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Westlake Legal Group > Economic Conditions and Trends

Tariffs Won’t Stop Turkey’s Invasion of Syria, Analysts Warn

Westlake Legal Group 15turkeyecon-sub-facebookJumbo Tariffs Won’t Stop Turkey’s Invasion of Syria, Analysts Warn Volkswagen AG Turkey Trump, Donald J Steel and Iron International Trade and World Market Economic Conditions and Trends Customs (Tariff)

FRANKFURT — Doubling tariffs on Turkish steel imports, as President Trump said he would do Monday, might make investors nervous. But it would take a much broader attack on the economy of Turkey to restrain its tanks from moving deeper into Syria, analysts say.

The reason is simple: Tariffs approved last year by White House officials have already gutted Turkey’s exports to the United States. They can hardly go any lower.

Mr. Trump’s threat to cut off talks on what he called a $100 billion trade deal with Turkey isn’t expected to have much of an effect, either. The figure was, to put it mildly, aspirational. Current two-way trade between Turkey and the United States is only about $21 billion.

Because neither American nor Turkish officials had detailed how they would more than quadruple trade, “analysts did not expect any immediate favorable impact on the Turkish economy,” said Selva Demiralp, economics professor at Koc University in Istanbul. “Thus, the withdrawal of this deal should not have much of an impact, either.”

The measures announced by the president are unlikely to destroy the Turkish economy, as he has warned, but plenty of other existing threats could. Economists have long regarded Turkey as a bubble waiting to burst because of government mismanagement, an inflated building boom and a shaky currency. Turkey’s military incursion into Kurdish-controlled northern Syria has unsettled investors who already had concerns about the region’s stability.

Mr. Trump’s tariff threat does give investors yet another reason to be apprehensive.

“The sanctions are ineffective, and they know they are ineffective,” said Sebastien Galy, senior macro strategist at Nordea Asset Management in Luxembourg. But he added: “Tariffs frighten both businesses and consumers. They save more and invest less because they are afraid of the future. The impact on expectations can be quite considerable.”

If the president really wanted to hurt Mr. Erdogan, Mr. Galy said, he would take steps to make it difficult for Turkish commercial banks and the central bank to conduct transactions in dollars.

The White House also said Monday that it would impose sanctions on several top officials in Ankara, including the defense and energy ministers and their ministries, essentially severing them from the global financial system. Mr. Trump’s executive order allows the sanctions to be expanded to other officials or government entities.

But comprehensive financial sanctions against the Turkish government would be seen as extremely hostile considering Turkey is still nominally a NATO ally.

Turmoil in Turkey has already caused the German carmaker Volkswagen to reconsider a big investment there. The company said Tuesday that it had postponed plans to build a $1.7 billion factory in the western part of the country that would employ 4,000 people and produce 300,000 Volkswagen and Skoda vehicles a year.

“We are monitoring the current situation with great concern,” Volkswagen said in a statement, without elaborating.

A nightmare for the Turkish government, led by Recep Tayyip Erdogan, would be a plunge in the value of the lira. That would cause the prices of imported goods to spike, fuel inflation inside Turkey and undermine popular support for Mr. Erdogan.

On Tuesday, the lira slipped about 0.6 percent versus the dollar, a relatively small amount for an often volatile currency. Analysts assume that the Turkish central bank and state-controlled commercial banks are using their dollar reserves to buy liras in the market and prevent a steeper decline.

Eventually, though, the central bank will run out of dollars. The longer Turkey continues fighting in Syria, the greater the stress on the Turkish currency, analysts say.

“History suggests that geopolitical tensions, especially involving the U.S., are not kind to the lira,” analysts at Oxford Economics said in a note to clients on Tuesday.

The Turkish steel industry is feeling plenty of pain without any help from the United States. Production is down 10 percent this year, said Ugur Dalbeler, a member of the board of the Turkish Steel Exporters Association and chief executive of Colakoglu Metalurji, a steel producer based in Istanbul.

“It is tough,” Mr. Dalbeler said by phone from Mexico, where he was attending an industry gathering.

Turkish steel makers have been slammed from numerous directions. Customers in the Middle East have suffered from tensions in the region. Europe has restricted steel imports in response to a glut in global supply. Demand from Japan, another important customer, has slumped. United States tariffs are, by comparison, a small problem.

Mr. Dalbeler expressed anger that the tariffs, originally justified on national security grounds, were being used to put pressure on Turkey.

“Doubling tariffs again proves that the president is not using his authority for national security,” he said. “He’s using it against Turkey politically.”

The United States imposed tariffs of 50 percent on Turkish steel last year amid a dispute over a detained American pastor. The Trump administration cut the tariffs to 25 percent in May, to the same level as tariffs imposed on most other foreign producers. But the damage was already done.

From January through August, imports of Turkish steel by the United States plunged 80 percent to 136,000 tons, “which is nothing, basically, on a global scale,” said Alex Griffiths, an analyst at Wood Mackenzie, a research firm.

“Exports were already to the level where I wouldn’t consider the United States to be a major export destination,” Mr. Griffiths said.

Mr. Trump mentioned the $100 billion trade deal with Turkey during a news conference with Mr. Erdogan in Japan in June. After Mr. Erdogan said the goal was to expand trade to $75 billion a year, Mr. Trump said that was too low.

“I think the $75 billion is small,” he said, according to an official transcript. “I think it’s going to be well over $100 billion soon.”

In September, Commerce Secretary Wilbur Ross acknowledged during a visit to Ankara that “$100 billion sounds like a lot.” But he added that it would be less than 2 percent of the United States’ total trade.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Tariffs Won’t Stop Turkey’s Invasion of Syria, Analysts Warn

Westlake Legal Group 15turkeyecon-sub-facebookJumbo Tariffs Won’t Stop Turkey’s Invasion of Syria, Analysts Warn Volkswagen AG Turkey Trump, Donald J Steel and Iron International Trade and World Market Economic Conditions and Trends Customs (Tariff)

FRANKFURT — Doubling tariffs on Turkish steel imports, as President Trump said he would do Monday, might make investors nervous. But it would take a much broader attack on the economy of Turkey to restrain its tanks from moving deeper into Syria, analysts say.

The reason is simple: Tariffs approved last year by White House officials have already gutted Turkey’s exports to the United States. They can hardly go any lower.

Mr. Trump’s threat to cut off talks on what he called a $100 billion trade deal with Turkey isn’t expected to have much of an effect, either. The figure was, to put it mildly, aspirational. Current two-way trade between Turkey and the United States is only about $21 billion.

Because neither American nor Turkish officials had detailed how they would more than quadruple trade, “analysts did not expect any immediate favorable impact on the Turkish economy,” said Selva Demiralp, economics professor at Koc University in Istanbul. “Thus, the withdrawal of this deal should not have much of an impact, either.”

The measures announced by the president are unlikely to destroy the Turkish economy, as he has warned, but plenty of other existing threats could. Economists have long regarded Turkey as a bubble waiting to burst because of government mismanagement, an inflated building boom and a shaky currency. Turkey’s military incursion into Kurdish-controlled northern Syria has unsettled investors who already had concerns about the region’s stability.

Mr. Trump’s tariff threat does give investors yet another reason to be apprehensive.

“The sanctions are ineffective, and they know they are ineffective,” said Sebastien Galy, senior macro strategist at Nordea Asset Management in Luxembourg. But he added: “Tariffs frighten both businesses and consumers. They save more and invest less because they are afraid of the future. The impact on expectations can be quite considerable.”

If the president really wanted to hurt Mr. Erdogan, Mr. Galy said, he would take steps to make it difficult for Turkish commercial banks and the central bank to conduct transactions in dollars.

