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Trump: ‘Not Looking for War’ With Iran

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U.S. President Donald Trump says he is “not looking for war” with Iran and willing to negotiate with its leaders without preconditions, but that under no circumstances can the Islamic Republic be allowed to mass a nuclear weapons arsenal.

Trump told NBC’s Meet the Press show that if the U.S. went to war with Iran, “It’ll be obliteration like you’ve never seen before.”

“But,” he added, “I’m not looking to do that.”

The U.S. leader said, “Here it is. Look, you can’t have nuclear weapons. And if you want to talk about it, good. Otherwise, you can live in a shattered economy for a long time.”

Trump’s comments, taped Friday, were aired after he announced Saturday, without providing any details, that he plans to impose “major” new sanctions on Iran on Monday. He said the sanctions would be dropped as soon as the country becomes “a productive and prosperous nation again.”

Iran cannot have Nuclear Weapons! Under the terrible Obama plan, they would have been on their way to Nuclear in a short number of years, and existing verification is not acceptable. We are putting major additional Sanctions on Iran on Monday. I look forward to the day that…..

— Donald J. Trump (@realDonaldTrump) June 22, 2019

Two other key U.S. officials, national security adviser John Bolton and Vice President Mike Pence, issued new warnings to Iran that Trump’s last-minute decision to not militarily retaliate for Tehran’s Thursday shoot-down of an unmanned U.S. drone near the Strait of Hormuz should not be viewed as a sign of “weakness.”

National security adviser John Bolton talks to reporters about Venezuela, outside the White House, May 1, 2019, in Washington.

“Neither Iran nor any other hostile actor should mistake U.S. prudence and discretion for weakness,” Bolton said in Jerusalem ahead of a meeting with Israeli Prime Minister Benjamin Netanyahu.

“No one has granted them a hunting license in the Middle East,” Bolton said of Iran. “Our military is rebuilt new and ready to go.”

Pence told the CNN television network, “Iran must not take restraint for a lack of resolve. This is a president who hopes for the best for the Iranian people…but we will stand up to their provocations.”

Bolton said existing sanctions against Tehran already are having a sharp effect on the Tehran economy.

“Sanctions are biting,” he said. “Iran can never have nuclear weapons — not against the U.S.A. and not against the world.”

Trump spoke with reporters Saturday at the White House before leaving for the presidential retreat at Camp David outside Washington for a meeting with top administration officials, at one point saying as soon as Tehran agreed to renounce nuclear weapons, “I’m going to be their best friend.”

Trump’s tone was much softer on Saturday after a week of intense actions between the U.S. and Iran.

Concern about a potential armed confrontation between the U.S. and Iran has been growing since U.S. officials recently blamed Tehran for mine attacks on two oil tankers in the Strait of Hormuz, allegations Tehran denies, and Iran’s downing of the drone.

On Friday, Trump said that he had canceled late Thursday a retaliatory strike against several Iranian targets.

He tweeted that the United States was “cocked & loaded to retaliate last night on 3 different sights when I asked, how many will die. 150 people, sir, was the answer from a General. 10 minutes before the strike I stopped it,” Trump tweeted, saying the action would have been disproportionate.

Pence said the U.S. was “not convinced” the downing of the drone “was authorized at the highest level” of the Iranian government. As Trump weighed how to respond last week, he said the shoot-down might have been launched on orders of a “loose and stupid” Iranian officer.

World powers have called for calm after the incidents.

German Chancellor Angela Merkel on Saturday urged for a political resolution of the crisis. “That is what we are working on,” she told Reuters.

On Sunday, Britain’s Middle East minister, Andrew Murrison, will travel to Tehran for talks with Iranian officials.

Britain’s Foreign Office said Murrison would call for “urgent de-escalation in the region.” He will also discuss Iran’s threat to cease complying with the nuclear deal that the United States pulled out of last year.  

James Phillips, a senior researcher at the conservative Washington-based Heritage Foundation, said he believes the immediate risk of a U.S.-Iran conflict has passed.

“It’s probably over as far as the incident goes with the shoot down of the drone. But, I think if there are further provocations, the president will respond in a strong and effective manner,” he said.

Phillips also said he does not expect Tehran to accept U.S. calls for negotiations while Trump continues a “maximum pressure campaign” of sanctions on Iran. “I doubt that Tehran will be serious until it sees who wins the next presidential election,” he said.

