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Daily Picks Monday: A leaked Trump bill to blow up the WTO

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Exclusive: A leaked Trump bill to blow up the WTO

From: https://www.axios.com/corporate-america-gun-industry-financial-institutions-retail-stores-b70154af-38ba-4cef-ad5a-e1a6976eff09.html

  • The bill essentially provides Trump a license to raise U.S. tariffs at will, without congressional consent and international rules be damned.
  • "It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal," said a source familiar with the bill.
  • Trump directly requested this legislation and was verbally briefed on it in May. But he hasn't met with the principals to review the text.
  • "It's not implementable at the border," given it would create potentially tens of thousands of new tariff rates on products. "And it would completely remove us from the set of global trade rules.
  • Congress is already concerned with how Trump has been using his trade authorities — just look at recent efforts by Republican Sens. Bob Corker and Pat Toomey and Democratic Sen. Michael Bennet to roll back the President's steel and aluminium tariffs.
  • "The good news is Congress would never give this authority to the president," the source added, describing the bill as "insane."

EU warns U.S. of major hit if car tariffs imposed

From: https://uk.reuters.com/article/uk-usa-trade-eu/eu-warns-u-s-of-major-hit-if-car-tariffs-imposed-idUKKBN1JS0RD

  • The European Union said tariffs on cars and car parts were unjustifiable and did not make economic sense.
  • The Commerce Department launched its investigation, on grounds of national security under instruction from President Donald Trump.
  • The bloc exported €37.4 billion (£33.10 billion) of cars to the United States in 2017, while €6.2 billion worth of cars went the other way.
  • In its submission, the EU said that EU companies make close to 2.9 million cars in the United States, supporting 120,000 jobs - or 420,000 if cars dealerships and car parts retailers are included.
  • Imports had, it said, not shown a dramatic increase in recent years and largely grown alongside overall expansion of the U.S. car market, with increased demand that could not be met by domestic production.
  • The EU had calculated that a 25% tariff would have a initial $13-14 billion negative impact on U.S. gross domestic product with no improvement to its current account balance.
  • Assuming counter-measures along the lines of those taken in response to existing U.S. import tariffs on steel and aluminium, up to $294 billion of U.S. exports - 19% of overall U.S. exports - could be affected.
  • The submission also said that the link between the automotive industry and national security was “weak”. Military vehicles, such as the Humvee, were made by different, more niche producers.

Exclusive - Largest U.S. business group attacks Trump on tariffs

From: https://www.reuters.com/article/us-usa-trade-chamber-exclusive/exclusive-largest-us-business-group-attacks-trump-on-tariffs-idUSKBN1JS0VL

  • The new campaign is an aggressive effort by the business lobbying giant, the chamber of commerce, which historically has worked closely with Republican presidents and praised Trump for signing business tax cuts in December.
  • Using a state-by-state analysis, it argues that Trump is risking a global trade war that will hit the wallets of U.S. consumers.
  • “The administration is threatening to undermine the economic progress it worked so hard to achieve,” said the Chamber President. “We should seek free and fair trade, but this is just not the way to do it.”
  • The Chamber said Texas could see $3.9 billion worth of exports targeted by retaliatory tariffs; Tennessee, $1.4 billion; and South Carolina, $3 billion.

Theresa May Finally Faces Her Moment of Truth on Brexit

From: https://www.bloomberg.com/news/articles/2018-07-02/may-s-brexit-moment-of-truth-is-coming-at-the-body-bag-summit

  • May’s aim is to force a decision on how dramatic a split to seek from the European Union with the idea is that clarity will finally emerge in a so-called white paper that will set out the U.K.’s goals for its post-Brexit relationship with the bloc.
  • Businesses want the smoothest of breakups, but if May tries to stay close to the bloc, she’ll face accusations of betrayal by Brexit purists.
  • Back the Prime Minister or resign. Those are options facing top ministers as they head into Friday’s gathering with the goal of uniting behind an approach to Brexit even as rivals are reported to be lining up.
  • Hardline Brexit supporters like Gove oppose May’s preferred option, which involves the U.K. collecting tariffs on the EU’s behalf, and instead back an alternative that would see technology -- which doesn’t yet exist -- providing the key to minimal border checks.
  • This particular argument has been dragging on for months, with concerned businesses finally sounding the alarm.
  • A government official on Monday confirmed a BBC report that a third option is now on the table. The official provided no details on the new proposal, which hasn’t been made public.

Merkel faces migration showdown with coalition partners

From: https://www.ft.com/content/f02bcf36-7d3a-11e8-bc55-50daf11b720d

  • The two parties embroiled in Germany’s escalating political crisis gave themselves one last chance to resolve their differences, agreeing to meet at 5pm Berlin time on Monday for talks that could seal the fate of Angela Merkel and her three-month-old coalition government.
  • If the two fail to bury the hatchet, Horst Seehofer, interior minister and leader of Ms Merkel’s Bavarian sister party the CSU, has said he will resign, a move that would mark a historic rupture in the centre-right of German politics.
  • At issue is a conflict between the two sister parties over migration policy, which has re-emerged as the most explosive issue in German politics.
  • The disagreement between the two leaders threatens to shatter the CDU/CSU alliance, a union that has formed the bedrock of German politics for nearly 70 years.
  • A divorce could also lead to the collapse of Ms Merkel’s “grand coalition” government and throw the future of the EU’s longest-serving leader into doubt.