The White House also said Monday that it would impose sanctions on several top officials in Ankara, including the defense and energy ministers and their ministries, essentially severing them from the global financial system. Mr. Trump’s executive order allows the sanctions to be expanded to other officials or government entities.

But comprehensive financial sanctions against the Turkish government would be seen as extremely hostile considering Turkey is still nominally a NATO ally.

Turmoil in Turkey has already caused the German carmaker Volkswagen to reconsider a big investment there. The company said Tuesday that it had postponed plans to build a $1.7 billion factory in the western part of the country that would employ 4,000 people and produce 300,000 Volkswagen and Skoda vehicles a year.

“We are monitoring the current situation with great concern,” Volkswagen said in a statement, without elaborating.

A nightmare for the Turkish government, led by Recep Tayyip Erdogan, would be a plunge in the value of the lira. That would cause the prices of imported goods to spike, fuel inflation inside Turkey and undermine popular support for Mr. Erdogan.

On Tuesday, the lira slipped about 0.6 percent versus the dollar, a relatively small amount for an often volatile currency. Analysts assume that the Turkish central bank and state-controlled commercial banks are using their dollar reserves to buy liras in the market and prevent a steeper decline.

Eventually, though, the central bank will run out of dollars. The longer Turkey continues fighting in Syria, the greater the stress on the Turkish currency, analysts say.

“History suggests that geopolitical tensions, especially involving the U.S., are not kind to the lira,” analysts at Oxford Economics said in a note to clients on Tuesday.

The Turkish steel industry is feeling plenty of pain without any help from the United States. Production is down 10 percent this year, said Ugur Dalbeler, a member of the board of the Turkish Steel Exporters Association and chief executive of Colakoglu Metalurji, a steel producer based in Istanbul.

“It is tough,” Mr. Dalbeler said by phone from Mexico, where he was attending an industry gathering.

Turkish steel makers have been slammed from numerous directions. Customers in the Middle East have suffered from tensions in the region. Europe has restricted steel imports in response to a glut in global supply. Demand from Japan, another important customer, has slumped. United States tariffs are, by comparison, a small problem.

Mr. Dalbeler expressed anger that the tariffs, originally justified on national security grounds, were being used to put pressure on Turkey.

“Doubling tariffs again proves that the president is not using his authority for national security,” he said. “He’s using it against Turkey politically.”

The United States imposed tariffs of 50 percent on Turkish steel last year amid a dispute over a detained American pastor. The Trump administration cut the tariffs to 25 percent in May, to the same level as tariffs imposed on most other foreign producers. But the damage was already done.

From January through August, imports of Turkish steel by the United States plunged 80 percent to 136,000 tons, “which is nothing, basically, on a global scale,” said Alex Griffiths, an analyst at Wood Mackenzie, a research firm.

“Exports were already to the level where I wouldn’t consider the United States to be a major export destination,” Mr. Griffiths said.

Mr. Trump mentioned the $100 billion trade deal with Turkey during a news conference with Mr. Erdogan in Japan in June. After Mr. Erdogan said the goal was to expand trade to $75 billion a year, Mr. Trump said that was too low.

“I think the $75 billion is small,” he said, according to an official transcript. “I think it’s going to be well over $100 billion soon.”

In September, Commerce Secretary Wilbur Ross acknowledged during a visit to Ankara that “$100 billion sounds like a lot.” But he added that it would be less than 2 percent of the United States’ total trade.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Wall Street’s Sky-High Expectations Are About to Collide With Reality

Westlake Legal Group merlin_154795812_1304cdc8-388c-4512-a1ee-3cd378524fad-facebookJumbo Wall Street’s Sky-High Expectations Are About to Collide With Reality United States Economy Stocks and Bonds Standard&Poor's 500-Stock Index Recession and Depression Economic Conditions and Trends Company Reports

Wall Street’s eternally optimistic forecasters are expecting corporate profit growth to surge by the middle of next year — views that are about to collide with reality as hundreds of companies report financial results and update investors on their prospects.

American companies go through this ritual every three months: sharing financial statements and holding conference calls in which they sometimes offer their expectations for future quarters, what Wall Street calls “guidance.” For this quarter, it begins with reports from several big banks on Tuesday.

In between these reports, executives continue to issue guidance, trying to nudge expectations higher or lower with speeches at conferences or other events so official results don’t jolt investors.

Lately, they’ve been doing less of the in-between nudging, and that could make this round of earnings reports more important than usual.

“Companies are starting to do what they do when there is rampant uncertainty, which is just stop issuing guidance,” said Savita Subramanian, head of United States equity strategy at Bank of America Merrill Lynch. “Companies just basically go dark.”

During the three months that ended in September, companies in the S&P 500 offered the fewest updates — positive or negative — to investors since 2000, according to the bank’s analysts.

The “rampant uncertainty” that Ms. Subramanian referred to flows from many sources: signs that the economy and job growth are slowing, evidence that the manufacturing sector may already be in a recession, and the trade war’s toll on China, Japan and Germany.

Plus, politics and the 2020 presidential election were always going to be a distraction, but the impeachment investigation has made it harder to know where policy will go.

On Friday, President Trump said the United States and China had reached an interim deal to avert a planned tariff increase on Tuesday. But the agreement was spoken and would take several weeks to write, doing little to remove the uncertainty surrounding the economic battle between Beijing and Washington.

Regardless of the companies’ reasons, the relative silence since their last reports means stock investors may be in for a lot of bad news all at once.

Then there’s the matter of the habitually overenthusiastic Wall Street analysts who rate stocks and try to predict where they’re heading. Stock prices hinge on expectations — not on what just happened — and the predictions look increasingly divorced from reality.

Right now, the collective forecast is that profits at S&P 500 companies will jump more than 10 percent in 2020, a view that defies expectations for the economy to slow further.

“It doesn’t look likely,” said Ralph Davidson, chief global equity strategist at BTG Pactual, a Brazilian investment bank, of the profit forecast. “We expect guidance to be coming down.”

It’s not that double-digit profit growth is unprecedented. In 2018, earnings jumped 22 percent after a sharp cut in corporate taxes. But it’s becoming clear that last year’s surge was a one-time jolt.

The current year offers an example of what may happen if it dawns on analysts that they’re being too rosy.

Last October, they were forecasting that profits would grow about 10 percent in 2019. Those targets came down fast at the end of the year because of sudden worry that the trade war and rising interest rates might tip the economy into a recession.

As the year progressed, and companies reported results, the analysts cut the forecast down, again and again.

Now, they expect that profits will have grown just under 2 percent once the year is done. For the third quarter, which ended in September, analysts expect S&P 500 companies to report that their profits fell 3 percent.

Lower profits aren’t necessarily bad news for the economy. One reason corporate earnings have been pinched is that wages have been rising. That reflects the strong job market and helps support consumer spending, which is the bedrock for economic growth in the United States.

Nor does a slowdown in profits definitely mean stocks will fall. The key reason that stocks haven’t done worse as growth targets have been reduced is the Federal Reserve’s decision to cut interest rates.

The central bank made its first cut in July and, most recently, announced that it would expand its balance sheet, a process that pumps money into financial markets. All of this has been good for stocks.

But eventually investors will have to turn their attention back to the fundamental question of whether profits are going to keep growing, and how fast. And that could make the next few weeks rocky.

“I think we’re going to see a wave of negative guidance on next year’s earnings,” said Ms. Subramanian of Bank of America. “And that might not be great for the market.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

With No End to Unrest in Sight, Hong Kong’s Economic Pain Deepens

Westlake Legal Group 13hk-economy-1-facebookJumbo With No End to Unrest in Sight, Hong Kong’s Economic Pain Deepens Politics and Government Hong Kong Protests (2019) Hong Kong Economic Conditions and Trends Demonstrations, Protests and Riots Communist Party of China

HONG KONG — It was the second day of Golden Week, usually one of Hong Kong’s busiest shopping periods, and Matthew Tam and his co-workers at a jewelry store were looking as lonely as a band of Maytag repairmen, surrounded by display cases of luxury watches with nary a customer in sight.

