Trump’s trade wars create a missed opportunity in the coronavirus crisis

If the US wanted an easy and quick way to boost economic activity and employment in response to the destructive economic damage of the coronavirus, there is one available. Unfortunately it doesn’t look like the Trump administration will grab it.

For weeks there have been reports in the US media that the administration was at least discussing the possibility of lifting tariffs on imports as a way to reduce costs to businesses and consumers and, assuming quid quo pros from other countries, boosting exports.

Yet while it does appear that Trump will allow some companies to defer their tariff payments for 90 days, directing US agencies to delay collecting the tariffs, the proposal looks quite narrow in scope and doesn’t include the tariffs that would provide the biggest impact on the US economy: The tariffs averaging nearly 20 per cent on $US362 billion ($590 billion ) of goods imported from China.

The proposed tariff relief won’t apply to China’s exports.Credit:AP

The temporary relief being contemplated seems to be focused on "most favoured nations", which would affect imported goods including some apparel and footwear and, perhaps, light trucks. The administration has already excluded some health products needed to combat the pandemic from tariffs.

While there are reports that Trump has signed off on the plan, there is no certainty the proposal will go ahead. There is significant pushback from US domestic manufacturers and their industry associations.

Treasury Secretary Steve Mnuchin has made it clear that general tariff relief is not being contemplated and, indeed, it is inconceivable that Trump, in an election year, would roll back the tariffs on China and effectively concede that his much-vaunted trade war has damaged – and is still damaging – the US economy.

Nevertheless, being prepared to remove most, if not all, of the tariffs the US has imposed during the Trump administration’s tenure – and seeking reciprocal actions from other governments – would provide a meaningful boost to the US and global economies as they battle the destructive consequences of the coronavirus.

Trump’s protectionist and nationalistic approach to economic policies and international institutions makes it unlikely that the US will resume its role as the global leader in a crisis. "Making America Great Again" has diminished its global influence even if it wanted to exercise it.

The proposal to suspend some tariffs, albeit for only 90 days, isn’t designed to help alleviate the steep global economic slump that is unfolding.

It’s being proposed to help the US economy and its businesses' and households’ cashflows but, in the process, is a also tacit admission (which Trump would never make explicit, even if he recognised it) that tariffs do damage those who impose them.

'Making America Great Again' has diminished [America's] global influence even if it wanted to exercise it.

Despite Trump’s statements that trade wars are good and easy to win and that it is China that has been paying the duties on its exports to the US, all the analyses of the trade war have concluded that it is US companies and consumers that have footed the bill.

That’s either through the cost of the duties themselves, or from higher prices as goods that used to be manufactured in China have been diverted to other higher-cost producers elsewhere in Asia or South America.

The US Congressional Budget Office has estimated that the cost to the US economy of tariffs is about 0.3 per cent of real US GDP, reducing consumption by 0.3 per cent, investment by 1.3 per cent and real income per household by $US580. Exports and imports would both be lower.

In a $US21 trillion dollar economy, those are substantial numbers.

Trump is never going to concede that his trade wars were misconceived. There is also a fear within the administration that easing up on China just as it starts to re-emerge from the pandemic would – given that infections and deaths in the US are still soaring and the economic damage is intensifying – accelerate China’s recovery and confer long-term economic and strategic benefits to a rival for America's global economic and geopolitical dominance.



China, given it was first to head into the crisis and appears likely to be first out, will already gain some advantages if it manages to contain the outbreak, and is seeking to leverage them through a re-writing of the history of the pandemic and via "soft" diplomacy.

How far it can exploit that opportunity is an open question. The reality that it is only just starting to re-open a damaged economy as much of the rest of the world has closed or is closing theirs puts some limits on the upside.

The general resentment over China’s decision to try to keep the world from knowing what was happening in Wuhan – a decision that may cost hundreds of thousands of lives because of the delayed responses it caused outside of China – will be another factor.

Moreover, China went into this global health and economic crisis in poor shape, with an economy with dangerously high debt levels and enormously wasteful deployment of capital within its state-owned enterprises.

Unlike the post-financial crisis period, when China’s massive stimulus plan helped the rest of the world remain afloat and turbo-charged its own economy for a decade, its capacity to take full advantage of the post-pandemic environment is constrained to some degree by its own vulnerabilities.

That won’t, of course, stop it from trying to maximise any economic and geopolitical advantages it can extract from the gradual re-opening of its economy even as the damage to most developed economies continues to worsen.

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Stock futures trade lower on US job concerns

Dow ends off session highs

FOX Business’ Lauren Simonetti says a lot of Wednesday’s gains came from Boeing.

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U.S. equity futures are trading lower ahead of weekly jobless claims numbers.

The major futures indexes are indicating a decline of about 1 percent when trading begins on Thursday.

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Jobless claims are expected to surge to 1 million last week, with estimates running as high as 4 million as efforts to contain the coronavirus pandemic triggered a wave of layoffs and brought the U.S. economy to a virtual standstill. That would exceed by far the record-high number of 695 thousand claims filed in October 1982.

The Senate late Wednesday passed an unparalleled $2.2 trillion economic rescue package steering aid to businesses, workers and health care systems engulfed by the coronavirus pandemic.