The U.S. announced this week it was authorizing another 1,000 troops — including a Patriot missile battery and additional manned and unmanned reconnaissance aircraft to bolster defenses at U.S. positions in Iraq and Syria.

 

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Ruling Party Candidate Concedes Defeat in Istanbul Re-Vote

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The ruling party candidate in the re-run of Istanbul’s mayoral election, Binali Yildirim, has conceded defeat to opposition candidate Ekrem Imamoglu.

Sunday’s vote was held because election authorities controversially annulled Imamoglu’s initial historic election victory in March on a technicality after President Recep Tayyip Erdogan disputed the defeat of his candidate.

Electoral authorities rejected Erdogan’s AKP Party’s claims of voting fraud, but ordered a revote on the grounds a number election officials were ineligible. The opposition condemned the decision and claimed the Sunday vote is now more than just about who runs the city.

In a sign of the importance of Sunday’s election, voting was brisk from the moment the Kadikoy district ballot station opened, in a city where people traditionally vote late.  Early heavy voting  was reported across the city.

“The election is very important for Turkey, this will change the face of Turkey,” said retiree Cengiz Demir, one of the first to vote in Kadikoy district. “We have to return to democratic settings. Maybe more than a majority have had enough of one man rule,” he added.

One man rule is a reference to President Erdogan who many of his opponents accuse of undermining democracy and turning Turkey into an authoritarian state.

“In the name of our Turkey, in the name of our Istanbul, we are going through a very important election,” Imamoglu said to hundreds of supporters after voting. “This is not only about the Istanbul metropolitan, municipal election but at the same time a day for the repair the damage of this unlawful process imposed on our nation for the sake of democracy in Turkey.”

Observers say Imamoglu’s strategy of avoiding polarizing politics and pledging inclusivity has been key to turning his CHP party’s fortunes around in the city.

“I have so many hopes for Turkey,” said Ayse, a teacher who only wanted to be identified by her first name, “Imamoglu is the only person who can make the change. Before I was so pessimistic.”

The importance of Sunday’s election has seen hundreds of thousands of people cut short their vacations to vote. The city’s airports and roads were full the night before the polls opened.

“This is so important,” said Deniz Tas speaking after voting, “I have traveled 12 hours on the road to vote and to right this injustice that has been done.”

Istanbul is Erdogan’s home city and has been his power-base for 25 years, since his rise to power started as the city’s mayor. The city accounts for a third of Turkey’s economy and nearly half the taxation, and the mayorship is widely seen as Turkey’s most important political prize after the presidency.

Underscoring the importance of the vote,  Erdogan has again put his political prestige on the line, campaigning heavily for Yildirm in the run-up to the election.  Erdogan too claims democracy is at stake, repeatedly accusing the opposition of voter manipulation. Observers say a second defeat for Erdogan could have significant consequences, damaging his reputation of electoral invincibility empowering opponents both in and outside his party.

In what was a bitter campaign Yildirim appeared conciliatory. “If we’ve ever made any wrongdoing to any rival or brother in Istanbul, I would like to ask for their forgiveness and blessing,” he said after casting his vote.

 Some AKP supporters expressed similar sentiments. “Re-vote happens in other countries, too, the voting can be repeated,” said a woman who didn’t want to be named.  “It is very normal that we have a repeat as well. The candidate who deserves it should win. The person with experience will win. Also, for us, Binali Yildirim has the experience to run Istanbul.”

 Both the leading candidates mobilizing thousands of lawyers and monitors to scrutinize the vote, claiming to defend democracy, Istanbul is bracing itself for a tense election.

 

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India Dismisses US Religious Freedom Report

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India says it is proud of its secular credentials as it rejected a U.S. report that said that religious freedom in the country has come under attack in recent years.

The latest U.S. State Department Report on International Religious Freedom released Friday said that right wing Hindu-groups claiming to protect cows that Hindus consider holy had used “violence, intimidation, and harassment” against Muslims and low-castes. It also noted that Christians have been targeted for proselytizing.

In a statement, the Indian Foreign Ministry said that no foreign government had the right to criticize its record. “We see no locus standi for a foreign entity to pronounce on the state of our citizens’ constitutionally protected rights.” It said that India is proud of “its status as the largest democracy and a pluralistic society with a longstanding commitment to tolerance and inclusion.”

