US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin returned from two days of talks in China on Thursday. After briefing the President on the results of the talks, the President announced a decision to apply a 10% tariff on an additional $300 billion worth of Chinese products. These tariffs will go into effect on September 1st.
MAGAnomics continues to shower prosperity on all Americans. The Bureau of Economic Analysis (BEA) released significant wage and salary data on July 30th. These data demonstrate remarkable numbers. There have been stunning upward revisions for 2017 and 2018.
Employee compensation rose 4.5% in 2017 and 5% in 2018. These numbers demonstrate incredible wage growth during a period of low inflation (1.4%). When the 5% wage growth in 2018 was combined with the tax reform package passed in late 2017, personal disposable income rose an astonishing 6.1% in 2018. And the primary beneficiaries of this growth have been blue-collar workers.
MAGAnomics continues to roar. The economy continues to be quite healthy. The 2ndquarter wage report is out from the Bureau of Labor Statistics. It shows substantial wage growth (3.7% year over year) while inflation remains quite tame (1.8%). All races are benefitting.
It has been an interesting week in US-China relations. As recently as a few of weeks ago, China had been threatening to blacklist foreign companies that “sided” with the US in the ongoing trade war.
The move to establish the blacklist came after the United States hit Huawei with an export ban, effectively barring US companies from doing business with the smartphone and telecom equipment maker.
The ban was designed to keep the nation’s networks secure from foreign adversaries. The concern is that the company’s products could offer the Chinese government a way to spy on sensitive US communications. Huawei denied the accusations.
In the middle of May, Xi Jinping, China’s leader, had warned his people of a new “Long March.” “We are here at the starting point of the Long March to remember the time when the Red Army began its journey,” Xi told cheering crowds in Jiangxi province. “We are now embarking on a new Long March, and we must start all over again.” Jiangxi province is the site of the Red Army’s retreat in 1934-36. Xi appeared to be warning his people that hardships lay ahead.
As noted yesterday, Asia, specifically China, is providing some interesting bits of news this week. On Sunday some 2 million Hong Kongers protested in the streets over China’s attempt to subvert their rights within their legal justice system. Carrie Lam, Hong Kong’s chief executive officer, may have been the target of their immediate anger. However, clearly China is their concern.
The heavy-handed response by Lam, rubber bullets and tear gas, against protesters who were peaceful has brought at least silent condemnation from most of the civilized world. This was no UC-Berkley protest. There were no fires in the streets. There were no broken windows. There was no looting. Emergency vehicles that needed to get through were allowed to pass. There were more than 70 injuries from the police response.
An interesting dynamic is playing out in Hong Kong. Protests broke out a week ago over a proposed law that Carrie Lam, Hong Kong’s first female chief executive, supports. The law would allow extradition of Hong Kongers to mainland China.
Please note the use of the term Hong Kongers. Although mostly descended from ethnic Chinese, the vast majority of the residents of Hong Kong do not consider themselves to be Chinese. Hong Kong has had long experience (150 years) with Western rule-of-law concepts. Additionally over 3 million people fled communist China in 1949 to the safety and freedom of Hong Kong. Hong Kongers are not conditioned culturally, as many of those on the mainland are, to the acceptance of totalitarian forms of governance.
In what historians will undoubtedly debate as a master stroke, PDJT announced on Friday that the tariffs on aluminum and steel from Canada and Mexico had been removed. At the same time Canada and Mexico removed their tariffs on American goods. All of this is expected to be in effect by Monday, May 20th.
Bloomberg…President Donald Trump said the U.S. will lift steel and aluminum tariffs on Canada and Mexico, boosting efforts to encourage lawmakers to ratify a new North American trade deal (USMCA).