The unanimous vote came despite misgivings on both sides about whether it goes too far or not far enough and capped days of difficult negotiations as Washington confronted a national challenge unlike it has ever faced.

The 880-page measure is the largest economic relief bill in U.S. history. Majority Leader Mitch McConnell appeared somber and exhausted as he announced the vote — and he released senators from Washington until April 20, though he promised to recall them if needed.

SENATE PASSES $2 TRILLION CORONAVIRUS STIMULUS BILL IN UNANIMOUS VOTE

In Asian markets, Tokyo's Nikkei fell 4.5 percent, Hong Kong's Hang Seng was lower by 0.5 percent and China's Shanghai Composite slipped 0.6 percent.

Prices have swung wildly as business shutdowns spread around the world. Investors say they need to see a decline in numbers of new coronavirus infections before prices can bottom out.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 21200.55 +495.64 +2.39%
SP500 S&P 500 2475.56 +28.23 +1.15%
I:COMP NASDAQ COMPOSITE INDEX 7384.295089 -33.56 -0.45%

On Wednesday, the S&P 500 advanced to 2,475.66 and the Dow Jones Industrial Average rose 2.4 percent to 21,200.55. The Nasdaq lost 33.56 points to 7,384.30.

Global central banks have cut interest rates and injected money into financial markets.

The number of known infections has leaped past 450,000 people worldwide, and more than 20,000 have died, according to Johns Hopkins University. Overall, more than 112,000 have recovered.

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For most people, the new coronavirus causes mild or moderate symptoms such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness including pneumonia and death.

The Associated Press contributed to this article.

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Stock futures trade higher as deal reached on coronavirus stimulus

Stock market surges on hopes of a stimulus package

FOX Business’ Lauren Simonetti talks about the Dow Jones gaining 2,000 points, making it the biggest point gain the Dow has ever seen.

Stock futures turned positive as White House and Senate leaders struck an agreement late Tuesday on a sweeping deal on injecting nearly $2 trillion of aid into an economy ravaged by the coronavirus.

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Dow futures are indicating a gain of 1.2 percent when Wall Street opens for business on Wednesday.

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The unprecedented economic rescue package would give direct payments to most Americans, expand unemployment benefits and provide a $367 billion program for small businesses to keep making payroll while workers are forced to stay home.

The final details had proved nettlesome. One of the last issues to close concerned $500 billion for guaranteed, subsidized loans to larger industries, including a fight over how generous to be with the airlines. Hospitals would get significant help as well.

A vote in the Senate could come Wednesday.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 20704.91 +2,112.98 +11.37%
SP500 S&P 500 2447.33 +209.93 +9.38%
I:COMP NASDAQ COMPOSITE INDEX 7417.857035 +557.18 +8.12%

On Tuesday, the Dow Jones Industrial Average surged to its best day since 1933 as Congress and the White House neared a deal. The Dow adding 11.4 percent, rising 2,112.98 points, its biggest point gain in history. The S&P 500 index leaped 9.4 percent.

In Asia, Japan's Nikkei jumped 8 percent, Hong Kong's Hang Seng added 3 percent and China's Shanghai Composite gained 2.2 percent.

Tokyo share prices were boosted by the decision to postpone the 2020 Olympics to July 2021 in view of the coronavirus pandemic.

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Economists and investors expect to see some dire measures of the impact of the virus in coming days and weeks, and few believe markets have hit bottom. Rallies nearly as big as this have punctuated the last few weeks, and none lasted more than a day.

The Associated Press contributed to this article.

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U.S. Soybean Stockpiles Set to Drop to Trade War Low

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Donald Trump’s trade truce with China is expected to push American soybean stockpiles to the lowest since the trade war began.

But corn stocks are going in the opposite direction, ballooning to the highest in three decades. And the president’s hints for more farmer aid could make the disconnect between the two even more pronounced.







Soybean reserves will fall 25% in the coming season to the lowest since 2016-17, the U.S. Department of Agriculture forecast at its outlook forum in Arlington, Virginia. Higher exports, especially to top importer China, will add to increased domestic demand to eat up stocks.

“Increasing global import demand, particularly for China, and a recovery in U.S. market share will support higher soybean exports following a sharp decline over the past two years,” the USDA said in a report Friday.

Stockpiles will fall to 320 million bushels at the end of the 2020-21 season, surprising analysts who had expected the figure to come in between 328 million to 825 million, according to a Bloomberg survey.

Meanwhile, the government forecast corn inventories will jump about 29% to 2.637 billion bushels as farmers plant more. That would be the highest in 33 years.

Current prices and yield prospects have increased bets that farmers will sow the yellow grain over the oilseed. The USDA on Thursday said corn plantings would likely climb to the highest in four years. While soybean acres should also rise, they are projected to stay below pre-trade war levels.

What’s more, Trump surprised the markets on Friday by raising the possibility of delivering more aid to American farmers as promised purchases from trade deals with China and other countries have yet to materialize.

Even the suggestion of more bailout money — after the government pledged $28 billion over the past two years — could end up distorting planting decisions.