New Delhi’s sharply worded statement comes ahead of a visit by U.S. Secretary of State Mike Pompeo to India starting Tuesday. His talks in New Delhi are expected to lay the ground for a meeting between U.S. President Donald Trump and Indian Prime Minister Narendra Modi on the sidelines of a Group of 20 summit in Japan later next week.

The ruling Bharatiya Janata Party also rejected the U.S. report on religious freedom saying that the presumption that “there is some grand design behind anti-minority violence is simply false.”

In a statement, party media head Anil Baluni said that Prime Minister Modi and other BJP leaders have strongly deplored violence against minorities and weaker sections of the society.

The U.S. report had said that senior BJP officials had last year made “inflammatory speeches” against religious minorities and that despite Indian government statistics indicating that communal violence has increased sharply over the past two years, the Modi administration has not addressed the problem.

 

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Amazon Set to Begin Drone Package Delivery

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The giant e-commerce technology company, Amazon, has announced that it expects to start delivering orders to shoppers’ homes by drones in the coming months. The details are still in the works, but the innovation could change the way we get packages. VOA’s Kevin Enochs reports.

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Trade Experts Unruffled About Rare Earth Minerals Supply

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Rising trade tensions between the U.S. and China have sparked worries about the 17 exotic-sounding rare earth minerals needed for high-tech products like robotics, drones and electric cars. 

 

China recently raised tariffs to 25% on rare earth exports to the U.S. and has threatened to halt exports altogether after the Trump administration raised tariffs on Chinese products and blacklisted telecommunications giant Huawei.  

  

With names like europium, scandium and ytterbium, the bulk of rare earth minerals are extracted from mines in China, where lower wages and lax environmental standards make production cheaper and easier.  

  

But trade experts say no one should panic over China’s threats to stop exporting the elements to the U.S. 

 

There is a U.S. rare minerals mine in California. And Australia, Myanmar, Russia and India are also top producers of the somewhat obscure minerals. Vietnam and Brazil both have huge rare earth reserves.  

  

The sky is not falling,'' said Mary B. Teagarden, a China specialist, professor and associate dean at the Thunderbird School of Global Management in Phoenix.There are alternatives.” 

 

Simon Lester, associate director of the center for trade policy studies at the Cato Institute think tank in Washington, agreed. “Over the short term, it could be a big disruption, but companies that want to stay in business will find a way,” he said.    

Although the U.S. is among the world’s top 10 countries for rare earths production, it’s also a major importer of the minerals, looking to China for 80% of what it buys from other countries, according to the U.S. Geological Survey. China last year produced 120,000 metric tons of rare earths, while the United States produced 15,000 metric tons.  

Mountain Pass Mine

 

The United States also depends on China to separate the minerals pulled from Mountain Pass Mine, the sole rare earths mine in the U.S., which was bought two years ago by the Chicago-based JHL Capital Group LLC .  

  

“We need to develop a U.S.-based supply chain so there is no possibility we can be threatened,” said Ryan S. Corbett, managing director of JHL Capital. 

 

The mine’s top products are neodymium and praseodymium, two elements that are used together to make the lightweight magnets that help power electric cars and wind turbines and are found in electronics such as laptop hard drives. 

 

Mountain Pass, located in San Bernardino County, Calif., was once the top supplier of the world’s rare earth minerals, but China began taking over the market in the 1990s and the U.S. mine stopped production in 2002.  

  

Mountain Pass later restarted production, only to close again amid a 2015 bankruptcy. Corbett said extraction resumed last year after JHL Capital purchased the site with QVT Financial LP of New York, which holds 30%, and Shenghe Resources Holding Co. Ltd. of China, a nonvoting shareholder with 9.9%.  

  

Since then, Mountain Pass has focused on achieving greater autonomy with a $1.7 billion separation system set to go online late next year that would allow it to skip sending rare earths ore to China for that step. 

 

China could hurt itself in the long run by cutting off the U.S., specialists said.  

  

David Merriman, a rare earths analyst for Roskill commodity research in London, said that during a similar trade flap with China in 2011, Japan began looking to other countries, including Australia, for the minerals needed to manufacture electronics.   

Australian rare earths production giant Lynas Corp. Ltd. this month announced a proposed deal with Blue Line Corp. of Texas for a separation facility at an industrial site in Hondo, Texas.  

Other deposits

  

There may be other options, too. Deposits of rare earths have been detected in other U.S. states, including Wyoming and Alaska, as well in several remote areas of Canada. The Interior Department is calling for more prospecting and mining of “critical minerals,” including on public lands currently considered off-limits, and even in oceans. 