Sales at the store, in the once-teeming shopping district of Tsim Sha Tsui, have plummeted 90 percent in recent months, thanks in large part to the evaporation of tourists from mainland China who have been staying away since antigovernment protests began in June.

“It’s quite worrying,” said Mr. Tam, 56, who relies almost entirely on commissions for his income. “I don’t know how much longer I can endure.”

Hoteliers, salesclerks, restaurateurs and tour guides across Hong Kong have been racked by similar fears as footage of tear gas-shrouded clashes between riot police officers and furious protesters are broadcast around the world, scaring off potential visitors.

With the city’s Beijing-backed leadership refusing to concede to the protesters’ demands for free elections and an independent investigation into allegations of police misconduct, an unmistakable sense of alarm is spreading among both small-business owners and corporate executives who see no way out of the impasse.

“People are hunkering down but it’s really starting to hurt, and the longer this goes on, the gloomier the picture starts to feel,” said Tara Joseph, president of the American Chamber of Commerce in Hong Kong, who has lived in the city for nearly two decades.

The pall thickened after the Hong Kong leadership invoked emergency powers to ban the wearing of face masks during street rallies, a move that prompted fresh unrest and fury among those already angered by a slow erosion of civil liberties. The government has avoided harsher measures for now, but the prospect of restrictions like a curfew remains widely discussed.

“Emergency ordinances, face-mask bans and curfews are not the best way to restore business confidence,” Ms. Joseph said.

The tourism industry is a major driver of Hong Kong’s economy that alone keeps several hundred thousand people employed. But the overall number of tourists arriving in this semiautonomous territory has plummeted. Arrivals at Hong Kong’s international airport in August fell nearly 40 percent from a year earlier, even before the violence at protests escalated.

The falloff has been especially steep among mainlanders, who made up more than three-quarters of the 65 million people arriving here last year. The flow of visitors from mainland China nose-dived 55 percent during Golden Week.

The numbers are stark. Hotel occupancy rates are roughly 60 percent, down from 91 percent earlier this year. Retail sales dipped by 23 percent in August, the steepest decline on record. Many economists believe the city’s economy is slipping into recession.

The deepening crisis is reflected in a cascade of cancellations of major events like the Hong Kong Tennis Open, the Hong Kong Cyclothon, and the Hong Kong Wine and Dine Festival, all of which had been scheduled for this month.

For now, international finance and real estate, other pillars of the Hong Kong economy, have been largely unscathed. Corporate leaders worry, however, about the long-term impact to Hong Kong’s reputation as a stable hub for multinationals in greater China, especially if a crackdown leads to serious bloodshed or Beijing tries to interfere with the city’s hallowed independent court system.

Anxiety over shifting sentiments was heightened by a Goldman Sachs report estimating that at least $3 billion in investment had in recent months shifted from Hong Kong to Singapore, another former British colony and a regional rival for international finance. Law firms, global banks and trading companies have been drawing up contingency plans for the worst-case scenario.

There have been some reports of layoffs, and a few of the city’s ritziest hotels have been forcing employees to take unpaid leaves or have their wages temporarily trimmed.

“We really want the violence to stop as soon as possible so Hong Kong can be promoted around the world as a safe place,” said Ronald Wu, executive director of Gray Line Tours of Hong Kong, which has seen its business drop by more than half.

Alice Chan, executive director of the Travel Industry Council of Hong Kong, said only 16 tour groups arrived during the first few days of the Golden Week holiday, compared with the 110 that arrived daily last year.

Ms. Chan said antipathy toward Hong Kong spiked in August after protesters shut down the airport and attacked two men from mainland China. The spectacle of protesters burning the national flag on other occasions, she said, also has not helped. “These incidents have hurt the feelings of mainlanders,” she said.

On the mainland, China’s state-run propaganda machine has cast the protests as a riotous anti-China separatist movement orchestrated by the United States and other countries eager to tear the motherland apart. Chinese censors have blocked news reports and images that present the protesters’ yearning for democracy and their fear of being subsumed into the mainland’s authoritarian maw.

Hong Kong Disneyland would normally have been crammed with mainlanders during the holiday, but this year, the protests clearly dented the mood at the Happiest Place on Earth. The vast parking lots were mostly empty, just three of 16 ticket windows were open, and lines for many attractions were short or nonexistent.

Zhou Wenhua, 38, a real estate sales executive from Shanghai, was thrilled. “If we went to Shanghai Disneyland this week, we wouldn’t be able to move,” she said after taking her family on a spin through the It’s a Small World ride on an otherwise empty boat.

Unlike many mainlanders roaming the park in mouse ears and gnawing on roast turkey legs, grilled fish balls and pressed squid, Ms. Zhou was willing to talk about the protests, which she described as an “insurrection.”

In an echo of Beijing’s narrative, she cast the participants as spoiled children unappreciative of the Chinese government and its achievements. “Without the Communist Party, China would still be impoverished and weak,” she said. “They really should stop their rioting.”

Not that she had witnessed the protests firsthand. Ms. Zhou and her family had spent the previous two nights cloistered at their downtown hotel room, dining on room service.

Locals, fearful of impromptu subway shutdowns that can leave them stranded, are also less likely to meet friends or dine out. The West Kowloon Cultural District, a $3 billion, decade-long project that opened to sold-out performances this year, has seen ticket sales plunge. For the first time this month, district officials canceled several events in anticipation of protests and transportation shutdowns.

For many, the looming question is whether a prolonged or precipitous economic decline will chip away at popular support for the movement. A few business owners shook their heads in dismay over the vandalism and disruptions to public transport, though they asked to remain anonymous given the growing vigilante-style attacks on those the protesters deem hostile to their cause.

Surrounded by display cases stacked full with $70,000 Rolexes and $20,000 Tudor watches, Cherry Chang, 30, the owner of a small store in Tsim Sha Tsui, the shopping district, said sales have halved over the last few months. Still, she said she was willing to endure short-term financial pain for the loftier goals of genuine democracy and the preservation of the city’s generous civil liberties.

“I don’t mind losing money to support certain ideals,” she said.

Cheuk-Yan Lee, general secretary of the Hong Kong Confederation of Trade Unions, which supports the protest movement, said he thought most Hong Kongers would blame the government for any hardship, not the protesters. The bigger threat, he said, is losing the freedoms and reliably independent courts that coaxed so many international companies to set up shop here in the first place.

“What will really hurt Hong Kong is not a brief drop in consumption but a loss of faith from global investors,” he said. “Instead of suppressing the protests, the government needs to revive confidence in the rule of law. Otherwise, we will just end up being another Chinese city.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trump Reaches ‘Phase One’ Deal With China and Delays Planned Tariffs

Westlake Legal Group 11dc-trade-sub1-facebookJumbo Trump Reaches ‘Phase One’ Deal With China and Delays Planned Tariffs United States Politics and Government United States International Relations United States Economy International Trade and World Market Economic Conditions and Trends Customs (Tariff)

WASHINGTON — President Trump said Friday that he had reached a “substantial” deal with China that will forestall a planned tariff increase on Oct. 15, providing a temporary détente in a yearlong trade war.

Mr. Trump, speaking from the Oval Office, said the two sides had reached a verbal “phase one” agreement that would take several weeks to write and could be signed by both sides in November.

The initial deal, which Mr. Trump said had been reached “in principle” would involve China buying $40 billion to $50 billion worth of American agricultural products, along with agreeing to guidelines on how it manages its currency. The agreement also includes some provisions on intellectual property, including forced technology transfer and would give American financial services firms more access to China’s market, the president said.