In 2019, farmers had to sow a crop in order to qualify for aid. Anticipation for further government payments could spark some growers to seed where they might not have otherwise.

Grain prices fell after Trump’s tweet that floated the aid possibility. May corn futures fell 0.5% to settle at $3.80 3/4 a bushel in Chicago. Soybeans erased earlier gains and fell 0.2% to $8.99 a bushel. Even wheat prices dropped 1.3% to $5.52 a bushel on the news.

“That raised fears of overproduction,” Arlan Suderman, INTL FCStone’s chief commodities economist, said by phone.

Earlier in the day, prices rose after the USDA said American plantings of all varieties are expected to slump to a record low and reserves were forecast to shrink.

But the allure of aid could throw all those numbers back into question.

“The farmer will plant like crazy,” Joe Davis, a director at brokerage Futures International, said in a message. “Trump is almost wanting the farmer to be happy and plant.”

Related coverage
  • Deadly Virus Stymies Chinese Farm Buying Under U.S. Trade Deal
  • America’s Own Numbers Cast Doubt on Trump’s China Farm Deal

— With assistance by Dominic Carey, Megan Durisin, and Jen Skerritt

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Stocks trade lower on renewed coronavirus fears

Stocks fall on coronavirus fears, global growth concerns

FOX Business’ Jackie DeAngelis discusses why investors were spurred to sell stocks over coronavirus fears on the floor of the New York Stock Exchange.

U.S. equity futures are pointing to a lower open on Friday after a spike in new coronavirus cases outside of China.

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The major futures indexes are indicating a decline of 0.4 percent.

Markets had been gaining on hopes the outbreak that began in central China might be under control following government controls that shut down much of the world's second-largest economy.

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Sentiment was buoyed by stronger-than-expected U.S. economic data and rate cuts by China and other Asian central banks to blunt the economic impact.

But investors were jarred by South Korea's report of 52 new cases of the coronavirus, raising its total to 156, most of them since Wednesday.

CORONAVIRUS MAY SLASH $29 BILLION FROM AIRLINES' REVENUE

China reported 118 deaths and 889 new cases in the 24 hours through midnight Thursday.

That raised the death toll to 2,236 since December and total cases to 75,465.

The number of new cases reported each day has been declining but changes in how Chinese authorities count infections have raised doubts about the true trajectory of the epidemic.

In Asia, Japan's Nikkei shed 0.4 percent, Hong Kong's Hang Seng tumbled 1.1 percent and China's Shanghai Composite climbed 0.3 percent.

In Europe, London's FTSE  fell 0.6 percent, Germany's DAX slipped 0.2 percent  and France's CAC was down 0.5 percent.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 29219.98 -128.05 -0.44%
SP500 S&P 500 3373.23 -12.92 -0.38%
I:COMP NASDAQ COMPOSITE INDEX 9750.964579 -66.21 -0.67%

On Wall Street, the benchmark S&P 500 index lost 0.4 percent on Thursday after being down as much as 1.3 percent at one point. The Dow Jones Industrial Average fell 0.4 percent.

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Gold touched its highest price since early 2013, gaining $14.50 to $1.634.30. The 10-year Treasury’s yield sank to 1.49 percent from 1.57 percent late Wednesday.

The Associated Press contributed to this article.

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Stocks trade higher as coronavirus cases slow

Apple drags markets down

FOX Business’ Jackie DeAngelis breaks down the day’s financial numbers as markets close in the red.

U.S. equity futures are pointing to gains when trading begins as the number of coronavirus cases has reportedly slowed.

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The major futures indexes are indicating a  rise of 0.3 percent when Wall Street opens for business.

Asian shares mostly rose Wednesday, despite overnight losses on Wall Street and continuing fears about the coronavirus.

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Japan's Nikkei rose 0.9 percent, Hong Kong's Hang Seng added 0.5 percent and China's Shanghai Composite was off 0.3 percent.

Adding to optimism, new virus cases in China have been falling, with 1,749 new infections and 136 new deaths announced on Wednesday. But data are showing disruptions to manufacturing, retailing and tourism.

CORONAVIRUS CASES FALL AS CHINA VOWS NO PATIENT UNCHECKED

Japan reported its third straight month of a trade deficit in January and like the rest of Asia is enduring a downturn in tourism. Some controls have been set on travel to and from China and other places suffering from outbreaks of the virus.

In Europe,  London's FTSE is up by 0.8 percent, Germany's DAX is adding 0.5 percent and France's CAC is 0.7 percent higher.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 29232.19 -165.89 -0.56%
SP500 S&P 500 3370.29 -9.87 -0.29%
I:COMP NASDAQ COMPOSITE INDEX 9732.743207 +1.57 +0.02%

Banks and technology stocks accounted for most of the decline in U.S. stocks on Tuesday.

The S&P 500 index fell 0.3 percent. The benchmark index remains just below its all-time high set on Friday. The Dow Jones Industrial Average slid 0.6 percent after Apple warned its revenue may be lower than forecast due to the coronavirus in China.

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The Nasdaq recovered from an early slide, inching up 0.1 percent.

The Associated Press contributed to this article.

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