 

We have to be more forward-thinking,'' said Alexander Gysi, an assistant professor in geology and geological engineering at the Colorado School of Mines in Golden.It would be better for the U.S. to have a greater range of sources for rare earths.”

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G-20 Finance Leaders’ Goal: Adapt to Turmoil in Trade, Tech

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Financial leaders of the Group of 20 gathered Saturday to brainstorm ways to adapt global finance to an age of trade turmoil and digital disruptions.

The central bank governors and other financial regulators meeting in this southern Japanese port city also flagged risks from upsets to the global economy as Beijing and Washington clash over trade and technology.

Asked if other financial leaders attending the meetings in Fukuoka were raising concerns over the impact on global markets and trade from President Donald Trump’s crusade against huge, chronic U.S. trade deficits, especially with China, U.S. Treasury Secretary Steven Mnuchin said no.

Trump and members of his administration contend that the ripple effects of the billions of dollars in tariffs imposed by Washington on Chinese exports over the past year are creating new business opportunities for other businesses in the U.S. and other countries.

But Mnuchin acknowledged that growth has been slowing in Europe, China and other regions.

“I’m hearing concerns if we continue on this path there could be issues. There will be winners and losers,” he said.

The G-20 officials were expected to express their support for adjusting monetary policy, for example by making borrowing cheaper through interest rate cuts, in a communique to be issued as meetings wrap up on Sunday.

Their official agenda on Saturday was focused on longer-term, more technical issues such as improving standards for corporate governance, policing cyber-currencies and reforming tax systems to ensure they are fair for both traditional and new, online-based industries.

Ensuring that governments capture a fair share of profits from the massive growth of businesses like Google and Amazon has grown in importance over the many years the G-20 finance chiefs have been debating the reforms aimed at preventing tax evasion and modernizing policies to match a financial landscape transformed by technology.

One aim is to prevent a “race to the bottom” by countries trying to lure companies by offering unsustainably and unfairly low tax rates as an incentive.

Mnuchin said he disagreed with details of some of the proposals but not with the need for action.

“Everyone, we are now facing a turning point,” Japanese Finance Minister Taro Aso told the group. “This could be the biggest reform of the long established international framework in over 100 years.”

Some European members of the G-20, especially, want to see minimum corporate tax rates for big multinationals. France and Britain have already enacted stop-gap tax systems for digital businesses, but they are not adequate, said French Finance Minister Bruno Le Maire.

“For the time being there is no fair taxation of this new economic model,” Le Maire said, adding that the hope is to have an agreement by the year’s end.

The issue is not confined to the wealthiest nations. Indonesia, a developing country of 260 million with more than 100 million internet users, is also struggling to keep up.

“The growth has been exponential but we cannot capture this growth in our GDP as well as in our tax revenue,” said Indonesian Finance Minister Mulyani Indrawati.

Mobile banking, big data, artificial intelligence and cloud computing are among many technologies that are expanding access to financial services for many people who in the past might not have even used banks.

But such innovations raise questions about protecting privacy and cybersecurity, Aso said.

“We need to stay vigilant against risks or challenges,” Aso said.

Japan, the world’s third-largest economy, is hosting the G-20 for the first time since it was founded in 1999. The venue for the annual financial meeting, Fukuoka, is a thriving regional hub and base for start-ups.

The G-20 groups include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.

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With Mexico Deal Done, US Urges China to Resume Trade Talks

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One down, still others to go. President Donald Trump claimed a victory after Washington and Mexico agreed on measures to stem the flow of Central American migrants into the United States.

Trump called off plans to impose a 5% tax on Mexican exports, and Treasury Secretary Steven Mnuchin, speaking to reporters Saturday in Fukuoka on the sidelines of a meeting of financial leaders of the Group of 20 major economies, urged China to follow suit and return to stalled negotiations.

Mnuchin said he planned to have a private conversation with the head of China’s central bank, Yi Gang. In a G-20 group meeting later in the day, the two were seen exchanging friendly remarks, but there were no fresh signs Beijing is ready to compromise in the dispute over trade and technology.

“From our perspective of where we are now, it is a result of them backtracking on significant commitments,” Mnuchin said. “I don’t think it’s a breakdown in trust or good or bad faith. … If they want to come back and complete the deal on the terms we were negotiating, that would be great.”