In exchange, the United States will not go ahead with plans to raise tariffs on $250 billion worth of Chinese goods to 30 percent next week. But the president has not made a final decision on whether to increase tariffs further on Dec. 15, as he has threatened.

Mr. Trump, who just weeks ago said he was looking for a “complete” China deal, said that the two sides would now break the agreement into phases.

“It’s such a big deal that doing it in sections, in phases, is really better,” Mr. Trump said during a meeting with Liu He, China’s vice premier. “So you’ll either have two phases or three phases.”

The first phase could be signed when Mr. Trump appears alongside his Chinese counterpart at a meeting of global leaders in Santiago, Chile, in November. The next phase would begin soon after, Mr. Trump said.

Despite the announcement, the deal has not been finalized and Steven Mnuchin, the Treasury secretary, said that more work remained.

“We have a fundamental agreement on the key issues,” Mr. Mnuchin said. “But there is a significant amount of work to do.”

The agreement, which came during the 13th round of negotiations, will help defuse a prolonged trade fight that has begun inflicting pain on the global economy and was set to escalate next week. In his quest to force China to acquiesce to America’s terms, Mr. Trump has already taxed $360 billion worth of Chinese products and was poised to tariff nearly every laptop, dresser and toy that China sells to the United States before year-end.

Stock and commodity prices climbed as investors anticipated a trade agreement that could help resolve economic concerns about ongoing damage from the dispute.

The S&P 500 rose 1.1 percent. The tech-heavy Nasdaq composite index rose 1.3 percent. The Russell 2000 index of small capitalization stocks, typically viewed as closely tied to the health of the American domestic economy rose 1.8 percent.

Crude oil prices rose as did prices for key industrial metals such as copper and iron ore, often looked to as a barometer of the outlook for China’s large industrial economy.

But the deal is far from the type of comprehensive agreement Mr. Trump has been pushing for and leaves many of the administration’s biggest concerns about China’s economic practices unresolved. Although exact terms of the agreement are still under discussion, the details Mr. Trump announced include many of the concessions that China has previously floated, including purchases of agricultural products and limits on Beijing devaluing its currency to gain a competitive advantage.

And it does not appear to address some of the thorniest issues that the two countries have been grappling over.

Mr. Mnuchin said on Friday that the United States would decide whether to rescind the designation of China as a currency manipulator in a future phase of negotiations.

In August, the Treasury Department formally designated China a currency manipulator for the first time since 1994 at the direction of Mr. Trump. The largely symbolic move came amid frustration among American officials that China was counteracting Mr. Trump’s tariffs by devaluing the renminbi.

And Robert Lighthizer, Mr. Trump’s top trade negotiator, said the deal did not resolve the fate of Chinese telecom giant Huawei, which has been placed on a United States blacklist, much to China’s dismay.

“In this agreement we’re not dealing specifically with Huawei. It’s not part of this agreement. That’s a separate process,” he said.

Still, any pause in future tariff increases and reduction in trade tensions will provide welcome relief to businesses, farmers, investors and others who have suffered financially from a bitter trade dispute that has dragged on for more than a year.

Mr. Lighthizer said that the deal would require China to make structural changes that would allow more American farm goods to flow there.

“It will be much easier now for American farmers to be able to ship to China,” he said. “And we’ve made some changes on our side too that will help the Chinese.”

Mr. Mnuchin said the United States and China had reached “almost a complete agreement” on both the currency issues, and China’s moves to open up to financial services firms.

“The banks and all of the financial services companies will be very, very happy with what we’ve been able to get,” Mr. Trump said, adding that the pact would be a “tremendous thing for banks and financial services companies.”

The stakes for an agreement were high with the trade war set to worsen if the two sides did not made progress and some of Mr. Trump’s biggest political constituencies — including farmers and small businesses — in the cross hairs. In addition to the October tariff increase, Mr. Trump had planned to impose another round of levies in December, at which point the United States would have taxed nearly every Chinese import.

Those additional tariffs have prompted concern from farmers and businesses, who say the levies Mr. Trump has already placed on more than $360 billion of Chinese goods are weighing on sales and investment. While the president and his advisers maintain that the trade war is having a limited impact on the economy, they have admitted that these tariffs could impact American consumers as the holiday season approaches.

Mr. Trump’s defenders say China’s concessions will generate positive momentum for future talks and result in more business for farmers and manufacturers as they continue to press China for a comprehensive pact to correct longstanding economic abuses. Critics say the move will go only partway toward resolving a crisis of the president’s own making, and that the trade war will continue to inflict pain across the global economy.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trump to Meet Chinese Envoy Amid Hopes of Trade War Truce

Westlake Legal Group 11dc-trade-sub1-facebookJumbo Trump to Meet Chinese Envoy Amid Hopes of Trade War Truce United States Politics and Government United States International Relations United States Economy International Trade and World Market Economic Conditions and Trends Customs (Tariff)

WASHINGTON — President Trump will meet with China’s top trade envoy at the White House Friday afternoon amid growing expectations that the United States could soon announce a trade truce that would help defuse tensions with China.

After months of the United States pushing China for a comprehensive trade deal, negotiators now appear to be focused on securing a more limited agreement that would help alleviate some of the economic pain that the trade war is inflicting across the global economy.

Stocks rose Friday, in a third straight day of gains that has lifted the S&P 500 more than 2.5 percent as investors have anticipated progress in the talks, which began on Thursday. On Friday, the index was up more than 1.5 percent in early trading, with trade-sensitive sectors like semiconductor makers faring particularly well.

Negotiators were set to continue talks on Friday morning, but people familiar with the discussions said the two sides were weighing an agreement that would have China buy more American agricultural goods and limit its currency intervention, among other potential provisions. In exchange, the United States may agree not to go ahead with a plan to raise tariffs to 30 percent on $250 billion worth of goods on Oct. 15.

American officials have emphasized that the final decision over whether to agree to an “early harvest” agreement will rest with Mr. Trump. But with the president’s domestic problems mounting around an impeachment inquiry and with another painful tariff increase set to go into effect, Mr. Trump could be eager to announce that China has agreed to even a few of America’s demands.

On Friday, Mr. Trump continued to suggest he was more open to a deal than he has seemed in the past. “Good things are happening at China Trade Talk Meeting,” he said in a tweet. “Warmer feelings than in recent past.”

Such a move would constitute a compromise by the American team, which has insisted they are pushing for a comprehensive trade deal to correct longstanding problems with China’s economy, including a requirement that American companies hand over trade secrets and China’s subsidization of state-owned firms.

Chinese officials have expressed willingness to update some intellectual property protections, open their automotive and financial markets to American companies, increase their purchases of American agricultural products, and take other steps. However, they have resisted the Trump administration’s demands to make more significant changes to structural issues they say are key to managing their economy and protecting national security.

But pressure is growing to at least pause the trade war, which is set to worsen if the two sides do not make progress. In addition to the October tariff increase, Mr. Trump plans to impose another round of levies in December, at which point the United States will tax nearly every product China exports to America. That has prompted concern from farmers and businesses, who say the tariffs are weighing on sales and investment. While the president and his advisers maintain that the trade war is having a limited impact on the economy, they have admitted that these tariffs could impact American consumers as the holiday season approaches.

Business groups have welcomed the idea of announcing an agreement that would help to cool tensions that have spiraled as the Trump administration has placed tariffs on more than $360 billion of Chinese products, and China has retaliated with levies of its own.

On Thursday, a U.S. Chamber of Commerce official who had recently met with both negotiating teams said he was hopeful that the countries would announce a deal that would set rules around how China manages its currency and prevent Mr. Trump’s planned tariff increase from going into effect next week.

