Paul Wiseman

US mends ties with allies, prepares for trade war with China

WASHINGTON (AP) — Gathering strength for a brutal trade war with China, the United States appears to be trying to patch things up with its friends. U.S. and Mexican negotiators met in Washington Aug. 2-3 to work on a rewrite of the North American Free Trade Agreement — an effort that looked virtually dead a few months ago. The prior week, President Donald Trump announced a cease-fire in a potentially destructive dispute with the European Union over trade in cars, trucks and auto parts. Meanwhile, the Trump administration ratcheted up the pressure on China by proposing a doubling in tariffs on $200 billion in Chinese imports. Beijing has vowed to counterpunch with trade sanctions of its own. “If you’re going to take China on, you’d better make sure you’ve shored up your base with your allies and made sure you kept other markets open,” said Michael Camunez, president of Monarch Global Strategies consultancy and a former U.S. Commerce Department official. Trump campaigned on a vow to overhaul the 24-year-old NAFTA with Canada and Mexico, a pact he called a job-killing disaster. NAFTA did away with most barriers, including tariffs, on trade between the U.S., Canada and Mexico. Trump and other NAFTA critics say the agreement encouraged U.S. manufacturers to move factories — and jobs — south of the border to take advantage of lower-wage Mexican labor. He vowed to pull out of NAFTA if he couldn’t a deal he liked. Talks on a new NAFTA began almost a year ago but got bogged down over the Trump team’s insistence on measures that would discourage investment in Mexico and shift auto production to the United States. Momentum suddenly resumed after Andres Manuel Lopez Obrador won the Mexican presidential election last month and expressed support for overhauling NAFTA. The Mexican negotiators are hoping to reach an agreement this month with the United States, then bring Canada back into the negotiations. Canada’s absence from this week’s talks raised suspicions that the United States was pursuing a divide-and-conquer strategy with its two trading partners, isolating Canada to pressure it into agreeing with whatever the U.S. and Mexico came up with. But David MacNaughton, Canada’s ambassador in Washington, told the AP it made sense for the U.S. and Mexico to negotiate first: “There are a couple of lingering issues between the U.S. and Mexico” that need to be settled “before we can move on,” he said. The most obvious is Trump’s push to require that autos contain more content made within the NAFTA trade bloc and specifically from countries that pay high wages (that is, not Mexico) to qualify for duty-free status under the agreement. But the two countries are whittling away at their differences. In June, Trump slapped taxes on imported steel and aluminum, hoping in part to pressure Canada and Mexico to agree to a NAFTA rewrite that was to his liking. But the two neighbors — and other U.S. allies and trading partners — have slapped back with tariffs of their own, often aimed at U.S. farmers who supported Trump in the 2016 election. The Mexicans, for example, targeted U.S. pork and cheese. The retaliation is beginning to take a toll. The Trump administration last week announced a $12 billion package to ease the pain on farmers. Daniel Ujczo, a lawyer with Dickinson Wright PLLC in Columbus, Ohio, said the U.S. has a big incentive to smooth over the differences with friendly countries and get the tit-for-tat tariffs removed. “The faster we get a deal with Mexico, the faster that relieves pressure on farm country,” he said. The Trump administration last week pulled back from the brink of a trade war with the European Union, suspending planned tariffs on European autos while it talks with the EU about tearing down trade barriers. As tensions with U.S. allies seem to ease, tensions with China are rising. On Aug. 1, the Trump administration proposed hiking planned tariffs on $200 billion in Chinese imports to 25 percent from an originally announced 10 percent. The world’s two biggest economies are sparring over what Washington says are Beijing’s predatory tactics to obtain American technology. Deals with allies like the EU, Mexico and Canada could give the administration “some breathing room on China and signal to the world that they aren’t looking to fight with everyone,” said Christine McDaniel, senior research fellow at George Mason University’s Mercatus Center.