Mnuchin said he had no direct message to give to Yi, who has participated in the 11 rounds of talks so far on resolving the dispute between the world’s two largest economies over technology and trade.

He said there were no plans for trade talks in Washington or Beijing before Presidents Donald Trump and Xi Jinping are due to meet in Osaka for the G-20 summit on June 28-29.

“This will be a one-on-one with Gov. Yi to talk alone about the trade issues,” Mnuchin said. But he added, “I would expect the main progress will be at the G-20 meetings of the presidents.”

The Trump administration began slapping tariffs on imports of Chinese goods nearly a year ago, accusing Beijing of using predatory means to lend Chinese companies an edge in advanced technologies such as artificial intelligence, robotics and electric vehicles. Those tactics, the U.S. contends, include hacking into U.S. companies’ computers to steal trade secrets, forcing foreign companies to hand over sensitive technology in exchange for access to the Chinese market and unfairly subsidizing Chinese tech firms.

The deal with Mexico helps alleviate uncertainty over the deal Washington recently reached on revising the North American Free Trade Agreement. The new U.S.-Mexico-Canada deal has been heading toward a vote in Congress and might have been stymied by new tariffs. But the U.S. is still negotiating new trade deals with Japan after withdrawing from a Pacific Rim arrangement, the Obama-era proposed Trans-Pacific Partnership.

America’s huge trade deficit with China — a record $379 billion last year — is one factor driving Trump’s frustrations with Beijing.

The United States now is imposing 25% taxes on $250 billion in Chinese goods. Beijing has counterpunched by targeting $110 billion worth of American products, focusing on farm goods such as soybeans in a deliberate effort to inflict pain on Trump supporters in the U.S. heartland.

The U.S. side has been preparing to expand retaliatory tariff hikes of 25% on another $300 billion of Chinese products, and Mnuchin indicated it was prepared to take that step if negotiations with Beijing fail. But he said Trump had not yet made a decision on that, suggesting room for further delays depending on the outcome of his discussion with Xi later this month.

“As the president has said, if we can get the right agreement, that’s great. If we can’t, we will proceed with tariffs,” he said.

 

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Federally Insured Banks Largely Off-Limits to Cannabis Business

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In May, Arkansas became the latest state to cash in on the sale of medical marijuana. Lines of people wrapped around a newly opened dispensary, drawing in customers from all four corners of the Southern U.S. state.

“I see them standing outside the window with a big smile on their face,” said Bud Watkins, manager of Doctor’s Orders RX in Hot Springs. “They love it.”

In the first week of business, Arkansan dispensaries sold more than 22.6 kg (50 pounds) of cannabis in nearly 5,000 transactions.

According to Marijuana Business Daily, that revenue will contribute to a growing national market of retail medical and recreational cannabis that is expected to eclipse $12 billion in sales by the end of 2019.

​Business good, money managing isn’t

Passed in the 2016 general election by popular vote, the Arkansas Medical Marijuana Amendment made the state one of only a few in the South to allow legal purchase of the drug. It joined, however, a majority of U.S. states that had passed similar legislation.

While business is doing well, managing the money is difficult. Despite more states coming on board, plant-touching businesses are still operating as mostly cash-only enterprises.

Plant-touching businesses handle the cannabis plant itself, either cultivating, distributing or processing it. These tend to be the businesses most people think of when they imagine the cannabis industry. Plant-touching businesses are generally subject to the strictest regulations and licensing processes in the industry, as well.

“The vast majority of the businesses that touch the plant have a very difficult time finding banking partners,” said Sal Barnes, a director at Marijuana Policy Group. “The majority of those that do (bank) are going to be through credit unions and state banks, especially in California and Colorado, where we have what we like to call an adult-use market, and that is essentially just a glorified checking account.”

​Federally outlawed since 1970

Since 1970, cannabis has been officially outlawed at a federal level for any use, including medical. This means that federally insured banks operate under prohibitive restrictions about doing any business with any plant-touching businesses, which affects everyone along the supply chain, from the growth of the plant to the production or sale of a cannabis gummy.

In spite of this, states have increasingly passed legislation to allow for the legal purchase, putting them at odds with the federal government.

“The industry is hindered. Right now, the current as-is method is not safe. You literally have companies hiring ex-Marines to guard their cash, and that just doesn’t fly,” Barnes said.

Not having access to banking services means that cannabis businesses must pay for everything in cash, from salaries to taxes. And, because the cash is usually stored on-site, robberies are very common.

