Tag Archives: tariffs

Trump upbeat on China trade talks but wants broad access for U.S. firms

FILE PHOTO: U.S. Trade Representative Robert Lighthizer (2nd right) sits across from China's Vice Premier Liu He (left) during the opening of US-China Trade Talks in the Eisenhower Executive Office Building at the White House in Washington, U.S., January 30, 2019. REUTERS/Leah Millis/File Photo

By Doina Chiacu and David Lawder

WASHINGTON (Reuters) – President Donald Trump expressed optimism about forging a comprehensive trade deal with China as high-level talks continued on Thursday, but said any arrangement that fails to open Chinese markets broadly to U.S. industry and agriculture would be unacceptable.

As delegations from the world’s two top economies held the second of two scheduled days of talks in the U.S. capital aimed at easing a six-month-old trade war, Trump also said no final accord will be made until he meets with Chinese President Xi Jinping in the near future.

The talks were aimed at resolving deep differences over China’s intellectual property practices. Trump has threatened to raise tariffs on $200 billion of Chinese goods to 25 percent from 10 percent on March 2 if an agreement is not reached and impose new tariffs on the rest of Chinese goods shipped to the United States.

Trump was scheduled to meet with the leader of the Chinese delegation, Vice Premier Liu He, at the White House at 3:30 p.m. as talks conclude.

“Meetings are going well with good intent and spirit on both sides,” Trump said on Twitter. “No final deal will be made until my friend President Xi, and I, meet in the near future to discuss and agree on some of the long-standing and more difficult points.”

Trump, who has engaged in a series of fights with a variety of trade partners since becoming president in 2017, has acted as the final decision-maker in U.S. trade negotiations. Trump has vetoed multiple proposed trade deals with China, choosing to push ahead with tariffs on Chinese goods to gain leverage.

The Republican president set a high bar for any agreement in the current round of talks, writing on Twitter, “China’s representatives and I are trying to do a complete deal leaving NOTHING unresolved on the table.”

Trump said he was looking for China to open its markets “not only to Financial Services, which they are now doing, but also to our Manufacturing, Farmers and other U.S. businesses and industries. Without this a deal would be unacceptable!”

Chinese negotiators proposed a meeting between Trump and Xi next month in the Chinese city of Hainan, the Wall Street Journal reported.

Two White House officials said the Chinese had not made an invitation in the current talks for Trump to meet Xi in China soon, but added that they would not be surprised if such an offer was extended during Liu’s meeting on Thursday.

“The White House thus far has been focused on substance, not next steps,” one official told Reuters, speaking on condition of anonymity.

THUMBS UP

People’s Bank of China Governor Yi Gang declined comment on Chinese proposals as he left the delegation’s hotel for the meetings in Eisenhower Executive Office Building, next to the White House. Asked how the talks were going, Yi flashed a thumbs-up sign.

The Journal quoted anonymous sources as saying Chinese proposals mostly involved more purchases of U.S. farm and energy products and promises to invite more American capital into China’s manufacturing and financial services sectors.

U.S. officials have demanded that Beijing make deep structural changes to its industrial policies, including broad new protections for American intellectual property and an end to practices that Washington has said force U.S. companies to transfer technology to Chinese firms in exchange for market access.

The U.S. complaints, along with accusations of Chinese cyber theft of American trade secrets and a systematic campaign to acquire U.S. technology firms, were used by Trump’s administration to justify punitive tariffs on $250 billion worth of Chinese imports.

China has retaliated with tariffs of its own, but has suspended some and is allowing some purchases of U.S. soybeans during the talks.

Chinese officials have said their policies do not coerce technology transfers. They have emphasized steps already taken, including reduced automotive tariffs and a draft foreign investment law expected to be approved in March that improves access for foreign firms and promises to outlaw “administrative means to force the transfer of technology.”

A crucial component of any progress in the talks, according to U.S. officials, is agreement on a mechanism to verify and enforce China’s follow-through on any reform pledges. This could maintain the threat of U.S. tariffs on Chinese goods for the long term.

The U.S. tariffs on Chinese goods are just one front in Trump’s efforts to upend the global trading order with his “America First” strategy. He has also imposed global tariffs on imported steel and aluminum, washing machines and solar panels and has threatened to raise tariffs on imported cars unless Japan and the European Union offer trade concessions.

