Trump Tariffs Are Hurting the Economy - Canadanewsmedia
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Economy

Trump Tariffs Are Hurting the Economy

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Trump Tariffs

What if the Trump could define what constitutes a national security threat and enact policy concurrent with that determination? And what if, because of that, he were allowed to levy indirect taxes on the America people from his seat in the Oval Office? By way of the Cold War-era Section 232 of the 1962 Trade Expansion Act, both of those realities exist.

Under Section 232, any U.S. head or agency has the authority to initiate investigations of imports as they relate to national security threats. It’s a process that can be entirely self-initiated by the executive branch. But currently, there’s no working definition of what a national security threat is, and that the determination is made by the Department of Commerce, which has allowed for far too much executive power bloat in matters of trade policy.

For his part, President Donald Trump has certainly taken advantage of this ambiguity—most recently with his ill-advised steel and aluminum tariffs. If lawmakers want to enforce both constitutional uses of power and consumer-friendly policy, they should reduce the scope of this legislation by supporting restorative legislation as seen through a recently-proposed by Sen. Patrick Toomey.

How does this section facilitate executive overreach? Vague guidelines. The Section 232 provisions don’t specify what constitutes a national security threat, only that the investigation must consider:

“. . . certain factors, such as: domestic production needed for projected national defense requirements; domestic capacity; the availability of human resources and supplies essential to the national defense; and potential unemployment, loss of skills or investment, or decline in government revenues resulting from displacement of any domestic products by excessive imports.”

Allowing nearly anyone in the executive branch to interpret and investigate imports for national security reasons is an outrageous provision. Just look at some of the real-world implications this power has had in just the last year.

When President Trump wasn’t getting a favorable trade deal with China, he claimed the situation constituted a threat to national security and enacted aluminum and steel tariffs. The president and many of his supporters said the tariffs were necessary to secure provisions needed to keep the military properly functioning.

None of this is actually true.

The United States is the fourth-largest steel producer in the world—turning out roughly 80 million tons of steel a year. But the U.S. military consumes less than 3 million tons of steel a year, so the amount of steel we produced yearly is nearly twenty-seven times the amount of steel our military needs. In a word, there’s no national security threat and Trump was blowing things out of proportion to get what he was after. With its domestic production alone, America could supply twenty-seven defense departments with its domestic production alone.

But Section 232 says he can—without consequences.

When it’s up to the discretion of the president to take action as he sees fit, the sorely-needed legislative process is rendered moot. Meanwhile, this president’s unchecked penchant for tariffs is negatively impacting the six million-plus folks with jobs in steel-consuming industries through price increases.

The problem can be fixed, of course. Right now, there are two proposed bills to address this problem from GOP Sens. Patrick Toomey (PA) and Rob Portman (OH). However, only Toomey’s bill will accomplish anything meaningful.

While Portman’s bill, dubbed the Trade Security Act, would merely reaffirm already-held Congressional power and create exemptions for Trump’s previous executive actions, Toomey’s bill is more restrictive and aims to actually limit the president’s power. He wants Congressional approval to absolutely be required to institute the tariffs recommended under Section 232. That is, while the weaker Trade Security Act Portman has put forth allows tariffs to go into effect unless Congress passes a measure to stop them, Senator Toomey’s bill necessitates Congressional approval of all Section 232 tariffs before they can go into effect.

This is a move in the right direction. Toomey’s proposed restrictions bring back the balance of power, disallowing broad executive overreach. Moreover, it shrinks the scope of the provision such that a given president’s interpretation of a national security threat is not the only lens through which the supposed threat is viewed. Toomey’s legislation incorporates a much-needed, stringent definition of “national security” into the statute while setting a requirement that the Department of Defense is to conduct future Section 232 investigations incorporating this definition—a significant improvement on the current Department of Commerce’s case-by-case determinations.

Toomey’s bill provides a real opportunity to reduce the scope of Section 232 and check Trump’s tariff power. If members of Congress want to help American consumers while restoring the balance of power, they should get behind Toomey’s smart policy proposal and put power back where it belongs.

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EU incoming economy chief calls for less restrictive budget policies

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By Gavin Jones

ROME (Reuters) – The European Union needs looser budgetary policies and an overhaul of its fiscal rulebook, the bloc’s designated economics commissioner said in an article published on Sunday.

Writing in Italian financial daily Il Sole 24 Ore, Paolo Gentiloni said that while the EU’s deficit and debt rules must not be ignored, they needed to be “reviewed and updated”.

“It’s time for countries which have fiscal space to use it, in an overall context of less restrictive budgetary policies,” Gentiloni, due to replace Pierre Moscovici as economic and financial affairs commissioner on Nov. 1, said.

The former Italian prime minister warned that with the EU economy slowing, “the risks of a prolonged period of low growth must not be overlooked” and the task of stimulating the economy “cannot be left to monetary policy alone”.

Gentiloni will have an important role in scrutinizing Italy’s draft 2020 budget which was submitted to the Commission last week.

The budget plan raises next year’s structural deficit — which excludes the effect of GDP growth fluctuations — by 0.1% of gross domestic product, reversing a previous commitment by Rome to lower it by 0.6%.

EU Commission Vice President Valdis Dombrovskis told Reuters on Friday that Brussels would ask Italy for “clarifications” over its budget intentions.

However, even though the budget seems to flout EU rules, many analysts expect the Commission to take a lenient approach and avoid a prolonged dispute with Rome like the one that broke out last year when Italy had a less EU-friendly government.

