Trump: ‘I am the chosen one’ Presented by Semiconductor Industry Association

With help from Megan Cassella

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Quick Fix

— President Donald Trump continues to portray his trade war with China as necessary, even if his life “would be much easier” if he didn’t engage Beijing in a tit-for-tat tariff fight.

— The U.S. and Mexico staved off another cross-border trade fight after reaching a deal on tomato imports, although not every group is happy with the result.

— Lobbyists trying to build support for the U.S.-Mexico-Canada Agreement aren’t taking August off as they fan out across U.S. states to talk up the deal.

IT’S THURSDAY, AUG. 22! Welcome to Morning Trade, where your host thinks the new Apple credit card sounds pretty high maintenance. Got any tips to share? Let me know: [email protected] or @abehsudi.

Driving the Day

TRUMP: ‘I AM THE CHOSEN ONE’: Trump continued to shrug off responsibility for any economic fallout from his trade war with China on Wednesday, arguing that a face-off with Beijing was necessary due to the failures of past administrations. Trump painted himself as a reluctant warrior, shifting from his usual narrative that the trade fight is not hurting the American economy or his political prospects to asserting that it was something he had to do.

“President Clinton, President Bush and President Obama and others should have done this long before me,” he said. “My life would be much easier, although I enjoy doing it, but my life would be much easier if I just said, let China continue to rip off the United States. All right? It’d be much easier, but I can't do that.”

The president also adopted a religious theme in describing his role in picking a trade fight with China, saying: "I am the chosen one."

“Somebody said it is Trump's trade war,” he said. “This isn't my trade war. This is a trade war that should have taken place a long time ago by a lot of other presidents.”

CBO’S VIEW ON TARIFFS: The nonpartisan Congressional Budget Office said the administration’s tariff actions are weighing on the economy, highlighting them as one factor for slowing growth. A report released Wednesday predicted that the economy will expand 2.3 percent this year and then grow at an average annual rate of 1.8 percent over the next decade.

From the updated economic outlook report: “On balance, CBO expects trade barriers to reduce U.S. output. The effects of the tariffs on trade flows, prices, and output are projected to rise over the next year. By 2020, in CBO’s projections, those tariffs reduce the level of real U.S. GDP by roughly 0.3 percent and reduce average real household income by $580 (in 2019 dollars).”

The prediction remains consistent with the CBO’s initial prediction released in January. The office estimates that some of the negative impacts of tariffs will wane after 2020 as businesses adjust supply chains.

Tariff revenue up: The CBO update anticipates a net increase in government revenue that is primarily fueled by customs duties. Tariff revenue is anticipated to rise 70 percent, by $29 billion, in 2019 based on tariffs that are in effect as of July 25.

AUGUST YIELDS A TOMATO DEAL: Mexico’s exports of more than $2 billion worth of tomatoes will no longer face anti-dumping duties after the Commerce Department and Mexican growers struck an eleventh-hour deal. The so-called suspension agreement halts a trade investigation that preliminarily found Mexican tomatoes were being sold at less than fair price in the U.S. Imports of the farm product from south of the border had been subject to a 25 percent tariff.

What’s in the deal: The agreement will set minimum prices for different types of tomatoes exported to the U.S. It will also create an inspection process at the border for up to 92 percent of the produce that crosses the border. Tomato producer organizations from Mexico supported the agreement, as did Florida tomato growers who originally demanded an end to the previous suspension deal and a reactivation of the dumping investigation.

Not everyone is happy: The draft deal will be open for public comment for 30 days before it goes into effect on Sept. 19. Mexican and Florida growers said they are happy with the deal, but U.S. importers say the inspection requirement will create a bottleneck at the border for tomatoes and other goods.

“The inspection provision is essentially a non-tariff trade barrier whose ripple effects will not only damage the U.S. tomato market but many other industries that trade with Mexico,” said Lance Jungmeyer, president of the Fresh Produce Association of the Americas, a group representing U.S. distributors and importers of Mexican produce.

