Deal or no deal for Mexican tomato growers Presented by Semiconductor Industry Association

With help from Megan Cassella and Jakob Hanke

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Quick Fix

— The Trump administration today will either announce a deal that resolves its ongoing tomato spat with Mexico — or move ahead with steep duties on imports of Mexican tomatoes.

— Vice President Mike Pence has warned China that it will be harder to strike a trade deal if it violates Hong Kong’s laws amid the continued protests. He also called on Congress to quickly pass the new North American trade pact after the recess.

— The Commerce Department has granted another temporary reprieve to Huawei, allowing U.S. companies to continue to do limited business with the Chinese telecom giant. But the Trump administration also broadened its sanctions on Huawei subsidiaries.

IT’S TUESDAY, AUG. 20! Welcome to Morning Trade, where your host is craving a fried chicken sandwich after reading about all the drama between Chick-fil-A and Popeyes. Any trade news or tips to share? Let me know: [email protected] or @sabrod123.

Driving the Day

DEAL OR NO DEAL FOR MEXICAN TOMATO GROWERS: The Commerce Department today could announce a new deal to govern tomato trade with Mexican growers — or state there’s no agreement and move forward with finalizing an anti-dumping duty on imports within 30 days.

Both sides remain in disagreement over a requirement that Mexican tomatoes be subject to border inspections. Commerce originally wanted to require inspection of all tomatoes Mexico shipped across the border. But last week, it revised its proposal to require that 50 percent of all tomato imports be subject to inspection by the Agriculture Department. Mexican growers have argued they are not against inspections but that Commerce’s proposed process would subject them to arbitrary delays at the border with no legal recourse.

Lots of back and forth: Mexican growers have been negotiating with Commerce officials for months in an effort to craft a new so-called suspension agreement that would hold off an anti-dumping probe that was filed by Florida growers in 1996. In July, Commerce announced a 25 percent preliminary anti-dumping duty on imports of tomatoes from Mexico.

Commerce is scheduled to announce final duties by Sept. 19, if no deal is reached. An agreement today is necessary to allow for a monthlong public comment process on any compromise. Stay tuned for updates on what comes of the negotiations.

PENCE’S TOUGH TALK TO CHINA: The vice president on Monday urged China to find a peaceful resolution to the Hong Kong protests, arguing that a violent crackdown would diminish the chances of the world’s two largest economies striking a trade deal.

"For the United States to make a deal with China, Beijing needs to honor its commitments, beginning with the commitment China made in 1984 to respect the integrity of Hong Kong's laws through the Sino-British joint declaration," Pence said during a speech at the Detroit Economic Club.

Pence’s remarks are part of a shift in the Trump administration’s tone on the Hong Kong protests in recent days. For weeks, the administration largely remained neutral on the pro-democracy demonstrations in Hong Kong. But Trump on Wednesday broke with his neutral tone, urging China to “work humanely with Hong Kong first” before reaching a trade deal.

"As the president said yesterday, it would be much harder for us to make a deal if something violent happens in Hong Kong,” Pence said.

Trade talks continue: Pence added that U.S. and Chinese officials are in “productive discussions,” which will continue “in the weeks ahead.” A Chinese delegation is expected to visit Washington in September.

“We don’t want China’s markets to suffer. In fact, we want them to thrive,” Pence said.

PENCE TO CONGRESS: IT’S TIME TO PASS USMCA: The vice president in Detroit also called on Congress to ratify the updated NAFTA soon after it comes back from recess in September.

“When the Congress reconvenes this September, we hope and trust that the Congress will take up this important trade agreement and take it up quickly,” Pence said, adding lawmakers should pass it this year.

China factor: Pence noted that passage of USMCA would also help bolster the administration’s agenda with Beijing. “Make no mistake about it ... passing the USMCA will strengthen the president’s hand in negotiations with China,” he said.

TRUMP GIVES HUAWEI SOME BREATHING ROOM: The Commerce Department on Monday granted Huawei a 90-day reprieve, extending a waiver that allows U.S. companies to do limited business with the Chinese telecommunications giant for another three months.

Commerce Secretary Wilbur Ross defended the move, saying it provides U.S. telecoms additional time to wean off some Huawei technologies, which some rural companies in particular depend on. Commerce also moved at the same time to further punish Huawei by adding 46 more of its subsidiaries to the U.S. export blacklist.

Pushback from Capitol Hill: Democratic leaders in Congress sought to make their displeasure known after the 90-day extension was announced. Senate Minority Leader Chuck Schumer, who has long been outspoken about the need to crack down on Huawei, called the move a “huge mistake” and criticized the Trump administration for continuing to find new ways “to let them off the hook.”

“Stay strong, Mr. President,” Schumer wrote on Twitter.

Sen. Ron Wyden, the top Democrat on the Finance Committee, also weighed in with a tweet saying American workers will “see no benefit” as long as the Trump administration lets Huawei “do what it wants” and it continues “a trade war with no plan.”

MERKEL NOT PICKING SIDES IN U.S.-CHINA TRADE WAR: German Chancellor Angela Merkel said on Monday the European Union should work to protect “as uninterrupted a trade as possible” with the U.S. and with China, suggesting the EU should not take sides in the trade war.

During a press conference with Hungarian Prime Minister Viktor Orbán in the Hungarian city of Sopron, Merkel said both leaders concluded that the EU should work “towards ensuring that protectionist tendencies do not prevail, but that the deep interdependence of world trade is also reflected in the fact that we can have as uninterrupted a trade as possible, both with the United States of America but also with China … because it helps to improve the situation for all of us.”

SCHUMER: NO U.S.-U.K. DEAL IF IT RISKS IRISH PEACE: The Senate minority leader said Monday he would oppose any trade deal between the U.K. and U.S. that threatens peace in Northern Ireland. In a letter to Secretary of State Mike Pompeo, Schumer said he would not support a post-Brexit deal that undermines the Good Friday Agreement, which ended decades of conflict, or “facilitates a return to a hard border.”

“The notion that America would now endorse a policy or agreement that undermines the success of the Good Friday Agreement is profoundly counterproductive and risks exacerbating sectarian polarization and eroding self-determination — and unleashing the potential for violence that comes with that reality. This cannot be allowed to happen,” Schumer wrote.

International Overnight

— Tech firms and industry groups warn France’s digital services tax will lead to copycat levies and scuttle multilateral talks, POLITICO Pro reports.

— Thailand says producers leaving China amid U.S. trade war offers hope for its economy, Bloomberg reports.

— U.S. dairy producers urge Trump to quickly wrap up a Japan trade deal, POLITICO Pro reports.

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