Paul Wiseman

5 key takeaways from the July jobs report

WASHINGTON (AP) — A resurgence in COVID-19 cases didn’t shut off the American job creation machine last month — but it did slow it down. Employers added 1.8 million jobs in July, slightly more than had been expected but far fewer than the gains of the previous two months. And while the unemployment rate dropped from 11.1 percent to 10.2 percent, it remains worrisomely high. The coronavirus outbreaks and the resulting lockdowns and fear that kept Americans away from restaurants, bars and shops hammered the economy in the spring. Employers slashed tens of millions of jobs as businesses shut their doors to slow the virus’ spread. The economy shrank at a harrowing annual rate of nearly 33 percent from April through June — by far the worst three months on record. As businesses began to reopen, the job market came back, recording unprecedented gains in May and June. But a surge in confirmed viral cases as summer began heightened doubts about whether a meaningful recovery can be sustained, especially with Congress deadlocked over proposals to provide further aid to the unemployed and to struggling states and cities. Here are five takeaways from July’s jobs report: Jobs grew, but more slowly Some economists feared that the resurgence in COVID cases would stop the jobs recovery in its tracks. It didn’t. July’s 1.8 million new jobs marked the third-best month of job creation on record. The problem is that hiring was down sharply from May’s 2.7 million added jobs and June’s 4.8 million. All told, the United States has recovered just 42 percent of the jobs that were lost in March and April. And the weakening pace of hiring suggests a long slog of a recovery ahead. Rising viral cases in the South and West have forced many businesses to delay or reverse plans to reopen. In Texas, for instance, just 26 percent of bars were closed as of June 21. Two weeks later, the figure had shot up to 74 percent, though it has since declined slightly, according to the data firm Womply. Moreover, a tentative economic comeback had been supported by a government relief program that included a crucial $600-a-week federal add-on to weekly state unemployment benefits. It allowed millions of unemployed people to afford necessities. But the expanded jobless aid has now expired, and Congress has failed to extend it or provide other financial stimulus to Americans. The loss of that money means that tens of millions of jobless Americans can’t spend as much as they formerly did, which, in turn, means a drag on the economy. “The loss of enhanced unemployment benefits and an inability to pass another stimulus bill will threaten a labor market recovery that already appears to be losing momentum,’’ Scott Anderson, chief economist at Bank of the West, wrote in a research report. Blue-collar job growth slowed sharply Hiring by private companies has increasingly narrowed to service businesses, like restaurants and retail shops, in contrast to factories, construction companies, mines and other goods-producing companies. In May, goods producers had added 676,000 jobs (21 percent of new private sector positions) and then 515,000 (11 percent) in June before adding far fewer — 39,000 (less than 3 percent of new positions) — in July. Among factories, the lone exception last month was automakers, now enjoying an uptick in sales because of falling loan rates and some pent-up demand for cars. Auto companies accounted for all of July’s factory hires. Recent job gains, Anderson noted, mainly reflect businesses that are recalling workers they had let go in the spring when the pandemic suddenly struck hard. By contrast, he wrote, “job growth downshifted sharply last month in manufacturing, construction, information and business services, signaling prolonged labor market weakness just below the surface.” Government job gains were likely exaggerated The Labor Department’s July figures show that government at all levels added 301,000 jobs last month, up from 54,000 in June. That appeared to be a surprisingly strong performance. But the government job gains were exaggerated by a technicality: Many local school districts had laid off teachers, bus drivers and school cafeteria workers early this year because of the pandemic lockups — in the spring, instead of in the summer as usual. That change warped the Labor Department’s summertime seasonal adjustments and had the effect of inflating its count of government workers in July. Economists are nervously monitoring government employment. Many have been urging Congress to deliver massive aid to state and local governments that are suffering a loss of tax revenue from the recession and are prevented by balanced-budget requirements from stimulating their economies with stepped-up spending. But Congress has yet to agree on providing any further help to state or local governments. Black and hispanic workers gained, but disparities persist Black and Hispanic workers gained jobs at a faster pace than whites in July, but their unemployment rates remain far higher. The number of Black Americans who were employed grew by 234,000 or 1.4 percent. And the number of employed Hispanics grew by 174,000 or 0.7 percent. White employment grew by 688,000 or just 0.6 percent. African Americans and Hispanics are more likely to occupy the service sector jobs that have been called back to work. Still, 14.6 percent of Black and 12.9 percent of Hispanic adults were unemployed in July, versus 9.2 percent of whites — the continuation of a longstanding racial disparity in joblessness. Many were reluctant to jump into the job market The recent hiring gains haven’t managed to draw many more Americans off the sidelines to look for jobs. The labor force — which includes people who either have a job or are looking for one — dipped last month by 62,000, to 61.4 percent of the adult population from 61.5 percent in June. “With coronavirus cases surging and the economic recovery faltering, discouraged and fearful workers were likely more reluctant to rejoin the official ranks of those seeking work,” said Lydia Boussour, senior economist at Oxford Economics.

