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Mnuchin: Overall US economy not harmed by trade battles




BUENOS AIRES, Argentina — U.S. Treasury Secretary Steven Mnuchin said Saturday that the overall U.S. economy has not been harmed by the trade battles set off by President Donald Trump’s get-tough policies although some individual sectors have been hurt. He said the administration was exploring ways to help farmers and other specific industries that have been affected.

Mnuchin spoke to reporters on the sidelines of meetings of finance ministers and central bank presidents from the Group of 20 nations, composed of traditional economic powers such as the United States, Japan and Germany and emerging economic powers including China, Brazil, India and Argentina.

Mnuchin said that there had not been an adverse effect on overall growth from the tariffs but that certain industries were being harmed because other countries were retaliating by targeting specific industries.

“Certain countries have targeted very specific levels of things that are not coincidental,” Mnuchin told reporters. “So if you are looking at lobsters in Maine or you are looking at bourbon in Kentucky or you are looking at soybeans, there are clearly markets being followed.”

Mnuchin said that the administration would be “looking at different opportunities to help the farmers” and provide assistance to other sectors being “unfairly targeted” by tariffs from other nations.

“But I still think from a macro basis, we do not see yet any impact on what’s a very positive growth” performance for the U.S. economy this year, Mnuchin said.

At a briefing before the G-20 meetings began, U.S. Treasury officials told reporters that Mnuchin would be prepared to respond to concerns being raised by other countries about the Trump administration’s trade policies.

Also speaking in Buenos Aires at the G-20 summit, International Monetary Fund Managing Director Christine Lagarde said the recent series of trade tariffs would significantly harm the global economy.

“In the worst case scenario under current measures” the impact on the global economy “is in the range of 0.5 per cent” of gross domestic product on a global basis, Lagarde said.

The United States and China are now in a full-blown trade war with both nations imposing tariffs on billions of dollars of each other’s goods with even bigger tariffs being threatened. Despite the standoff, U.S. officials said Mnuchin had no individual meetings scheduled with China during the G-20 meetings. Mnuchin did have about a dozen one-on-one sessions scheduled with other countries.

In a recent appearance before the House Financial Services Committee, Mnuchin said that the talks with China had broken down and indicated that the United States was waiting for China to come up with concessions to break the impasse.

The United States and China have hit each other with tariffs on $34 billion goods with another $16 billion in penalty tariffs in the pipeline. The Trump administration is preparing to impose tariffs on another $200 billion and Trump has threaten4ed to add $300 billion more to that figure.

On Saturday, the Treasury Secretary said the U.S. administration has been very clear that the objective is to have a more balanced trading relationship with China.

“We purchased about $500 billion of goods from them; they purchased about $130 billion of goods from us. We share a desire to have a more balanced relationship. And the balanced relationship is by us selling more goods,” Mnuchin said.

In addition to the sessions of the G-20, there will be an hour-long meeting among G-7 finance ministers and central bank officials. Treasury officials said part of this meeting would be to allow G-7 officials to discuss China’s unfair trade practices


AP Economics Writer Martin Crutsinger in Washington contributed to this story.

The symbolism of politicians interrupting vacations to work on freer trade would really bolster their goals. They shouldn’t take that for granted
If you are going to call another country out on its trade policies, you’d better be ready to defend your own
Level of interest is unclear
No economic-policy tradition is sacred in U.S. President Donald Trump’s pursuit of faster growth and lower trade deficits

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IMF warns G20 economic leaders that tariffs hurting global economy




The International Monetary Fund (IMF) warned world economic leaders on Saturday that a recent wave of trade tariffs would significantly harm global growth, a day after U.S. President Donald Trump threatened a major escalation in a dispute with China.

IMF Managing Director Christine Lagarde said she would present the G20 finance ministers and central bank governors meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade.

“It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures…is in the range of 0.5 pct of GDP on a global basis,” Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne.

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Her warning came shortly after the top U.S. economic official, Treasury Minister Steven Mnuchin, told reporters in the Argentine capital there was no “macroeconomic” effect yet on the world’s largest economy.

Long-simmering trade tensions have burst into the open in recent months, with the United States and China – the world’s No. 2 economy – slapping tariffs on $34 billion worth of each other’s goods so far.

The weekend meeting in Buenos Aires comes amid a dramatic escalation in rhetoric on both sides. Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States.