Myron Brilliant, the executive vice president and head of international affairs at the Chamber of Commerce, said that the two sides might announce a more comprehensive pact that strengthened China’s protections for intellectual property and further opened markets like financial services and automobiles to American companies.

The Trump administration could also contemplate removing the threat of additional tariffs that are scheduled to be imposed in December or roll back some of the tariffs it has already levied on more than $360 billion of Chinese goods based on the package of offers brought by the Chinese negotiating team, he said.

Officials from both sides have sounded relatively optimistic headed into this week’s talks. But Mr. Trump’s penchant for keeping negotiating partners guessing, and the on-again, off-again history of the trade war, has continued to cast uncertainty over the gathering. The countries appeared on the cusp of an agreement in April, only to have the deal fall apart and result in an escalation that has resulted in even more tariffs on Chinese and American goods.

Mr. Trump and the Chinese vice premier, Liu He, will meet in the Oval Office at 2:45 p.m.

Lower-level negotiations between the countries began in Washington on Monday. On Thursday, Robert Lighthizer, Mr. Trump’s top trade negotiator, and Treasury Secretary Steven Mnuchin met with the for negotiations that dragged on late into the day.

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China Trade Talks Restart as White House Explores Escalation Options

Westlake Legal Group merlin_159733326_365ee0f3-4455-4e35-ac0d-5d771ddbe5bc-facebookJumbo China Trade Talks Restart as White House Explores Escalation Options United States Politics and Government United States International Relations United States Economy Trump, Donald J Securities and Exchange Commission Regulation and Deregulation of Industry Pillsbury, Michael (1945- ) Kudlow, Lawrence A International Trade and World Market Embargoes and Sanctions Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — American and Chinese officials met for the 13th round of trade negotiations on Thursday amid growing expectations of a limited deal that could ease tensions and address some of President Trump’s concerns about China’s economic practices.

“We had a very, very good negotiation with China,” Mr. Trump said on Thursday afternoon, adding that the two sides would continue discussions on Friday. “It’s going very well.”

But administration officials are separately weighing options that could inflict additional economic pain on Beijing as the United States continues looking for ways to force China to change longstanding rules that have put American companies at a disadvantage.

The ideas under consideration would move the White House’s negotiating tool of choice beyond tariffs toward limiting China’s access to American capital markets and imposing greater scrutiny on its companies, according to people familiar with the discussions.

Administration officials, including members of the National Security Council, have begun pressing the Securities and Exchange Commission to increase scrutiny of Chinese firms. They are also looking for ways to reduce the exposure of American retirement funds to certain Chinese companies.

Many of the efforts have been proceeding independently from the trade talks and are fueled by longer-term considerations of China’s economic and security threats. Some White House advisers now view the escalation options as an additional lever to force China to make the kinds of deep economic concessions that have so far proved elusive in the talks, which have dragged on for more than a year.

On Thursday, Treasury Secretary Steven Mnuchin and Robert Lighthizer, Mr. Trump’s top trade negotiator, greeted the Chinese vice premier, Liu He, on the steps of the Office of the United States Trade Representative. The meetings stretched into the afternoon, and at one point a black S.U.V. was seen delivering large brown bags from Clyde’s, a Washington restaurant, for a working lunch.

“Big day of negotiations with China,” Mr. Trump wrote on Twitter on Thursday morning. “They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.”

A U.S. Chamber of Commerce official briefed by both negotiating teams said that the United States and China could announce a limited trade agreement this week that would prevent Mr. Trump’s planned tariff increase from going into effect this month and set rules around how China manages its currency.

Myron Brilliant, the executive vice president and head of international affairs at the Chamber of Commerce, said that a more comprehensive pact could still be announced but that the scope of the deal would depend on what Chinese negotiators offered. The Trump administration could also contemplate removing the threat of additional tariffs that are scheduled to be imposed in December or roll back some of the tariffs it has already levied on more than $360 billion of Chinese goods based on what the Chinese negotiating team offers, he said.

There have been some recent signs of accommodation between the two countries in recent weeks. China has resumed purchases of American agricultural goods. And in what is likely to be viewed as a gesture of good will by the Chinese, the Trump administration plans to approve licenses soon that will allow some companies to sell nonsensitive goods to the Chinese telecom provider Huawei, which has been blacklisted from buying American products.

But China has resisted many of the administration’s demands to make more transformative changes to the way it runs its economy. Chinese officials appear unlikely to agree to the administration’s longstanding demands that Beijing limit its subsidies to Chinese firms, change its policies surrounding the treatment of data or make other structural changes, people familiar with the negotiations said.

The potential for such a limited agreement has fueled private deliberations within the White House on options for escalating economic pressure on China.

Officials have held meetings in recent weeks to consider options if the current round of negotiations fails to address the administration’s primary concerns. Mr. Trump’s top economic advisers have publicly played down the discussions, which have centered on tightening scrutiny of Chinese companies listed on American stock exchanges and limiting the direct exposure of government-run retirement funds to China.

Larry Kudlow, the director of the National Economic Council, acknowledged on Tuesday that the administration was looking for ways to protect Americans who were investing in Chinese companies.

“We’ve opened up a study group to take a look at it,” Mr. Kudlow said on the Fox Business Network.

But the options under consideration go further than that. According to a memo circulated within the White House and reviewed by The New York Times, the administration is studying a menu of actions that, if carried out, would most likely rattle the Chinese government.

The memo was drafted by Michael Pillsbury, a China scholar at the Hudson Institute and an outside adviser to the White House. It proposes holding Chinese companies and their employees criminally liable for financial disclosure violations, broadening the criteria that could get prominent Chinese companies blacklisted in the United States and blocking public and private pension funds and university endowments from certain Chinese investments.

Other options go beyond financial scrutiny of Chinese companies. The memo describes the possibility of fostering deeper ties between the United States and Taiwan and disrupting the flow of capital between Hong Kong and mainland China if it is determined that Hong Kong’s autonomy is not being respected.

It also lays out legislation in Congress, which Mr. Trump has yet to endorse, that would impose sanctions on China for activity in contested areas of the South China Sea and crack down on Chinese-funded Confucius Institutes at American universities.

Mr. Pillsbury declined to comment on his conversations with the White House but acknowledged that he had been analyzing such possibilities for a coming study on China strategy for the Hudson Institute.

“It appears that tariffs alone are not enough, but we also need to meet some of the Chinese demands to get the kind of deal the president wants,” Mr. Pillsbury said.

A White House spokesman declined to comment.

Mr. Trump’s tariffs have already pushed some companies to move their operations out of China. But the raft of new investment restrictions and export controls that the administration is mulling would further sever supply chains and discourage financial integration between the countries, potentially to the detriment of financial markets.

On Monday, the White House clamped down on Chinese firms it accused of human rights violations by adding eight companies and 20 government organizations to an entity list that will prevent them from buying American products. On Tuesday, the State Department announced visa restrictions for Chinese officials allegedly involved in the detention and abuse of Muslim minorities.

An array of initiatives related to American capital markets and investments made by retirement funds in Chinese entities are also under consideration.

The most advanced discussions have centered on the Thrift Savings Plan, the retirement plan for federal employees and the military. As of next year, that plan, which holds nearly $50 billion in assets, is expected to begin investing in an index fund that includes more Chinese and Russian companies, as part of an effort to diversify its exposure.

The index fund includes companies that the United States government has imposed sanctions on — including Hangzhou Hikvision Digital Technology, which was among the companies blacklisted on Monday. It also includes AviChina Industry & Technology, an affiliate of China’s major military aircraft and weapons manufacturer; ZTE, which was hit with sanctions for providing technology to North Korea and Iran; and several Russian companies that the Treasury Department’s Office of Foreign Assets Control has put under sanctions.