As US piles up debt to aid economy, even usual critics cheer

WASHINGTON (AP) — The U.S. government has opened the spigots and let loose nearly $3 trillion to try to rescue the economy from the coronavirus outbreak — a river of debt that would have been unthinkable even a few months ago. And yet the response, even from people who built careers as skeptics of federal debt, speaks to the gravity of the crisis: Almost no one has blinked. With the U.S. economy in a frightening free-fall, they say, the government has no choice but to pour trillions into an emergency operation. Doing less would risk a catastrophe — a recession that could devolve into a full-fledged depression. And if that were to happen, the government’s fiscal health would end up far worse. What’s more, the lessons of World War II and the 2008 financial crisis suggest to many that a combination of ultra-low interest rates and eventual economic growth can keep government debts manageable and prevent a budget crisis. In a sign that investors worry more about a deep recession than about whether the government might eventually struggle to repay its escalating debt, the yield on the benchmark 10-year Treasury note remains well less than 1 percent. Many analysts say that while soaring federal debt may end up slowing an eventual recovery, there won’t be any recovery if the government doesn’t borrow and spend aggressively now. “Like most folks, I’m not especially concerned about deficit and debt now,” said Donald Marron, director of the Tax Policy Center, a Washington think tank. “Interest rates remain low. Immediate health and economic concerns must take precedence.’’ Nonetheless, the numbers are shocking. After Congress passed four programs to sustain the economy through the COVID-19 crisis, the budget deficit — the gap between what the government spends and what it collects in taxes — will hit a record $3.7 trillion this year, according to the Congressional Budget Office. On May 4, the Treasury Department announced that it will borrow $2.99 trillion in the April-June quarter, blowing away the previous quarterly record of $569 billion, set in the recession year of 2008, and eclipsing the $1.28 trillion it borrowed in the bond market in all of 2019. By the time the budget year ends in September, the government’s debt — its accumulated annual deficits — will equal 101 percent of the U.S. gross domestic product, according to the CBO. Policymakers are trying to fend off catastrophe. The lockdowns and travel curbs meant to contain the virus are battering the economy. GDP is expected to fall at a 40 percent annual rate from April through June. That would be the worst quarter on record dating to 1947. Thirty million Americans have sought unemployment benefits since the virus struck. Even before the health crisis, the government’s debt to the public, swollen by President Donald Trump’s 2017 tax cuts, amounted to more than 80 percent of GDP, highest level since 1950. The nation has been here before. In 1946, the year after World War II ended, federal debt peaked at nearly 109 percent of GDP. By 1962, the debt burden had dropped below the 1940 level of 44 percent of GDP. The surging postwar economy poured tax revenue into government coffers. In some ways, things are different now. The economy doesn’t grow as fast. From 1947 through 1962, the economy averaged a robust, debt-erasing 3.5 percent annual growth. It’s unlikely to achieve anything that impressive anytime soon. Since 2010, GDP growth has averaged just 2.3 percent annually. Economists have long worried about the consequences of big government debts. When the government takes on debt, the argument goes, it competes with private borrowers for loans. It “crowds out’’ private investment, heightens borrowing rates and threatens growth. But after the financial crisis, economists began to rethink their approach to debt. The recovery from the Great Recession, in the United States and especially in Europe, was sluggish in part because policymakers declined to juice growth with more debt. The 19 European countries that share the euro currency slid back into recession in 2011. As their economies slumped, their debt problems worsened. In the United States, rates didn’t rise much even as the economy gradually strengthened. It turns out investors have a near-insatiable appetite for U.S. Treasurys, given their status as the world’s safest investment. Their rush to buy Treasurys helped lower the government’s borrowing costs. So did persistently low inflation. In such a low-rate, low-inflation environment, the risk of piling on debt seems more manageable, at least for countries like the United States and Japan that borrow in their own currencies. “We can worry much less about the amount of debt than most economists guessed,” said Douglas Elmendorf, a former CBO director and now dean of the Harvard Kennedy School who for years has been a critic of runaway federal debt. Today’s U.S. policymakers enjoy the support of the Federal Reserve, which has been flooding the market with cash and keeping borrowing costs ultra-low. Fed Chairman Jerome Powell took the unusual step at a news conference last week of imploring Congress not to worry right now about the risk that its aggressive rescue programs will produce excessive debt. “I have long time been an advocate for the need for the United States to return to a sustainable path from a fiscal perspective,” Powell said. “This is not the time to act on those concerns. This is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through.” Likewise, Olivier Blanchard, a former chief economist of the International Monetary Fund, challenged the old consensus on government debt in a speech last year: “Put bluntly, public debt may have no fiscal cost… The probability that the U.S. government can do a debt rollover, that it can issue debt and achieve a decreasing debt to GDP ratio without ever having to raise taxes later, is high.’’ Then again, the future might not be like the recent past. Mark Zandi, chief economist at Moody’s Analytics, said he thinks rates will eventually start rising as the economy regains health, perhaps in 2022 or 2023. “There’s going to be a day of reckoning,” Zandi said. “We are going to as a nation have to address these deficits and debts. We’re going to have to raise taxes. We’re going to have to restrain spending.’’ But for now, he said, “You have to respond with everything you’ve got to make sure the economy doesn’t completely fall apart.’’ “The question is not: How much does this cost? But rather: How much will debt go up if we do this, versus if don’t do this?’’ said Richard Kogan, senior fellow at the Center on Budget and Policy Priorities and a budget adviser in the Obama administration.