Gentiloni, who comes from the pro-Europe Democratic Party which now governs with the anti-establishment 5-Star Movement, said it was crucial that the budget plan comes from a government that has a constructive approach toward the EU.

Among what he termed new instruments needed help growth and stability, Gentiloni cited an EU-wide unemployment insurance scheme, without going into details.

(Reporting by Gavin Jones; Editing by Canada News Media)

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Lebanese continue protests, demand government to fix economy

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Tens of thousands of demonstrators have gathered in Lebanon‘s streets on Sunday for a fourth day of anti-government protests that have led to the resignation of a Christian party from the government.

Demonstrators, who have been on the streets since Thursday, have pledged to continue marching despite the resignations late on Saturday of four government members from the key political party, Lebanese Forces.

Labour Minister Camille Abousleiman, one of the four to quit the government, told Al Jazeera shortly after the decision that they had “lost faith in the government’s ability to effect change and address the problem”.

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Lebanese citizens have been suffering from tax hikes and dire economic conditions in the heavily indebted country.

Lebanon’s public debt stands at around $86bn – more than 150 percent of gross domestic product, according to the finance ministry.

The grievances and anger at the government’s lack of solutions erupted into protests on Thursday, sparked by hikes in taxes including a proposed $0.2 tax on calls via messaging apps such as WhatsApp.

Such calls are the main method of communication for many Lebanese and, despite the government’s swift abandonment of the tax, the demonstrations quickly swelled into the largest in years.

“It is day four and protesters are back on the street. It’s not just in the capital Beirut, but across the country. The message they [protesters] are giving is of defiance and that they will continue to demand the resignation of the government,” said Al Jazeera’s Zeina Khodr, reporting from Beirut.

“While there are tens of thousands on the street protesting, there are still people who are backing the political parties, so it is not going to be easy to bring a change. These people out there want a nationalist leader whose loyalty is to Lebanon and not a political party.”

In an attempt to appease demonstrators, Lebanon’s finance minister, following a meeting with Prime Minister Saad Hariri, announced that they had agreed on a final budget that did not include any additional taxes or fees.

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“We want everybody to join us on Sunday and also Monday to topple the government,” one protester said.

On Friday, Hariri gave a 72-hour deadline to his partners in government to agree on a solution to the country’s economic woes without imposing new taxes.

Hezbollah chief Hassan Nasrallah, whose movement is part of the government, warned on Saturday that a change in government would only worsen the situation.

The army on Saturday called on protesters to “express themselves peacefully without harming public and private property”.

What is the solution to Lebanon’s economic and political crisis?

On Saturday evening, thousands were packed for a third straight night into the Riyadh al-Solh square in central Beirut, despite security forces having used tear gas and water cannon to disperse similar crowds a day before.

Amnesty International said the security forces’ reaction was excessive, pointing out that the vast majority of protesters were peaceful.

“The intention was clearly to prevent protesters gathering – in a clear violation of the right to peaceful assembly,” it said.

Small groups of protesters have also damaged shop fronts and blocked roads by burning tyres and other obstacles.

The Internal Security Forces said 70 arrests were made on Friday on accusations of theft and arson.

But all of those held at the main police barracks were released on Saturday, the National News Agency (NNA) said.

SOURCE:
Al Jazeera and news agencies

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Finance Officials Focus on Economy

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The IMF managing director, Kristalina Georgieva, said the threat from trade wars was a chief point of discussion for finance officials.

She said the IMF has estimated that the tariffs already imposed or threatened could shave 0.8% off global growth by the end of next year. Much of that stems from the fallout on business confidence.

In trade wars, “everybody loses,” she said. “Policymakers ought to take very seriously their obligations to international cooperation in trade.”

The World Bank’s president, David Malpass, said this week’s finance discussions had focused on how to address multiple challenges.

“Growth is slowing, investment is sluggish, manufacturing activity is soft and trade is weakening,” he said. “Climate change and fragility are making poor countries more vulnerable.”

He said the World Bank was committed to helping to address these challenges to provide a better life for the 700 million people in the world living in extreme poverty.

The IMF, in an updated economic outlook, projected the global economy would expand by 3% this year, the weakest in a decade, and said 90 percent of the world was experiencing a downshift in growth. But the IMF forecast growth will accelerate slightly to 3.4% in 2020, still below the 3.6% rate in 2018.

Jubilee USA, a religious organization fighting global poverty, said in a statement that while the IMF outlined a number of serious threats, the recommendations for dealing with them fell short.

“Risky investing, trade tensions and developing countries borrowing too much are serious concerns for financial stability,” said Eric LeCompte, the group’s executive director.

While Trump’s trade policies were a prime topic of discussion at the meetings, finance officials for the most part avoided direct criticism of the American president.

Christine Lagarde, who dealt with the Trump administration during her last three years as head of the IMF, was a bit more direct in an interview to be broadcast Sunday on CBS’s “60 Minutes.”

Asked about Trump’s trade war with China, she said it would give the world’s economy “a big haircut” and should be resolved by having all parties “sit down like big men, many men in those rooms and put everything on the table, and try to deal bit by bit, piece by piece, so that we have certainty.”

On Trump’s frequent Twitter attacks on Federal Reserve Chairman Jerome Powell, Lagarde said central bankers need to be independent to do their jobs well.

“Market stability should not be the subject of a tweet here or a tweet there. It requires consideration, thinking, quiet and measured and rational decisions,” she said.

Lagarde is scheduled to take over on Nov. 1 as the head of the European Central Bank, which manages monetary policy for the 19 countries who use the euro currency.

(KR)

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