#1 – PRESIDENT TRUMP TELLS REPUBLICAN SENATORS HE MAY REJOIN TPP, WALKS IT BACK 24 HOURS LATER
It looks like the President’s flirtation with rejoining TPP may have been more a product of his proclivity to tell those in close proximity what they want to hear.
The news that Trump had directed his newly minted economic advisor Larry Kudlow to explore re-entering the agreement first broke last week via a statement from Senator Ben Sasse:
However, it took Trump less than 24 hours to change his tune, via tweet:
This follows a pattern started in Davos, when Trump surprisingly told another group of trade supporters that he'd be open to rejoining TPP.
#2 - ONE PATH BACK TO TPP COULD BE THROUGH JAPAN
• Japanese media outlet Nikkei is reporting that Prime Minister Shinzo Abe will pitch President Trump on a “framework for trade talks” that would bring the U.S. back into the TPP fold.
• However, the article notes that both sides want different things. Abe would like to see the U.S. rejoin TPP so there is another major economy to anchor the agreement. The Trump administration would rather cut a bilateral deal with Japan to fulfill the President’s goals of opening new markets for farmers and to attempt to address his gripes about bilateral trade deficits.
• Trump and Abe are set to meet for talks (and golf) next week in Palm Beach. Read more here from the NY Times.
#3 - AS RULES OF ORIGIN PROPOSAL WEAKENS, HOPES FOR NAFTA DEAL GROw
• The Wall Street Journal reports that NAFTA partners are currently hard at work “hammering out a compromise” on automotive rules of origin that will increase the chances of a deal this Spring.
• According to the Journal, here is the meat of the compromise: “Addressing complaints from trading partners and worries from Detroit, the U.S. now seeks to require that cars and key parts traded among the U.S., Canada and Mexico have at least 75% North American content in order to cross borders duty-free, compared with the 85% level in the previous U.S. proposal, according to industry officials following the talks. The existing version of Nafta requires a level of 62.5%......In return for backing off from earlier proposals, U.S. officials are now discussing ways in which auto makers could receive credit toward duty-free content if worker pay meets a certain threshold. That would benefit products made by higher-paid U.S. workers over lower-paid Mexican workers.”
• View from the Summit of the Americas: While the President skipped the Summit of Americas that included all NAFTA partners, Vice President Pence was on the scene and told reporters its was possible that a deal would be reached “in the next several weeks.”
• View from Mexico: Mexico’s economy minister last week said there is an 80% chance of a NAFTA deal by the first week of May.
• View from Canada: Canadian talking heads have noted that even if auto rules of origin is solved, there are still several sticky issues on the table. Read about the big remaining issues in this Bloomberg piece from last week.
#4 – ABOUT THAT $100 BILLION
• By all accounts, the United States Trade Representative’s office is still hard at work on finalizing a list of an additional $100 billion in tariffs on Chinese imports, as requested by President Trump. This is in despite of NEC Director Larry Kudlow’s stated belief that “calmer heads” can prevail and further tariffs can be avoided.
• Fuel to the fire: Announcing another $100 billion in new tariffs, even as the President is being bombarded by complaints from farmers and ag state Senators, would be a telling sign that the President is committed to his protectionist path. While the White House waived off expectations for an announcement last week, they wouldn't take the possibility off the table of an announcement this coming week. Get ready for more anger from Capitol Hill and industry if the list comes next week.
#5 - NEW COALITION FORMS TO OPPOSE 301 TARIFFS
• The National Retail Federation (NRF) and the Information Technology Industry Council (ITIC) are among the groups organizing a broad new coalition opposing the 301 tariffs.
• Last week the coalition sent a letter to House Ways and Means Committee leadership that depicts the 301 tariffs as a tax on consumers, highlights the damage retaliatory tariffs will have on farmers, and expresses a willingness to work with the Committee to find alternative solutions.
• The coalition letter was supported by 107 organizations, many of whom represent countless individual companies.
#6 - SPECULATION GROWS ABOUT USE OF COMMODITY CREDIT CORPORATION FOR FARMER MITIGATION PLAN
• The Washington Post was among a number of outlets last week pointing to the Commodity Credit Corporation as the likely tool the Trump Administration will use to mitigate the impact of retaliatory tariffs on American farmers.
• According to the Post’s story: “Trump’s aides are looking at ways to use the Commodity Credit Corporation, a division of the Agriculture Department that was created in 1933 to offer a financial backstop for farmers….The CCC can borrow up to $30 billion from the Treasury Department and extend that money to farm groups. If U.S. farmers see orders from China plummet because both countries create new layers of tariffs on imports, the White House wants to set up a bailout program for the U.S. agriculture industry.”
• Then again there is this nugget from a Washington Post story later in the week on an exchange Republican Senator Steve Daines had with the President at the White House:
“Farmers don’t want a handout. They want access to markets,” Sen. Steve Daines (R-Mont.) said. “The president was surprised by that. He’s like, 'really?' He said, 'Oh really? Okay, so we won’t do that.'"
#7 – NEARLY 60 HOUSE MEMBERS WANT HIGHER DE MINIMIS LEVELS IN NAFTA
• As NAFTA negotiations speed toward a potential conclusion, members of Congress are looking to make their voices heard on some of the issues buried in the agreement that haven’t gotten front-page attention.
• Nearly 60 bipartisan House members raised just such an issue last week, asking U.S. Trade Representative Robert Lighthizer to raise the so-called “de minimis” levels in NAFTA which dictate whether low-value goods are slowed by customs procedures at border.
• The issue according to the letter is that the U.S. has an $800 de minimis level – meaning we allow goods up to that level through our borders without added costs or red tape. Canada and Mexico’s level are much lower, $15 and $50 respectivly, which advocates say impact online sales to those countries from U.S. businesses.
• Read more on this issue in a recent op-ed in The Hill.