“We have one of the most secure buildings in the state,” said Watkins, who didn’t want to go into too many details.

Marijuana in the mainstream

Legalizing marijuana is no longer considered a fringe issue. According to a 2018 Gallop poll, two-thirds of Americans support legalizing marijuana.

There is also bipartisan traction in Congress. In March, a U.S. House of Representatives committee passed the Secure and Fair Enforcement Banking Act of 2019, more commonly known as the SAFE Banking Act. It would provide legal protection from persecution for banks and federally regulated creditors that do business with state-legal cannabis businesses.

State attorneys, including Arkansas’ Leslie Rutledge, are now also applying pressure to see changes in federal law.

“After careful consideration and speaking with members of the banking industry, as well as our state regulatory authority, the attorney general felt that it was important for the office to support the SAFE Banking Act to help minimize fraud, tax evasion and money laundering that arises from cash only businesses,” said Rutledge’s office in an emailed statement.

Earlier this month, 38 Republican and Democratic state attorneys general sent a letter in support of the SAFE Banking Act.

“This is not just an issue facing Arkansans, but affects a majority of states,” Rutledge’s office stated. “If passed, this legislation will help Arkansas minimize the dangerous problems seen by other states, such as burglaries and robberies of dispensaries who can maintain a large quantity of cash, while at the same time, allowing legitimate businesses and service providers to also conduct business within the regulated banking system.”

As for whether the SAFE Banking Act eventually makes it to a vote, or future federal bills attempt to change banking regulations, Barnes said it’s only a matter of time.

“Next year, no. Next two to three years, possibly. Within the next four to five, definitely,” he said.

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Two Execs Out as Uber Stock Sputters

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Uber is parting ways with two of its top executives less than a month after the company’s rocky stock market debut.

CEO Dara Khosrowshahi told employees in an email Friday that he plans to be more involved in day-to-day operations now that the initial public offering of stock has passed. He said the heads of the company’s global rides and food-delivery teams will report directly to him, and Chief Operating Officer Barney Harford will leave the company.

Khosrowshahi said he plans to combine the marketing, communications and policy teams, and Chief Marketing Officer Rebecca Messina also will leave the company.

“It’s increasingly clear that it’s crucial for us to have a consistent, unified narrative to consumers, partners, the press and policymakers,” Khosrowshahi said.

Stock struggling

San Francisco-based Uber’s stock has struggled since its initial public offering last month. The company posted strong revenue growth in its first quarter as a public company, but also $1 billion in losses.

The stock closed Friday down 76 cents, or 1.7%, at $44.16. It went public at $45 a share.

“This is Dara asserting more control over the company and taking over the wheels at a time the company really needs to execute in the eyes of the public investors,” said Dan Ives, managing director of equity research at Wedbush Securities. “It’s a double-edged sword for him, because it’s going to put that much more pressure on the success of Uber riding on his shoulders.”

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US Legislators Seek Answers on Boeing 737 Max Defect 

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Two key U.S. legislators want answers from Boeing and federal regulators about why the company waited more than a year to disclose that a safety alert in its 737 Max plane wasn’t working properly. 

 

U.S. Reps. Peter DeFazio of Oregon and Rick Larsen of Washington sent letters to Boeing and the Federal Aviation Administration seeking details on what they knew when, and when airlines were told. 

 

The feature is designed to warn pilots when a sensor provides incorrect information about the pitch of the plane’s nose. 

 

Boeing admitted in May that within months of the plane’s 2017 debut, engineers realized that the sensor warning light worked only when paired with a separate, optional feature. 

 

The sensors malfunctioned during flights in Indonesia and Ethiopia. Both planes crashed, killing 346 people in all.

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Trade War Clouds Outlook as Finance Chiefs Meet in Japan

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Finance ministers and central bank governors meeting in Japan this weekend will try to make headway on long-standing issues such as how much global giants like Facebook and Amazon should pay in taxes. 

 

They’re likely to end up focusing a large share of their attention on how to keep global growth on track when the world’s two biggest economies are entrenched in an escalating trade war. 

 

U.S. Treasury Secretary Steven Mnuchin, who has headed trade talks with Beijing along with U.S. Trade Representative Robert Lighthizer, was due to meet with Yi Gang, governor of China’s central bank, on the sidelines of the G-20’s annual financial gathering in Fukuoka in southern Japan. 