Trade talks with Canada proceed after Trump comments leak

WASHINGTON (AP) — Talks to keep Canada in a North American trade bloc broke up Aug. 31 and will resume next week with the two longtime allies divided over such issues as Canada’s dairy market and U.S. efforts to shield drug companies from generic competition. President Donald Trump notified Congress on Aug. 31 that he plans to sign an agreement in 90 days with Mexico to replace the North American Free Trade Agreement — and hopes Canada can brought on board, too. Congress eventually would have to approve any agreement. The U.S. and Mexico reached a deal on Aug. 27 that excluded Canada. The top Canadian trade envoy, Foreign Affairs Minister Chrystia Freeland, then hurried to Washington for talks aimed at preserving Canada’s membership in the regional trade agreement. But Freeland couldn’t break an impasse in four days of negotiations with U.S. Trade Representative Robert Lighthizer. The U.S.-Canada talks will resume Wednesday. The negotiations had taken an odd turn for the worse Friday over news that President Donald Trump had told Bloomberg News that he wasn’t willing to make any concessions to Canada. Trump said he wanted the remarks to remain off-the-record; otherwise, the president said, “it’s going to be so insulting they’re not going to be able to make a deal.” The comments were leaked to the Toronto Star, and on Friday afternoon, Trump took to Twitter to angrily confirm the Star’s report: “Wow, I made OFF THE RECORD COMMENTS to Bloomberg concerning Canada, and this powerful understanding was BLATANTLY VIOLATED. Oh well, just more dishonest reporting. I am used to it. At least Canada knows where I stand!” Freeland tried to brush off the controversy in a news conference. “My negotiating counterparty is Ambassador Lighthizer,” she said. “He has brought good faith and good will to the table.” “It is Trump’s bluster at best, but obviously he is not going to force anyone into a bad deal,” said Jerry Dias, president of the Canadian private-sector union Unifor. “It is clear the U.S. economy is much bigger than ours, but trying to embarrass the Canadian team, trying to insult Canadians, is not going to get him anywhere.” Still, Freeland expressed confidence that Canada could reach a deal with the United States on a revamped trade accord that could please all sides. “We know a win-win-win agreement is within reach,” she said. Some questioned the Trump administration’s hardball approach — cutting a deal with Mexico and pressing Canada to comply or risk being left out. “The approach the Trump administration has taken — ‘my way or the highway’ — doesn’t seem designed to get to yes,” said Michael Camunez, CEO of Monarch Global Strategies who served in President Barack Obama’s Commerce Department. Philip Levy, senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush, added, “The president’s approach of brinksmanship is so far not very successful in international agreements.” The 24-year-old NAFTA tore down most trade barriers dividing the United States, Mexico and Canada. Trade between the three countries surged. But many manufacturers responded to the agreement by moving factories south of the border to take advantage of low Mexican wages, then shipping goods north to the United States and Canada. Trump has charged that the deal wiped out American factory jobs. He has vowed to negotiate a better deal — or withdraw from NAFTA altogether. Talks on a new trade deal started a year ago but bogged down over U.S. demands, including some meant to return manufacturing to the United States. A few weeks ago, the United States began negotiating with Mexico, leaving Canada on the sidelines. Outgoing Mexican President Enrique Pena Nieto wanted to sign a deal before he left office Dec. 1. The deal announced Aug. 27 would, among many other things, require that 40 percent to 45 percent of a car be made in a North American country where auto workers made at least $16 an hour — that is, not in Mexico — before qualifying for duty-free status. Canada doesn’t have much of an objection to the auto provisions of the U.S.