Further, Northey said he “hopes there is real opportunity to grow our exports to China” as China “needs the products we produce.” However, as for timing, Northey said with a chuckle from the audience “the next little while could be the next Tweet.” At nearly the same time, President Trump on Twitter said of the potential deal with China, that: “They will purchase from our great American farmers practically as much as our farmers can produce.”

China Promises to Buy More American Agricultural Goods

After two rounds of trade talks between the world’s largest economies, China has promised to buy significantly more U.S. agriculture and energy products to help reduce its trade surplus with America. Treasury Secretary Steven Mnuchin (Muh-NOO-chin) outlined his targets for boosting sales over the weekend but it remains unclear if China has agreed to reduce the deficit by the $200 billion that the Trump Administration has been asking for. Mnuchin told Fox News Sunday that Commerce Secretary Wilbur Ross will be going into China looking for hard commitments in agriculture, “where we expect to see a very big increase, 35-40 percent increases, in agriculture this year alone.” In the meantime, Politico says the U.S. will hold off on its threat to slap tariffs on up to $150 billion in Chinese goods as a way to deter intellectual property theft and forced technology transfers. A joint statement from the two countries issued over the weekend didn’t specify whether or not the two countries would back off on penalties already imposed relating to the administration’s steel and aluminum tariffs.

Administration Focusing on Good, Not Quick, NAFTA 2.0

Bloomberg says the U.S., Canada, and Mexico are all on separate pages when it comes to a new North American Free Trade Agreement. Treasury Secretary Steven Mnuchin (Muh-NOO-chin says the administration is more focused on reaching a good deal rather than an immediate one. Mnuchin says it doesn’t matter if it’s passed in this session of Congress or the next one. Canadian Prime Minister Justin Trudeau said last week that there was a good NAFTA deal already on the table. However, U.S. Trade Representative Robert Lighthizer said just hours later that the “governments were nowhere close to a deal.” Mnuchin’s comments are the latest to suggest that the door may be open to finishing the NAFTA negotiations sometime after the Mexican presidential election on July first. However, he did raise the prospect of the president having multiple options on the table. “I’m not saying he’s willing to let it spill over,” Mnuchin says, “but he has all his alternatives. I’m just saying that, right now, we’re focused on negotiating a good deal and not focused on deadlines.” Mexico’s chief negotiator says the three countries have agreed on nine of about 30 chapters in the agreement.

John Deere Raising Prices to Cover Steel Costs

Deere & Company is raising equipment prices in order to protect profits as costs rise. The farm and construction machinery manufacturer says profits were up 50 percent and equipment sales were up 34 percent annually in its latest quarter. However, a Dow Jones report says those numbers disappointed analysts. Deere’s share rose nearly six percent as investors are focusing on Deere’s strong outlook for sales growth this year. Rising expenses in recent quarters have weighed down Deere’s performance, even as machinery demand picks up. Deere joined a number of U.S. manufacturers in reporting rising costs as a growing U.S. economy drives up the prices for materials and shipping. Prices for steel and aluminum have been pushed up by U.S. tariffs on imported metal products. Deere says it will raise prices because of both higher production costs, as well as increasing transportation costs, as it begins to take orders on 2019 models. The company predicts overall sales of farm and construction equipment will increase by 33 percent this year to $33.7 billion.