 

But it was unclear if their meeting, a possible prelude to talks at the G-20 summit later this month between President Donald Trump and Chinese President Xi Jinping, might lead to a restart of those talks after weeks of stalemate. 

China’s ability to endure

 

As the Trump administration prepares to expand retaliatory tariff hikes of up to 25% to another $300 billion of Chinese products, Beijing has sought to highlight China’s capacity to endure and overcome hardship.  

 

Yi told Bloomberg Television in an interview broadcast Friday that he expected the meeting with Mnuchin to be “difficult.” But he said China’s central bank, the People’s Bank of China, had plenty of room to maneuver to help keep the economy growing despite the pounding the country’s export manufacturers are taking as the toll from higher tariffs mounts. 

 

Speaking Thursday in France, Trump said he plans to make a decision about ramping up tariffs on China after speaking with Xi at the summit in Osaka at the month’s end.

“I will make that decision, I would say, over the next two weeks — probably right after the G-20,” he said.

The Trump administration began slapping tariffs on imports of Chinese goods nearly a year ago, accusing China of resorting to predatory tactics to give Chinese companies an edge in advanced technologies such as artificial intelligence, robotics and electric vehicles. These tactics, the U.S. contends, include hacking into U.S. companies’ computers to steal trade secrets, forcing foreign companies to hand over sensitive technology in exchange for access to the Chinese market and unfairly subsidizing Chinese tech firms.

Trade deficit

Trump has also complained repeatedly about America’s huge trade deficit with China — a record $379 billion last year — which he blames on weak and naive negotiating by previous U.S. administrations.

The United States now is imposing 25% taxes on $250 billion in Chinese goods. Beijing has counterpunched by targeting $110 billion worth of American products, focusing on farm goods such as soybeans in a deliberate effort to inflict pain on Trump supporters in the U.S. heartland.

Unease over trade tensions and their potential impact on other economies has deepened since Trump announced he would impose a 5% tax on Mexican products starting Monday — a tax that would reach 25% by Oct. 1 if the Mexican government fails to stop the flow of Central American migrants into the United States.

While the tariffs have taken a minor toll on the U.S. economy, the uncertainty and slowing demand are rippling across the globe. Earlier this week, the World Bank downgraded its forecast for the global economy in light of trade conflicts, financial strains and unexpectedly sharp slowdowns in wealthier countries.

Slashing rates

The weakness has prompted central banks, most recently in Australia and India, to slash interest rates to fend off recession. 

 

Japan, hosting the G-20 for the first time since it was founded in 1999, has plumbed the limits of that strategy. The Bank of Japan’s policy interest rate has been at minus 0.1% for years, to keep credit cheap and support a modest pace of expansion.

As the trade conflicts percolate, the officials gathering in Fukuoka, a bustling port city on the southern main island of Kyushu, will carry on chipping away at financial reforms and other perennial issues. 

 

Some European members of the G-20, especially, want to see minimum corporate tax rates for big multinationals. 

 

Japan’s Kyodo News service reported Friday, citing a draft communique, that the finance leaders are also discussing the issue of how developing countries are handling debts incurred through major construction projects, efforts to combat money laundering, and efforts to prevent terrorist groups from using cybercurrencies as a source of funding.

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In Double Whammy, Fitch Downgrades Mexico and Moody’s Lowers Outlook

Posted on Leave a commentPosted in Бізнес, Новини, Фінанси

In a double blow for Mexico, credit ratings agency Fitch downgraded the nation’s sovereign debt rating on Wednesday, citing risks posed by heavily indebted oil company Pemex and trade tensions, while Moody’s lowered its outlook to negative.

The Mexican peso weakened as much as 1.3% on the news.

Cutting Mexico’s rating to BBB, nearing junk status, Fitch said the financial woes of state oil company Pemex were taking a toll on the nation’s prospects.

Fitch said mounting trade tensions influenced its view, according to a statement issued shortly after the end of a meeting in the White House in which Mexican officials tried to stave off tariffs U.S. President Donald Trump has vowed to impose next week.

Following a surge in mostly Central American migrants arriving at the U.S. border, Trump threatened blanket tariffs on Mexican imports if it did not do more to stem the flow.

“Growth continues to underperform, and downside risks are magnified by threats by U.S. President Trump,” Fitch said.

Mexican President Andres Manuel Lopez Obrador took office in December with ambitious plans to build a $8 billion refinery, a decision ratings agencies and investors warned would divert funds from its more profitable production and exploration business.

