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THE BIG DEAL–Business groups worry they won’t see a phase two Trump-China trade deal: Businesses are concerned that President TrumpDonald John Trump Democratic challenger on Van Drew’s party switch: ‘He betrayed our community’ Rand Paul pledges to force Hunter Biden vote if GOP backs Dem impeachment witnesses Trump plans to divert .2 billion from Pentagon for border wall construction: report MORE‘s “phase one” China trade deal, set to be signed on Wednesday, will not be followed by a more substantial phase two, leaving a slew of tariffs in place for at least another year.
The concerns are being raised in part because of the difficult issues that would have to be resolved between Beijing and Washington to win a stage two deal.
“I think there’s a real risk that there won’t be a phase two deal,” said David French, senior vice president of government relations for the National Retail Federation. “They reserved the hard stuff for phase two.”
Why?
- Businesses were relieved when Trump and China announced they had reached a limited trade deal in principle in October, preventing a substantial increase on tariffs.
- But many of the tough tariffs that Trump put in place to pressure China to negotiate a deal in the first place remain in place, raising prices on imports. So are most of the retaliatory tariffs China has imposed on American products.
The Hill’s Niv Elis explains here.
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ON TAP TOMORROW
- The House Financial Services Committee holds a hearing on the affordable housing crisis, 10 a.m.
- The Senate Environment and Public Works Committee holds a hearing to approve the U.S.-Mexico-Canada Agreement, 10 a.m.
- The Senate Budget Committee holds a hearing to approve the U.S-Mexico-Canada Agreement, 10:30 a.m.
- A House Financial Services subcommittee holds a hearing on a proposal to modernize the Community Reinvestment Act, 2 p.m.
LEADING THE DAY
Trump administration removes designation of China as currency manipulator: The Trump administration on Monday revoked its Monday designation of China as a currency manipulator ahead of the signing of a “phase one” trade deal between the world’s two largest economies.
The Treasury Department reversed an August decision to label China a currency manipulator in its semi-annual foreign exchange policy report released Monday afternoon. The decision, which was reported in advance by multiple media reports earlier in the day, comes before Trump is set to sign a preliminary trade agreement with China on Wednesday.
“The Treasury Department has helped secure a significant Phase One agreement with China that will lead to greater economic growth and opportunity for American workers and businesses,” said Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money — Presented by Wells Fargo — Business groups worry they won’t see a ‘phase two’ China trade deal | Trump officials remove currency manipulator label for China | Job numbers, stocks boost Trump in election year Trump administration removes designation of China as currency manipulator US, China resuming regular talks to resolve conflicts: report MORE.
“China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability.”
The Hill’s Naomi Jagoda and I have the background here.
- From the start of his 2016 campaign, President Trump has accused China of devaluing its currency to make its exports comparatively cheaper than U.S. goods in foreign markets.
- The Treasury Department designated China on Aug. 5 after Beijing allowed the yuan to fall below an exchange rate of seven yuan to one U.S. dollar. Treasury Secretary Steven Mnuchin announced China’s designation later that day.
- Treasury’s labeling of China as a manipulator sent shockwaves through financial markets, sending stocks tumbling over fears of a currency war. But tensions eased after China allowed the yuan to rise above the seven-to-one exchange rate, laying the groundwork for an October tariff ceasefire.
Job numbers, stocks boost Trump in election year: President Trump is heading into the final year of his first term with a strong job market that could boost his chances of winning another four years in office.
- The U.S. added jobs at a steady clip in 2019, powering through the rising costs of Trump’s trade battles, a global economic slump and myriad geopolitical crises.
- Fears of a recession that dominated the summer have faded, and the stock market has shattered record highs through the first days of 2020 — with the Dow Jones rising above 29,000 for a time on Friday.
- The December jobs report released the same day showed the U.S gaining 145,000 jobs and maintaining an unemployment rate of 3.5 percent, the lowest in more than 50 years. And some economists say the labor market has plenty of room to expand in the new decade.
“The economy is pretty damn good for the vast majority of Americans,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth, a D.C. think tank.
“This year was good news. We could have a lot more good news.”
I explain why here.
The flipside: Still, there are weak spots beneath the headline numbers that could make Trump vulnerable.
Trump’s promise to revive U.S. manufacturing and mining jobs was central to his appeal in Ohio, Michigan, Wisconsin and Pennsylvania — four industrial states that could make or break his reelection.
- Hiring in those sectors surged in 2018 but fell flat last year amid the rising toll of Trump’s tariffs and the retaliation they drew from China and Europe.
- Closures at steel plants, auto factories and other manufacturing hubs across the Midwest are red flags as Trump attempts to reassemble his winning industrial coalition.
- “2019 was one of the weakest years we’ve seen for manufacturing jobs over the last decade,” said Scott Paul, president of the Alliance for American Manufacturing, a trade group representing manufacturers and the United Steelworkers.
SPONSORED CONTENT – PRESENTED BY WELLS FARGO
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Rising housing costs are forcing families to sacrifice basic needs like food, health care and education.
Wells Fargo is committing $1 billion in philanthropic giving over the next six years to reduce the cost burden of housing – and help American families move into safe, stable, and affordable homes.
GOOD TO KNOW
- The Trump administration is making it harder for franchise employees to sue corporations over their wages.
- The U.S. budget deficit in the first three months of fiscal 2020 rose 11.8 percent compared to the same period in the previous year, the Treasury Department reported Monday.
- President Trump is slated to address the American Farm Bureau Federation on Sunday, when he will likely highlight a newly signed limited trade agreement with China in an effort to boost his support among the group.
- The New York Times: “New E.U. Trade Chief on a Quest to Fix Relations With U.S.”
ODDS AND ENDS
- CNBC: “Payments giant Visa is buying Silicon Valley start-up Plaid for $5.3 billion, the companies announced Monday.
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