Despite friendly talk, US-China trade rifts resurface

WASHINGTON (AP) — Cake and conversation, it seems, can go only so far to mend longstanding economic rifts between the United States and China. Three months after President Donald Trump and his Chinese counterpart, Xi Jinping, shared chocolate cake at an amiable summit in Florida, tensions between the world’s two biggest economies are flaring again. As officials of the two sides began meeting July 19, Chinese Vice Premier Wang Yang said the two countries depend on each other economically and warned that “confrontation will immediately damage the interests of both.” Obstacles to cooperation loom. The Trump administration is considering slapping tariffs on steel imports, a step that risks igniting a trade war. For the United States, it’s a perilous option to address a problem caused largely by China’s overproduction of steel. And Trump is criticizing China again for failing to use its economic leverage to rein in its neighbor and ally, the nuclear rogue state North Korea. Could this week’s U.S.-China Comprehensive Dialogue produce a meaningful breakthrough in economic relations? Most China watchers are skeptical. “I’m not looking for anything worthwhile,” says Derek Scissors, a China specialist at the conservative American Enterprise Institute. For one thing, the points of difference between the two countries run deep. For another, Xi faces political pressures at home and won’t want to cause a stir in Beijing. For all the tensions between the two nations, Trump’s words about Xi himself have remained warm. He has suggested that the personal bond he formed with Xi when the two met April 6-7 at Trump’s Mar-a-Lago resort can overcome fundamental differences on trade and national security. Last week, the president called his Chinese counterpart a “friend of mine,” ”a terrific guy” and “a very special person.” At a White House event July 17, Trump suggested that the relationship is so strong that he asked during the Florida summit to start exporting U.S. beef to China and that the request was quickly granted. Trump said that the beef industry was so pleased to return to China after a 14-year ban that one executive from Nebraska “hugged me, he wanted to kiss me so badly.” “We welcome this opportunity,” Kenny Graner, a North Dakota cattle farmer who is president of the U.S. Cattlemen’s Association, says of the China market. “They have a middle class that’s growing in income. It’s big, a lot of people.” After the meeting, the president softened his accusations of abusive Chinese practices, dropped his threat to label China a currency manipulator and expressed optimism that China would pressure North Korea to scale back its nuclear program. Still, the Trump-Xi relationship has yet to deliver the substantive changes that Trump the candidate had promised voters — a core piece of his mantra to put “America first.” The economic irritants are likely to vex U.S. and Chinese officials this week. Trump had campaigned on a promise to shrink America’s trade deficits, which he blames for wiping out American factories and manufacturing jobs. The United States last year ran a trade deficit in goods with China of $347 billion, the amount by which imports exceeded exports. It’s by far the widest gap that the U.S. has with any country. “If (the gap) was just the product of free-market forces, we could understand,” Commerce Secretary Wilbur Ross said at the opening of the dialogue July 19. “But it’s not.” The Trump administration argues that China unfairly subsidizes its exports. Take steel. From 2000 to 2016, China accelerated steel production, raising its share of the world market from 15 percent to nearly 50 percent. As Chinese steel poured into the market, global prices fell, hurting American steelmakers. Scissors notes that China has long promised to stop subsidizing steel and to slow production but hasn’t delivered. The Trump administration responded by invoking a little-used weapon in American trade law that lets the president tax or restrict imports — if a U.S. Commerce Department investigation finds that they imperil national security. (The result of Commerce’s investigation of steel imports is expected soon.) The rationale was that the American military relies on steel for airplanes, ships and other equipment. Steel also goes into roads, bridges and other infrastructure. The problem is that the United States already blocks most Chinese steel imports. So any tariffs or limits on imports would instead hurt other countries, including such staunch allies as Canada and South Korea. Scissors says the United States could try to coordinate sanctions against China by countries that do import Chinese steel. David Dollar, a former World Bank and U.S. Treasury official who is now at the Brookings Institution, thinks Xi isn’t likely to make a bold move to cut Chinese steelmaking capacity — or enact other economic reforms — in advance of the Chinese communist party’s National Congress this fall. At the meeting, Xi will want to further tighten his grip on the party. What’s more, the European Union and others are likely to lash back if the U.S. imposes sanctions on foreign steel, thereby running the risk of a broader trade war. Then there’s North Korea. As a presidential candidate, Trump attacked China for refusing to pressure Pyongyang to back off from developing nuclear weapons. After the Mar-a-Lago summit, though, Trump praised Beijing for agreeing to help deal with North Korea. As a reward, he abandoned his vow to accuse China of manipulating its currency to benefit Chinese exporters. This month, North Korea defiantly proceeded with its first launch of an intercontinental ballistic missile. Trump tweeted his complaint: “Trade between China and North Korea grew almost 40% in the first quarter. So much for China working with us — but we had to give it a try!” Overall, Brookings’ Dollar expects more turbulence between Washington and Beijing. The Obama administration, he notes, had kept the relationship stable despite economic differences by working with China on such issues as the Paris climate agreement and the Iran nuclear deal. But Trump has pulled out of the Paris deal and denounced the Iran pact. “We’re going to see more volatility in the U.S.-China relationship than we’ve seen in years,” Dollar said.