JAPAN TALKS CONTINUE: Japanese Economic Revitalization Minister Toshimitsu Motegi will continue his meeting with U.S. Trade Representative Robert Lighthizer today as the two countries push toward a trade agreement of sorts.

DATAPOINT: HIGH STAKES FOR PORK INDUSTRY: If Trump can deliver on a mini trade deal with Japan, it could mean major gains for the U.S. pork industry. American pork producers were gutted by Trump’s decision to withdraw from the Trans-Pacific Partnership and the benefits it would have provided in Japan, one of their most important export markets. Now, U.S. market share in Japan is shrinking as U.S. pork is edged out by exports from Canada and the European Union, reports Pro’s Taylor Miller Thomas.

View the full DataPoint graphic here. Want to add DataPoint to your Pro account? Learn more.

A THAW ON CLIMATE CHANGE? Driven by a public clamoring for action and pressure from corporate CEOs, lawmakers are noting an evolution in attitudes toward climate action among some Republicans on Capitol Hill — a subtle but significant shift in tone that emerged in interviews with lawmakers for the latest episode of POLITICO’s Global Translations podcast. It suggests the possibility of modest action on climate this year, according to lawmakers and business leaders. Dan Byers, vice president for policy at the U.S. Chamber of Commerce’s Global Energy Institute, predicted legislative action in the coming months. “I will even go out on a limb and maybe predict that you could see a nice package of climate energy innovation-focused legislation be signed by the president later this year,” he told the podcast.

A USMCA PUSH TO THE FINISH (MAYBE): It’s no quiet summer for USMCA lobbyists. Proponents of the deal have spent the month promoting it across the country, bombarding lawmakers as they spend time in their home districts and urging them to support Trump’s new North American trade deal.

POLITICO’s David Beavers reports that the lobbying tactics are varied and creative: Farmers for Free Trade and the Illinois Farm Bureau met last week with House Speaker Nancy Pelosi and Rep. Cheri Bustos at the Illinois State Fair, while the Corn Refiners Association has sent thank-you letters to members of Congress who have been out front with their support of the agreement. The Business Roundtable, meanwhile, has spent nearly seven figures since May on radio and digital ads pushing for speedy passage of the deal, according to a person familiar with the group’s strategy.

"Most members of Congress think it's good policy," said Phil Cox, a co-chairman of the Trade Works for America Coalition. "It's our job to make sure it's also good politics for them back home."

WHEN A REPRIEVE IS NOT A REPRIEVE: Commerce’s decision to extend a temporary general license allowing a limited number of business activities to continue between Huawei and U.S. companies was called a “reprieve” by many outlets (guilty), but the reality is that it won’t help American firms all that much.

The rule extending the license will technically allow a U.S. company to ship eligible items to Huawei but the Chinese telecommunications giant has to first provide a statement certifying proper use of the good or technology. The requirement has raised questions of whether the rule is actually workable, as there are doubts that Huawei will provide those certification statements. “That is the big question,” said one attorney who works with clients that have an interest in Huawei’s fate.

Trade Remedy Corner

PET SHEET PROBE GETS A GREEN LIGHT: The Commerce Department announced Wednesday it will initiate anti-dumping investigations on imports of polyethylene terephthalate sheet from South Korea, Mexico and Oman. In 2018, imports of PET sheet, a plastic material used for various applications, from South Korea, Mexico and Oman were valued at an estimated $90.0 million, $88.5 million, and $208.3 million, respectively.

International Overnight

— China will stage a big public affairs event to woo global investors spooked by the trade war, the South China Morning Post reports.

— A group of lawmakers is warning the administration to be cautious about hitting imports of EU olive oil with tariffs as retaliation in a long-running trade fight over aircraft subsidies.

— Companies wanting to relocate production from China to Vietnam are running into problems in the Southeast Asian country, The Wall Street Journal reports.

— Minutes from the last Federal Reserve meeting show that Trump is having an influence over how the institution communicates its decisions, Reuters reports.



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