Officials have also been discussing efforts to close loopholes that give Chinese companies access to American capital markets with less stringent disclosure requirements than American firms or those from other countries.

Chinese law requires the records of companies based in China to be kept there, and restricts the kind of documentation that auditors can transfer out of the country. The rules mean that hundreds of Chinese firms, with a collective market capitalization of more than $1 trillion, have received looser oversight than companies in other jurisdictions, according to the Securities and Exchange Commission.

A bipartisan group of senators has introduced legislation that would force Chinese companies to comply with S.E.C. disclosure regulations or be delisted from American exchanges in three years. White House officials have debated throwing their support behind the bill, but several officials, including Mr. Kudlow and Mr. Mnuchin, have opposed delisting as a draconian option that could throw American stock markets into turmoil.

“Delisting is not on the table,” Mr. Kudlow told reporters on Monday. He said the administration was responding to complaints to the commission about a lack of transparency and compliance, “but we’re very early in our deliberations.”

Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations, said that addressing the lack of compliance among Chinese companies was “overdue” but that a solution would ideally be negotiated between Chinese companies and the S.E.C.

“Nobody benefits from a mass delisting of Chinese companies on U.S. stock exchanges,” Ms. Economy said.

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U.S. and China May Be Headed for Mini-Deal on Trade This Week

Westlake Legal Group 10dc-trade2-facebookJumbo U.S. and China May Be Headed for Mini-Deal on Trade This Week United States Politics and Government United States International Relations United States Economy United States Chamber of Commerce Trump, Donald J International Trade and World Market Intellectual Property Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — The United States and China could announce a limited trade agreement this week that would prevent President Trump’s planned tariff increase from going into effect this month and set rules around how China manages its currency, according to a U.S. Chamber of Commerce official who has been briefed by both negotiating teams.

Top officials from the two countries are meeting again this week to try to resolve a yearlong trade war that has dragged on amid disagreements over the types of provisions any pact should include. But as the clash begins to inflict economic pain on the global economy, negotiators from both sides seem increasingly focused on reaching a mini-deal that would resolve just a portion of the trade dispute.

Myron Brilliant, the executive vice president and head of international affairs at the Chamber of Commerce, told reporters on Thursday that he was “hopeful” that a limited arrangement stopping a planned tariff increase on Oct. 15 would emerge from this week’s meetings.

Mr. Brilliant, who recently spoke with both negotiating teams, added that a more comprehensive pact could be announced this week but that the scope of the deal would depend on what Chinese negotiators brought to the table. The Trump administration could also contemplate removing the threat of additional tariffs that are scheduled to be imposed in December or roll back some of the tariffs it has already levied on more than $360 billion of Chinese goods based on the package of offers brought by the Chinese negotiating team, he said.

Such a limited arrangement would not constitute a full resolution and is unlikely to satisfy Mr. Trump’s demands that China change many of its economic practices, such as limiting state subsidies to its firms. The deal appears likely to repackage concessions that China has made to the United States in previous months and years — including an agreement reached on currency this year, before a falling-out between the countries in May brought progress to a standstill.

Still, a limited deal — which Washington officials have begun referring to as an “early harvest” or a “confidence building” measure — could lower tensions between the United States and China and help to mitigate some of the damage that tariffs and other punitive measures have begun to take on companies on both sides of the fight. Considerations of a limited deal involving currency promises were first reported by Bloomberg.

Mr. Trump said on Twitter on Thursday morning that he planned to meet China’s top trade envoy, Liu He, on Friday, raising speculation that a more limited deal might be at hand.

“Big day of negotiations with China,” the president wrote. “They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.”

The trade meetings come amid a growing recognition on both sides that the bilateral relationship has been headed in a troubling direction. Trade between the United States and China has slumped, dragging on both economies. In the United States, uncertainty about the prospect for future tariffs has discouraged businesses from making new hires and investments, an unwelcome development at a time of gathering economic gloom.

“We can’t afford a further escalation of the trade war that will only accelerate the chance of a recession,” Mr. Brilliant said. “I am confident the U.S. administration understands the stakes here on that front.”

Administration officials have denied that they are seeking any kind of “partial” or “interim” deal. Yet people familiar with their thinking say many are open to the possibility of an arrangement that would roll back some tariffs in return for Chinese agricultural purchases, stronger protections on intellectual property or other concessions.

But they caution that it is unclear whether the president will ultimately agree to such an arrangement. Mr. Trump and his advisers are wary of being criticized by both Democrats and Republicans for making a deal that is too weak and giving up the leverage Mr. Trump has created with his tariffs.

Announcing some kind of package of concessions this week might pave the way for a larger trade deal when Mr. Trump is next expected to meet President Xi Jinping of China in person, in November at the Asia-Pacific Economic Cooperation meetings in Santiago, Chile, Mr. Brilliant said.

Other trade experts expressed support for a positive turn in relations, regardless of what an agreement would be labeled.

“On eve of China trade talks, I welcome both sides making sufficient progress to forestall future tariff hikes and even some rollbacks,” Wendy Cutler, a vice president at the Asia Society Policy Institute and a chief trade negotiator for the Obama administration, tweeted on Wednesday. “Some call this a partial deal — but i call it announcements of tangible progress that gives momentum to the overall talks.”

It is unclear whether the provisions that might be announced this week would be new, or how much they might change China’s economic actions.

In meetings in February, China and the United States agreed to avoid devaluing their currency to make their products cheaper abroad and give their exporters an advantage, Chinese officials said in March. They also agreed to continue to comply with previous currency agreements among the Group of 20 countries, and disclose detailed information in accordance with standards set by the International Monetary Fund.

But this and other agreements were put off in late April, when the Chinese changed the draft trade agreement and American officials accused them of reneging on a pact that was nearly complete. Since then, relations have steadily worsened. In August, the Treasury Department formally labeled China a currency manipulator after Beijing allowed its currency to weaken — a decline that many economists said was done in line with market forces.

Since then, both sides have brandished a series of carrots and sticks in an attempt to pressure each other into a favorable deal. China resumed buying American agricultural goods last month, after ceasing its purchases to put more pressure on American farmers. Chinese officials also quietly dropped earlier public demands that any deal must immediately get rid of all of Mr. Trump’s levies, paving the way for a potential interim agreement.

Mr. Trump said last month that he would delay a round of tariff increases from Oct. 1 to Oct. 15. Last week, he gave a green light for his administration to issue some licenses allowing American companies to supply goods to the Chinese telecom firm Huawei, which he previously put on a blacklist barring it from buying American goods.

But other interim measures have ratcheted up the tension. The Trump administration announced on Monday that it would add 28 more entities to that blacklist, including some of China’s leading artificial intelligence firms. On Tuesday, the State Department announced visa restrictions for Chinese officials accused of involvement in human rights abuses.

Many uncertainties remain in the trade talks. In particular, China has appeared unwilling to make many of the more significant changes to its economy that the Trump administration has demanded, including restraining its subsidies to state-owned firms and allowing for the flow of data across its borders.

Mr. Brilliant said on Thursday that China’s promises on intellectual property still revolved around “20th century” issues, like copyrights for movies and software, rather than “21st century” issues involving the use of data. He said that while there could be an announcement on intellectual property this week, it appeared that more fundamental concerns about China’s treatment of technology would not be addressed.

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China Trade Talks Restart and White House Weighs Escalation Options

Westlake Legal Group merlin_159733326_365ee0f3-4455-4e35-ac0d-5d771ddbe5bc-facebookJumbo China Trade Talks Restart and White House Weighs Escalation Options United States Politics and Government United States International Relations United States Economy Trump, Donald J Securities and Exchange Commission Regulation and Deregulation of Industry Pillsbury, Michael (1945- ) Kudlow, Lawrence A International Trade and World Market Embargoes and Sanctions Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — Trump administration officials are weighing a range of options that could inflict additional economic pain on China as the United States continues looking for ways to force Beijing to change longstanding practices that have put American companies at a disadvantage.