The disappearing teen summer job

WASHINGTON (AP) — It was at Oregon’s Timberline Lodge, later known as a setting in the horror movie “The Shining,” where Patrick Doyle earned his first real paycheck. He was a busboy. The job didn’t pay much. But Doyle quickly learned lessons that served him for years as he rose to become the CEO of Domino’s, the pizza delivery giant: Show up on time, dress properly, treat customers well. “I grew up a lot that summer,” he says. As summer 2017 begins, America’s teenagers are far less likely to be acquiring the kinds of experiences Doyle found so useful. Once a teenage rite of passage, the summer job is vanishing. Instead of baling hay, scooping ice cream or stocking supermarket shelves in July and August, today’s teens are more likely to be enrolled in summer school, doing volunteer work to burnish their college credentials or just hanging out with friends. For many, not working is a choice. For some others, it reflects a lack of opportunities where they live, often in lower-income urban areas: They sometimes find that older workers hold the low-skill jobs that once would have been available to them. In July 1986, 57 percent of Americans ages 16 to 19 were employed. The proportion stayed over 50 percent until 2002 when it began dropping steadily. By last July, only 36 percent were working. Economists and labor market observers worry that falling teen employment will deprive them of valuable work experience and of opportunities to encounter people of different ethnic, social and cultural backgrounds. But the longer-term trend for teen employment is down and likely to stay that way for several reasons: • Teenagers and their parents are increasingly aware of the value of a college education. A result is that more kids are spending summers volunteering or studying, to prepare for college and compete for slots at competitive schools. In July 1986, just 12 percent of Americans ages 16 to 19 were taking summer classes. Thirty years later, the share had risen to 42 percent. “Parental emphasis on the rewards of education has contributed to the decline in teen labor force participation,” Teresa Morisi, a Labor Department economist, concluded in a February report on teen employment, which has been declining in the United States and other wealthy countries. Nathan Miller, 19, of New Berlin, Wisconsin, didn’t work throughout high school, choosing instead to play baseball and spend time with his family. He’s forgoing summer employment again this year to play baseball and take a certified nursing assistant course at a high school. Miller, who starts college in the fall, thinks the course may give him an edge in his quest to become a doctor. “I’m going to try to get as much hours as I can as early as possible to get as much advantage as I can to get into a competitive med school,” he says. “It’s a competition out there.” • Teens who do want to work can find that older workers are standing in the way. The summer jobs teens used to take — flipping burgers, unpacking produce at the grocery store, cashiering at the mall — are increasingly filled by older, often foreign-born, workers. In 2000-2001, teens accounted for 12 percent of retail workers, researchers at Drexel University found. Fifteen years later, it was just 7 percent. Over the same period, the teenage share of restaurant and hotel jobs fell from 21 percent to 16 percent. Americans increasingly keep working even as they near traditional retirement age — sometimes taking entry-level jobs to provide income as they transition to full-time retirement. Foreign-born workers have also increased their share of jobs in hotels and restaurants that require little education. Many employers view older workers as more reliable — more likely to show up on time, or at all, and to better know how to handle customers, co-workers and suppliers. • Many school districts have lengthened their academic years to try to boost student achievement, in the process shrinking summer vacation and the chance for teens to find work even if they want to. School years now often don’t end well into June and resume before Labor Day. “With a shorter summer off from school, students may be less inclined to get a summer job, and employers may be less inclined to hire them,” Morisi writes. The picture varies, of course, across demographic and racial lines. In poor urban neighborhoods, teens who want work struggle to find it. The summer jobs they used to get — scarce in the best of times — now often go to adults. In wealthier areas, teens are more likely to be attending summer school, doing volunteer work, traveling with their families or pursuing sports or other extracurriculars. In Loudoun County, Virginia, an affluent suburb of Washington, many businesses say they struggle to find teens willing and able to work summers. “They’re busy,” says Tyler Wegmeyer, who raises fruits and vegetables and runs a pick-your-own farm in the Loudoun town of Hamilton. “They’ve got activities. They’ve got camps. Their families go on vacation. It’s very rare I can get a kid to work all summer long.” A few years ago, Marty Potts’ family, which has farmed in Loudoun County for decades, had to abandon its dairy operation, which requires many laborers, to focus on beef farming, which requires fewer. Even so, she says, “It’s been two years since we’ve been able to get anybody.” Not until now has Collin Shipp, 18, who just graduated from Loudoun’s Woodgrove High School, ever looked for a summer job. A high school athlete, he spent previous summers trying to shave his time in the 400-meter dash and improving his distance in the triple jump. “Track was my job,” he says. Paul Harrington, Neeta Fogg and Ishwar Khatiwada of Drexel’s Center for Labor Markets and Policy studied average teen employment rates from June through August. They found that the percentage of employed 16-to-19-year-olds fell from 45 percent in 1986 to 30 percent last year. (Their numbers are lower than the July-only figures because teens are less likely to work in June and August.) They forecast that teens’ June-August employment rate will reach 30.5 percent this year, surpassing 30 percent for the first time since the recession year of 2009 and evidence of an overall improved job market. But it’s still a lot lower than it used to be. Drexel’s Harrington laments the decline of summer employment for teens. In addition to providing on-the-job experience, summer work has proved especially valuable for poor urban youths. Harrington cites research showing that city teens who participate in summer jobs programs achieve higher school attendance and academic performance and are less likely to commit crimes. The value of summer work is hardly confined to American teens. Emily Lyons, CEO of Femme Fatale Media Group, which provides models and dancers for corporate events, recalls a summer job that wasn’t exactly pleasant. The job stank. Literally. Lyons spent the summer of 1998 working part time on an Ontario garlic farm, picking, sorting and packing the pungent plants. “It was hard, dirty and strong-smelling work,” she recalls. In business, she discovered, “you have to be able to wear many hats and be willing to get your hands dirty. You can’t be too good for any role.” Lyons carried those lessons — and experience from other youthful jobs as a nanny, a hotel housekeeper and a blueberry picker — into a career as an entrepreneur and eventually to her current post as a chief executive. “Every job along the way taught me different lessons that I carry with me today,” she says. AP writers Carrie Antlfinger in Milwaukee and Candice Choi in New York contributed to this report.
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