U.S. Treasury Secretary Steven Mnuchin will try to rally G7 allies over the weekend to join it in more aggressive action against China, but they may be reluctant to cooperate because of U.S. tariffs on steel and aluminum imports from the European Union and Canada, which prompted retaliatory measures. .

The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to “further dialogue.”

German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low.

“I don’t expect tangible progress to be made at this meeting,” Scholz told reporters on the plane to Buenos Aires.

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Mnuchin told reporters on Saturday that he has not seen a macroeconomic impact from the U.S. tariffs on steel, aluminum and Chinese goods, along with retaliation from trading partners.

But he said there have been microeconomic effects on individual businesses, he said, adding that the administration was closely monitoring these and looking at ways to help U.S. farmers hurt by retaliatory tariffs.

The U.S. dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback’s strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest level in a year.

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Economy seen busting out with 4% GDP, but it won't mean squat without an encore




Bloomberg News/Landov

Growth in the U.S. economy surged the spring like a Mississippi riverboat.

The economy hit the gas pedal in the spring and may have ripped off one of the fastest growth spurts since the U.S. exited the Great Recession nine years ago. Great news, all right, but it won’t mean much without a few encores.

Gross domestic product — the official yardstick for the economy — likely grew 4% in the second quarter, economists polled by MarketWatch say. Such an increase would double up on the 2% gain in the first three months of 2018.

The spring bloom could be even brighter. The Atlanta Federal Reserve’s GDPNow forecast pegs growth at 4.5% and some Wall Street firms such as Macroeconomic Advisers estimate 5% GDP.

“After taking a brief pit-stop at the start of the year, the economy is firing on all cylinders again,” said economists Michael Gregory and Sal Guatieri of BMO Capital Markets.

No kidding. Consumers boosted spending, hiring surged again and businesses lifted investment and production. Exploding growth has sparked growing shortages of skilled labor and even some raw materials, a problem exacerbated by recent tariffs on foreign steel and lumber.

Also read: Screaming labor shortage forcing firms to get creative to fill record job openings

Now let’s be clear. No one should ever take one quarter’s worth of evidence to make a long-term prognosis on the economy’s health. Onetime events could giveth to GDP in one period and taketh from another.

Read: More babies may be dying in Congo due to Dodd-Frank law on ‘conflict minerals’

The better way to look at the economy is over a broad span. If second-quarter GDP meets forecasts, the U.S. would have expanded at a 3% rate or higher in the first half of 2018. And it would put the economy on track to achieve 3% GDP for the full year.

How big a deal is that? Well, the last time the U.S. grew 3% in a calendar year was 2005. The past 12 years mark the longest stretch in the nation’s history in which GDP has failed to break the 3% mark.

These just aren’t abstract numbers, either. A faster growing economy means lower unemployment, rising wages and bigger profits. In short, people can more easily make ends meet and achieve a higher standard of living.

Slow growth has been a problem in the U.S. for a decade now and it’s far from clear that a broader upswing is coming. The pro-business Trump administration has tried to get the economy on a faster plane with big tax cuts and deregulation, but it’s also causing lots of anxiety with brewing trade spats.

And now the president has complained publicly about the Federal Reserve raising interest rates, breaking another Washington taboo. For decades the White House has refrained from over actions that could appear to threaten the independent of the central bank.

Read: Fed won’t be swayed by Trump’s interest-rate complaints, Bullard says

The upheaval in the White House is forcing Wall Street to pay closer attention to the Washington.

The government will release the advanced trade figures for June a day before the GDP report on Friday, but it’s still too early to fathom the fallout from the first wave of U.S. and retaliatory tariffs.

Many U.S. firms appear to have stock up on foreign supplies or shipped more goods overseas ahead of the tariffs. Foreign buyers and sellers appear to have done likewise. That may be causing some strange doings in recent trade reports.

Another key signpost for the economy might also be less than helpful in June.

Orders for durable goods — big-ticket items designed to last at least three years — probably surged. Orders for passenger planes soared and auto makers were able to boost production after re-establishing a key supply line that was disrupted by a major fire at a parts maker.

The big number in the report is a category that tracks U.S. business investment excluding the Pentagon and commercial aviation. So-called core orders reveal whether companies are increasing investment, the magic elixir for future economic growth.

Investment surged after Trump was elected in November 2016 in anticipation of the biggest corporate tax cuts in 31 years. Yet there are growing signs the threat of a tariff war is causing firms to delay some future spending plans until they get a better sense of the outcome.

“Business investment growth appears to have slowed a little further,” said U.S. economist Andrew Hunter of Capital Economics.

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