The ideas under consideration would move the White House’s negotiating tool of choice beyond tariffs toward limiting China’s access to American capital markets and imposing greater scrutiny on its companies, according to people familiar with the discussions.

Administration officials, including members of the National Security Council, have begun pressing the Securities and Exchange Commission to tighten its checks on Chinese firms. They are also looking for ways to reduce the exposure of American retirement funds to certain Chinese companies.

Many of those efforts have been proceeding independently from the trade talks — which resumed again on Thursday — and are fueled by longer-term considerations of China’s economic and security threats. Some White House advisers now view those options as an additional lever to force China to make the kinds of deep economic concessions that have so far proved elusive in the talks, which have dragged on for more than a year.

Top-level officials from both countries began their 13th round of trade negotiations on Thursday. They are expected to discuss proposals for a somewhat limited trade deal that would address some of President Trump’s criticisms of China’s economic practices but still be acceptable to Beijing.

“Big day of negotiations with China,” Mr. Trump tweeted Thursday morning. “They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.”

Some administration officials have been hopeful that a deal will lock in more intellectual property protections for American companies and provide those firms with greater access to Chinese markets. They also want to avoid further tariffs on Chinese goods that have begun to weigh on American consumers.

If China makes sufficient concessions, some in the administration are willing to roll back a portion of the tariffs that Mr. Trump has placed on more than $360 billion of Chinese goods, people familiar with the discussions said. In what is likely to be viewed as a gesture of good will by the Chinese, the Trump administration plans to go ahead with approving licenses soon that will allow some companies to sell nonsensitive goods to the Chinese telecom provider Huawei, which has been blacklisted from buying American products.

But China has resisted many of the administration’s demands to make more transformative changes to the way it runs its economy. Chinese officials have come to Washington this week eager to settle on a narrow deal that would involve tariff reductions in exchange for a resumption of Chinese purchases of American food. They appear unlikely to agree to the administration’s longstanding demands that Beijing limit its subsidies to Chinese firms, change its policies surrounding the treatment of data or make other structural changes, people familiar with the negotiations said.

The potential for such a limited agreement has fueled private deliberations within the White House on options for escalating economic pressure on China.

Officials have held meetings in recent weeks to consider escalation options if the current round of negotiations fails to address the administration’s primary concerns. Mr. Trump’s top economic advisers have publicly played down the discussions, which have centered on tightening scrutiny of Chinese companies listed on American stock exchanges and limiting the direct exposure of government-run retirement funds to China.

Larry Kudlow, the director of the National Economic Council, acknowledged on Tuesday that the administration was looking for ways to protect Americans who were investing in Chinese companies.

“We’ve opened up a study group to take a look at it,” Mr. Kudlow said on the Fox Business Network.

But the options under consideration go further than that. According to a memo circulated within the White House and reviewed by The New York Times, the administration is studying a menu of actions that, if carried out, would most likely rattle the Chinese government.

The memo was drafted by Michael Pillsbury, a China scholar at the Hudson Institute and an outside adviser to the White House. It proposes holding Chinese companies and their employees criminally liable for financial disclosure violations, broadening the criteria that could get prominent Chinese companies blacklisted in the United States and blocking public and private pension funds and university endowments from certain Chinese investments.

Other options go beyond financial scrutiny of Chinese companies. The memo describes the possibility of fostering deeper ties between the United States and Taiwan and disrupting the flow of capital between Hong Kong and mainland China if it is determined that Hong Kong’s autonomy is not being respected.

It also lays out legislation in Congress, which Mr. Trump has yet to endorse, that would impose sanctions on China for activity in contested areas of the South China Sea and crack down on Chinese-funded Confucius Institutes at American universities.

Mr. Pillsbury declined to comment on his conversations with the White House but acknowledged that he had been analyzing such possibilities for a coming study on China strategy for the Hudson Institute.

“It appears that tariffs alone are not enough, but we also need to meet some of the Chinese demands to get the kind of deal the president wants,” Mr. Pillsbury said.

A White House spokesman declined to comment.

Mr. Trump’s tariffs have already pushed some companies to move their operations out of China. But the raft of new investment restrictions and export controls that the administration is mulling would further sever supply chains and discourage financial integration between the countries, potentially to the detriment of financial markets.

On Monday, the White House clamped down on Chinese firms it accused of human rights violations by adding eight companies and 20 government organizations to an entity list that will prevent them from buying American products. On Tuesday, the State Department announced visa restrictions for Chinese officials allegedly involved in the detention and abuse of Muslim minorities.

An array of initiatives related to American capital markets and investments made by retirement funds in Chinese entities are also under consideration.

The most advanced discussions have centered on the Thrift Savings Plan, the retirement plan for federal employees and the military. As of next year, that plan, which holds nearly $50 billion in assets, is expected to begin investing in an index fund that includes more Chinese and Russian companies, as part of an effort to diversify its exposure.

The index fund includes companies that the United States government has imposed sanctions on — including Hangzhou Hikvision Digital Technology, which was among the companies blacklisted on Monday. It also includes AviChina Industry & Technology, an affiliate of China’s major military aircraft and weapons manufacturer; ZTE, which was hit with sanctions for providing technology to North Korea and Iran; and several Russian companies that the Treasury Department’s Office of Foreign Assets Control has put under sanctions.

Officials have also been discussing efforts to close loopholes that give Chinese companies access to American capital markets with less stringent disclosure requirements than American firms or those from other countries.

Chinese law requires the records of companies based in China to be kept there, and restricts the kind of documentation that auditors can transfer out of the country. The rules mean that hundreds of Chinese firms, with a collective market capitalization of more than $1 trillion, have received looser oversight than companies in other jurisdictions, according to the Securities and Exchange Commission.

A bipartisan group of senators has introduced legislation that would force Chinese companies to comply with S.E.C. disclosure regulations or be delisted from American exchanges in three years. White House officials have debated throwing their support behind the bill, but several officials, including Mr. Kudlow and Treasury Secretary Steven Mnuchin, have opposed delisting as a draconian option that could throw American stock markets into turmoil.

“Delisting is not on the table,” Mr. Kudlow told reporters on Monday. He said the administration was responding to complaints to the commission about a lack of transparency and compliance, “but we’re very early in our deliberations.”

Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations, said that addressing the lack of compliance among Chinese companies was “overdue” but that a solution would ideally be negotiated between Chinese companies and the S.E.C.

“Nobody benefits from a mass delisting of Chinese companies on U.S. stock exchanges,” Ms. Economy said.

Henrietta Treyz, the director of economic policy at Veda Partners, outlined the extensive array of economic weapons at Mr. Trump’s disposal for investors this year. She said she would not be surprised if the S.E.C. stepped up scrutiny of Chinese firms or if the United States imposed penalties on China’s electronic payments systems, such as Alipay, on national security grounds.

Such moves could be far more severe than the tariffs on $550 billion of Chinese imports that the United States will have imposed by the end of the year, leading to a decoupling not just of the American and Chinese economies but of the financial sector as well.

“Tariffs are just a tax, a cost of doing business, but those costs can be digested by passing costs on to consumers or squeezing margins or diversifying your end consumer,” Ms. Treyz said. “If you’re no longer allowed to ship or buy products from Huawei or other entity list companies, you’ve shut out an entire pipeline of access, not to mention lost 1.3 billion potential customers in China.”