-Mexican deal, which would benefit Canadian workers, too. Ottawa does have other complaints. Neither U.S. nor Canadian negotiators are talking publicly about the issues that divide them. But Daniel Ujczo, a trade attorney of the law firm Dickinson Wright in Columbus, Ohio, and others say the flashpoints include trade barriers that protect Canadian dairy farmers and Ottawa’s insistence on keeping NAFTA provisions for resolving disputes. Also nettlesome is a provision in the U.S.-Mexico deal that shields U.S. makers of biologics — ultra-expensive drugs produced in living cells — from generic competition for 10 years instead of the eight Canada is willing to live with: The Canadians fear the protection will drive up drug prices and make their government health care system more costly. The Trump administration had insisted that it wanted a deal by Aug. 31, beginning a 90-day countdown that would let Mexico’s Nieto sign the pact before leaving office. But under U.S. trade rules, the U.S. team doesn’t have to make public the text of the revamped agreement for 30 additional days, buying more time to reach a deal with the Canadians. Denise Bode, a partner at the Michael Best Strategies consulting firm, downplayed the importance of deadlines. “If they’re making progress, they’ll continue to work until they get a resolution or realize they can’t reach a resolution,” she said. Freeland likewise shrugged off the time constraints. “For Canada, the focus is on getting a good deal,” she said, “and once we get a good deal for Canada, we will be done.” Lighthizer’s statement Aug. 31 said Trump intends to sign a new trade deal with Mexico, whether or not Canada is part of it. But it might not be that easy. When the Trump administration notified Congress last year that it intended to renegotiate NAFTA, critics note that it said it would enter talks with both Canada and Mexico. It’s unclear whether the Trump team even has authority to reach a pact with just one of those countries. And Congress, which has to approve any NAFTA rewrite, might refuse to endorse a deal that excludes Canada. “There is no NAFTA without Canada,” said John Bozzella, president of Global Automakers, a trade group. “Auto rules included in the understanding reached between the United States and Mexico are predicated on Canada’s participation.” Even while gripped in negotiations with Mexico and now Canada over a new North American trade pact, the administration has been fighting major trading partners on other fronts. The president has imposed wide-ranging tariffs that, he argues, will help protect American workers and force U.S. trading partners to stop exploiting trade deals that are unfair to the United States. Since March, for example, Trump’s team has applied new tariffs of up to 25 percent on nearly $85 billion worth of steel and aluminum on the grounds that these imports pose a threat to America’s national security. The administration has also applied taxes to $50 billion in Chinese products, mostly goods used in manufacturing. And it’s considering slapping tariffs of up to 25 percent on an additional $200 billion in Chinese imports after a public comment period ends Sept. 6. Unlike the previous Chinese imports subject to U.S. tariffs, this larger group of goods includes parts and materials that U.S. companies depend on, along with consumer goods. These tariffs are the administration’s response to its charges that Beijing uses predatory tactics to try to supplant U.S. technological supremacy. Beijing’s tactics include cyber-theft and a requirement that American companies hand over trade secrets in exchange for access to China’s market. ^ Gillies reported from Toronto. AP Economics Writer Christopher Rugaber contributed to this story.