“Further evidence that medium-term growth is in decline, whether as a result of policies that actively undermine growth or because of continued policy unpredictability, would put downward pressure,” Moody’s said in a statement.

Mexico’s finance ministry declined to comment.

Lopez Obrador has said the ratings agencies were punishing Mexico for the “neo-liberal” policies of previous administrations.

A Reuters analysis of Pemex accounts from the past decade shows debt increased by 75% during the term of Lopez Obrador’s predecessor, Enrique Pena Nieto, amid a landmark energy reform.

Pemex

Moody’s highlighted the risks posed by Pemex, formally known as Petroleos Mexicanos, the world’s most indebted oil company.

“The impact of the contingent liability represented by Pemex weighs increasingly heavily on the sovereign credit profile,” Fitch said in a statement.

The latest moves by the ratings agencies on Mexico’s sovereign rating could also ratchet up pressure on the oil company’s own rating, which is teetering on the brink being downgraded from investment grade.

In March, S&P cut its stand-alone assessment of Pemex by three notches, following Fitch’s move to downgrade its credit in January. S&P pegs the rating of Pemex to that of the sovereign rating and the stand-alone assessment does not equal a rating.

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US Refiners to Trump: Tariffs on Mexico Could Raise Gas Prices

Posted on Leave a commentPosted in Бізнес, Новини, Фінанси

U.S. refiners warned the Trump administration that tariffs on imports from Mexico could deliver a punishing blow to refiners and raise the cost of gasoline just as the U.S. driving season kicks into high gear, according to sources familiar with the discussions.

Trump surprised Mexico last week with a threat to impose 5% tariffs on all its exports to the United States unless the Mexican government took measures to stem the flow of illegal immigrants into the United States.

The United States imports more than 650,000 barrels of crude per day from Mexico, about 10% of total crude imports, according to U.S. government data. Refiners are also worried that Mexico could retaliate with tariffs on its imports of U.S. fuel, a major source of revenue for the U.S. industry.

“If these tariffs take hold, particularly if they’re able to get up to 25%, that could really impact the overall competitiveness of the U.S. refining industry,” said Chet Thompson, chief executive of the American Fuel and Petrochemical Manufacturers trade association. The group has had discussions with the administration and Congress on the issue, Thompson said.

​Mexico oil complements US oil

Mexico’s oil is heavy and refiners need it to blend with lighter U.S. oil to produce diesel fuel, gasoline and other products. Tariffs would drive up the cost of those imports — and Trump has said he would increase levies by 5% monthly until they reach 25% in October.

Mexico is a prime supplier of heavy crude, which has been harder to come by since the United States imposed sanctions on Venezuela in January.

Gasoline prices have remained subdued as global oil prices have declined because of worries about worldwide economic demand. But without enough heavy crude, U.S. refineries could run plants at lower rates to save money if heavy crude feedstock becomes too costly, lobbyists said.

“The heavy crude market is tight and it’s only Mexico at the moment. The tariff would essentially make the crude uneconomical and we may have no choice but to consider run cuts,” said one Washington-based refinery lobbyist.

Refiners have said that could drive up the price of gasoline at the pump, just as American drivers take to the road in the period of the highest gasoline demand in the United States.

Texas lawmakers alarmed

International crude prices are near a six-month low, so any rise in gasoline prices is unlikely to be prohibitive.

Right now a regular gallon of gasoline in the United States averages $2.80, according to the American Automobile Association, but it tends to rise in the summer months.

“We are trying to educate the administration on what this means for gas prices,” the lobbyist said. The potential for tariffs has alarmed lawmakers of both major U.S. parties, including members of Congress from Texas, a reliably Republican state that voted for Donald Trump in 2016 but depends on the oil industry and cross-border trade with Mexico, which accounts for 39 percent of the state’s exports, according to the Texas-Mexico Trade Coalition.

“We shouldn’t be imposing tariffs on Mexico,” said Senator Ted Cruz, Republican of Texas. He told Reuters that Republican senators “had a vigorous and frank discussion” with White House officials on the issue.

Texas has 5.7 million barrels of daily refining capacity, more than any other state.

U.S. refiners are also concerned about retaliatory actions by Mexico, which buys about one-quarter of U.S. refined product exports. In March, Mexico bought about 1.3 million bpd of oil products from the United States, according to U.S. Energy Department data.

“It would be pretty devastating to us,” a second Washington-based lobbyist said.