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Trump Administration Weighs Economic Escalation Against China

Westlake Legal Group merlin_159733326_365ee0f3-4455-4e35-ac0d-5d771ddbe5bc-facebookJumbo Trump Administration Weighs Economic Escalation Against China United States Politics and Government United States International Relations United States Economy Trump, Donald J Securities and Exchange Commission Regulation and Deregulation of Industry Pillsbury, Michael (1945- ) Kudlow, Lawrence A International Trade and World Market Embargoes and Sanctions Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — Trump administration officials are weighing a range of options that could inflict additional economic pain on China as the United States continues looking for ways to force Beijing to change longstanding practices that have put American companies at a disadvantage.

The ideas under consideration would move the White House’s negotiating tool of choice beyond tariffs toward limiting China’s access to American capital markets and imposing greater scrutiny on its companies, according to people familiar with the discussions.

Administration officials, including members of the National Security Council, have begun pressing the Securities and Exchange Commission to tighten its checks on Chinese firms. They are also looking for ways to reduce the exposure of American retirement funds to certain Chinese companies.

Many of those efforts have been proceeding independently from the trade talks — which resume again this week — and are fueled by longer-term considerations of China’s economic and security threats. Some White House advisers now view those options as an additional lever to force China to make the kinds of deep economic concessions that have so far proved elusive in the talks, which have dragged on for more than a year.

Top-level officials from both countries will convene on Thursday for their 13th round of trade negotiations. They are expected to discuss proposals for a somewhat limited trade deal that would address some of President Trump’s criticisms of China’s economic practices but still be acceptable to Beijing.

Some administration officials have been hopeful that a deal will lock in more intellectual property protections for American companies and provide those firms with greater access to Chinese markets. They also want to avoid further tariffs on Chinese goods that have begun to weigh on American consumers.

If China makes sufficient concessions, some in the administration are willing to roll back a portion of the tariffs that Mr. Trump has placed on more than $360 billion of Chinese goods, people familiar with the discussions said. They may also approve licenses that would allow some companies to sell nonsensitive goods to the Chinese telecom provider Huawei, which has been blacklisted from buying American products.

But China has resisted many of the administration’s demands to make more transformative changes to the way it runs its economy. Chinese officials have come to Washington this week eager to settle on a narrow deal that would involve tariff reductions in exchange for a resumption of Chinese purchases of American food. They appear unlikely to agree to the administration’s longstanding demands that Beijing limit its subsidies to Chinese firms, change its policies surrounding the treatment of data or make other structural changes, people familiar with the negotiations said.

The potential for such a limited agreement has fueled private deliberations within the White House on options for escalating economic pressure on China.

Officials have held meetings in recent weeks to consider escalation options if the current round of negotiations fails to address the administration’s primary concerns. Mr. Trump’s top economic advisers have publicly played down the discussions, which have centered on tightening scrutiny of Chinese companies listed on American stock exchanges and limiting the direct exposure of government-run retirement funds to China.

Larry Kudlow, the director of the National Economic Council, acknowledged on Tuesday that the administration was looking for ways to protect Americans who were investing in Chinese companies.

“We’ve opened up a study group to take a look at it,” Mr. Kudlow said on the Fox Business Network.

But the options under consideration go further than that. According to a memo circulated within the White House and reviewed by The New York Times, the administration is studying a menu of actions that, if carried out, would most likely rattle the Chinese government.

The memo was drafted by Michael Pillsbury, a China scholar at the Hudson Institute and an outside adviser to the White House. It proposes holding Chinese companies and their employees criminally liable for financial disclosure violations, broadening the criteria that could get prominent Chinese companies blacklisted in the United States and blocking public and private pension funds and university endowments from certain Chinese investments.

Other options go beyond financial scrutiny of Chinese companies. The memo describes the possibility of fostering deeper ties between the United States and Taiwan and disrupting the flow of capital between Hong Kong and mainland China if it is determined that Hong Kong’s autonomy is not being respected.

It also lays out legislation in Congress, which Mr. Trump has yet to endorse, that would impose sanctions on China for activity in contested areas of the South China Sea and crack down on Chinese-funded Confucius Institutes at American universities.

Mr. Pillsbury declined to comment on his conversations with the White House but acknowledged that he had been analyzing such possibilities for a coming study on China strategy for the Hudson Institute.

“It appears that tariffs alone are not enough, but we also need to meet some of the Chinese demands to get the kind of deal the president wants,” Mr. Pillsbury said.

A White House spokesman declined to comment.

Mr. Trump’s tariffs have already pushed some companies to move their operations out of China. But the raft of new investment restrictions and export controls that the administration is mulling would further sever supply chains and discourage financial integration between the countries, potentially to the detriment of financial markets.

On Monday, the White House clamped down on Chinese firms it accused of human rights violations by adding eight companies and 20 government organizations to an entity list that will prevent them from buying American products. On Tuesday, the State Department announced visa restrictions for Chinese officials allegedly involved in the detention and abuse of Muslim minorities.

An array of initiatives related to American capital markets and investments made by retirement funds in Chinese entities are also under consideration.

The most advanced discussions have centered on the Thrift Savings Plan, the retirement plan for federal employees and the military. As of next year, that plan, which holds nearly $50 billion in assets, is expected to begin investing in an index fund that includes more Chinese and Russian companies, as part of an effort to diversify its exposure.

The index fund includes companies that the United States government has imposed sanctions on — including Hangzhou Hikvision Digital Technology, which was among the companies blacklisted on Monday. It also includes AviChina Industry & Technology, an affiliate of China’s major military aircraft and weapons manufacturer; ZTE, which was hit with sanctions for providing technology to North Korea and Iran; and several Russian companies that the Treasury Department’s Office of Foreign Assets Control has put under sanctions.

Officials have also been discussing efforts to close loopholes that give Chinese companies access to American capital markets with less stringent disclosure requirements than American firms or those from other countries.

Chinese law requires the records of companies based in China to be kept there, and restricts the kind of documentation that auditors can transfer out of the country. The rules mean that hundreds of Chinese firms, with a collective market capitalization of more than $1 trillion, have received looser oversight than companies in other jurisdictions, according to the Securities and Exchange Commission.

A bipartisan group of senators has introduced legislation that would force Chinese companies to comply with S.E.C. disclosure regulations or be delisted from American exchanges in three years. White House officials have debated throwing their support behind the bill, but several officials, including Mr. Kudlow and Treasury Secretary Steven Mnuchin, have opposed delisting as a draconian option that could throw American stock markets into turmoil.

“Delisting is not on the table,” Mr. Kudlow told reporters on Monday. He said the administration was responding to complaints to the commission about a lack of transparency and compliance, “but we’re very early in our deliberations.”

Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations, said that addressing the lack of compliance among Chinese companies was “overdue” but that a solution would ideally be negotiated between Chinese companies and the S.E.C.

“Nobody benefits from a mass delisting of Chinese companies on U.S. stock exchanges,” Ms. Economy said.

Henrietta Treyz, the director of economic policy at Veda Partners, outlined the extensive array of economic weapons at Mr. Trump’s disposal for investors this year. She said she would not be surprised if the S.E.C. stepped up scrutiny of Chinese firms or if the United States imposed penalties on China’s electronic payments systems, such as Alipay, on national security grounds.

Such moves could be far more severe than the tariffs on $550 billion of Chinese imports that the United States will have imposed by the end of the year, leading to a decoupling not just of the American and Chinese economies but of the financial sector as well.

“Tariffs are just a tax, a cost of doing business, but those costs can be digested by passing costs on to consumers or squeezing margins or diversifying your end consumer,” Ms. Treyz said. “If you’re no longer allowed to ship or buy products from Huawei or other entity list companies, you’ve shut out an entire pipeline of access, not to mention lost 1.3 billion potential customers in China.”

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