Talks with Canadian officials expected after US-Mexico deal

WASHINGTON (AP) — Canada’s minister of foreign affairs was scheduled to hold talks in Washington on Aug. 28 in hopes of reaching a trade agreement with the United States, an urgent response after President Donald Trump announced a deal with Mexico on Aug. 27 that left out Canada. The official, Chrystia Freeland, is facing a tight deadline to keep the three nations that formed the North American Free Trade Agreement 24 years ago together in a trade pact. The deal unveiled by Trump — whose administration set an Aug. 31 deadline — raised several key questions: Can Canada, the United States’ second-largest trading partner, be coaxed or coerced into a new pact? If not, is it even legal — or politically feasible — for Trump to reach a replacement trade deal with Mexico alone? And will the changes being negotiated to the 24-year-old NAFTA threaten the operations of American and foreign companies that have built sophisticated supply chains that span the three countries? “There are still a lot of questions left to be answered,” said Peter MacKay, a former Canadian minister of justice, defense and foreign affairs who is now a partner at the law firm Baker McKenzie. Trump was quick to proclaim the agreement a triumph, pointing to the Aug. 27 surge in the stock market, which was fueled in part by the apparent breakthrough with Mexico. “We just signed a trade agreement with Mexico, and it’s a terrific agreement for everybody,” the president declared. “It’s an agreement that a lot of people said couldn’t be done.” Trump suggested that he might leave Canada out of a new agreement. He said he wanted to call the revamped trade pact “the United States-Mexico Trade Agreement” because, in his view, NAFTA has earned a reputation for being harmful to American workers. But first, he said, he would give Canada a chance to get back in — “if they’d like to negotiate fairly.” To intensify the pressure on Ottawa to agree to his terms, the president threatened to impose new taxes on Canadian auto imports. Talking to reporters, the top White House economic adviser, Larry Kudlow, urged Canada to “come to the table.” “Let’s make a great deal like we just made with Mexico,” Kudlow said. “If not, the USA may have to take action.” Canada’s NAFTA negotiator, Foreign Minister Chrystia Freeland, cut short a trip to Europe to fly to Washington on Aug. 28 to try to restart talks. “We will only sign a new NAFTA that is good for Canada and good for the middle class,” said Adam Austen, a spokesman for Freeland, saying that “Canada’s signature is required.” MacKay added, “There is still a great deal of uncertainty — trepidation, nervousness, a feeling that we are on the outside looking in.” Critics denounced the prospect of cutting Canada out a North American trade pact, in part because of the risks it could pose for companies involved in international trade. Many manufacturers have built vital supply systems that depend on freely crossing all three NAFTA borders. Noting the “massive amount of movement of goods between the three countries and the integration of operations,” Jay Timmons, president of that National Association of Manufacturers, said “it is imperative that a trilateral agreement be inked.” Trump has frequently condemned the 24-year-old NAFTA trade pact as a job-killing “disaster” for American workers. NAFTA reduced most trade barriers between the three countries. The president and other critics say the pact encouraged U.S. manufacturers to move south of the border to exploit low-wage Mexican labor. The preliminary deal with Mexico might bring more manufacturing to the United States. Yet it is far from final. Even after being formally signed, it would have be ratified by lawmakers in each country. The U.S. Congress wouldn’t vote on it until next year — after November midterm elections that could end Republican control of the House of Representatives. But initially, it looks like at least a tentative public-relations victory for Trump, the week after his former campaign manager was convicted on financial crimes and his former personal attorney implicated him in hush money payments to two women who say they had affairs with Trump. Before the administration began negotiating a new NAFTA a year ago, it had notified Congress that it was beginning talks with Canada and Mexico. So the Aug. 27 announcement raises the question: Is the administration authorized to reach a deal with only one of those countries? A senior administration official, who briefed reporters on condition of anonymity, said yes: The administration can tell Congress it had reached a deal with Mexico — and that Canada is welcome to join. But other analysts said the answer wasn’t clear: “It’s a question that has never been tested,” said Lori Wallach, director of the left-leaning Public Citizen’s Global Trade Watch. Even a key Trump ally, Rep. Kevin Brady, the Texas Republican who is chairman of the House Ways and Means Committee, expressed caution about Monday’s apparent breakthrough. Brady said he looked forward “to carefully analyzing the details and consulting in the weeks ahead to determine whether the new proposal meets the trade priorities set out by Congress.” And the No. 2 Senate Republican, John Cornyn of Texas, while hailing Monday’s news as a “positive step,” said Canada needs to be party to a final deal. “A trilateral agreement is the best path forward,” Cornyn said, adding that millions of jobs were at stake. There are political reasons to keep Canada inside the regional bloc: “Mexico will have a difficult time selling ‘Trump’s deal’ back home if Canada does not think it is a good deal,” said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC. “It will appear that Mexico caved.” Indeed, Mexico has said it wants Canada included in any new deal to replace NAFTA. “We are very interested in this being an agreement of three countries,” said President-elect Andres Manuel Lopez Obrador. At the same time, Foreign Minister Luis Videgaray told reporters that “Mexico will have a free trade agreement regardless of the outcome” of U.S.-Canada negotiations. The Office of the U.S. Trade Representative said Mexico had agreed to ensure that 75 percent of automotive content be produced within the trade bloc (up from a current 62.5 percent) to receive duty-free benefits and that 40 percent to 45 percent be made by workers earning at least $16 an hour. Those changes are meant to encourage more auto production in the United States. For months, the talks were held up by the Trump administration’s insistence on a “sunset clause”: A renegotiated NAFTA would end after five years unless all three countries agreed to continue it. Mexico and Canada considered that proposal a deal-killer. On Aug. 27, the Trump administration and Mexico announced a compromise on that divisive issue: An overhauled NAFTA would remain in force for 16 years. After six years, the countries would review the agreement and decide whether it needed to be updated or changed. They then would either agree to a new 16-year deal or the pact would expire.

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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