(Reporting by Doina Chiacu, Susan Heavey, Chris Prentice, Jeff Mason, Steve Holland, Alexandra Alper and David Lawder; Writing by David Lawder; Editing by Will Dunham)

China confident on U.S. trade pact, Trump cites Xi’s ‘strong signals’

FILE PHOTO: U.S. President Donald Trump takes part in a welcoming ceremony with China's President Xi Jinping in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj

By John Ruwitch

SHANGHAI (Reuters) – China expressed confidence on Wednesday that it can reach a trade deal with the United States, a sentiment echoed by U.S. President Donald Trump a day after he warned of more tariffs if the two sides could not resolve their differences.

The remarks, by the Chinese Commerce Ministry, follow a period of relative quiet from Beijing after Trump and Chinese leader Xi Jinping reached a temporary truce in their trade war at a meeting over dinner in Argentina on Saturday.

In a brief statement, the ministry said China would try to work quickly to implement specific items already agreed upon, as both sides “actively promote the work of negotiations within 90 days in accordance with a clear timetable and roadmap”.

“We are confident in implementation,” it said, calling the latest bilateral talks “very successful”.

Trump, in a post on Twitter, linked Beijing’s silence to officials’ travels and said he thought Xi had been sincere during their weekend meeting to hammer out progress over trade.

“Very strong signals being sent by China once they returned home from their long trip, including stops, from Argentina. Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting. ALL subjects discussed!” Trump wrote on Wednesday.

The U.S. president a day earlier had said the ceasefire could be extended but warned tariffs would be back on the table if the talks failed and that he would only accept a “real deal” with China.

China’s Foreign Ministry referred specific questions to the Commerce Ministry, which is due to hold its weekly news briefing on Thursday in Beijing.

“We hope the two working teams from both sides can, based on the consensus reached between the two countries’ leaders, strengthen consultations, and reach a mutually beneficial agreement soon,” Foreign Ministry spokesman Geng Shuang told reporters.

The threat of further escalation in the trade war between the world’s two largest economies has loomed large over financial markets and the global economy for much of the year, and investors initially greeted the ceasefire with relief.

The mood has quickly soured, however, on skepticism that the two sides can reach a substantive deal on a host of highly divisive issues within the 90-day negotiating period, and markets continued to slide on Wednesday in part from confusion over the ceasefire’s lack of detail.

Failure would raise the specter of a major escalation in the trade battle, with fresh U.S. tariff action and Chinese retaliation possibly as early as March.

The White House has said China had committed to start buying more American products and lifting tariff and non-tariff barriers immediately while beginning talks on structural changes with respect to forced technology transfers and intellectual property protection.

Sources told Reuters that Chinese oil trader Unipec plans to resume buying U.S. crude by March after the Xi-Trump deal reduced the risk of tariffs on those imports. China’s crude oil imports from the U.S. had ground to a halt.

MARKETS DOWN

Global financial markets sank to one-week lows on Wednesday amid the renewed trade concerns, extending Tuesday’s slide.

U.S. markets were closed on Wednesday to observe former President George H.W. Bush’s death, but the effect of Wall Street’s turmoil the previous day was felt in Europe and Asia with the benchmark Shanghai stock index closing down 0.6 percent.

“Narrow agreements and modest concessions in the ongoing trade dispute will not bridge the wide gulf in their respective economic, political and strategic interests,” Moody’s Investors Service said in a report that predicted U.S.-China relations “will remain contentious”.

Officials from the United States and a number of other major economies have often criticized China for its slow approach to negotiations and not following through on commitments.

China has said comparatively little about the Trump-Xi agreement after senior Chinese officials briefed the media following the meeting, and U.S. and Chinese accounts of what the deal entails have sometimes differed.

“Officials now face the difficult task of fleshing out a deal that is acceptable to the Chinese but also involves significant enough concessions not to be torpedoed by the China hawks in the Trump administration,” Capital Economics said in a note this week, adding that higher tariffs could simply be delayed.

A Chinese official told Reuters that officials were “waiting for the leaders to return” before publicizing details.

President Xi and his most senior officials are due back in China on Thursday, having visited Panama and Portugal since leaving Argentina.

On Wednesday, the Global Times tabloid, which is run by the Chinese Communist Party’s main newspaper, said the Trump administration’s statements about the deal – including the agreement that China would buy $1.2 trillion in additional U.S. goods – were designed to highlight or even exaggerate facets of the deal that benefited the United States.

“It will be a win-win situation if a deal is realized. But if not, more fights and talks will continue alternately for a long while. Chinese society should maintain a calm attitude,” it said.

(Reporting by John Ruwitch and Wang Jing in Shanghai, Philip Wen in Beijing and Makini Brice in Washington; Writing by Ben Blanchard; Editing by Kim Coghill and Steve Orlofsky)

Trump-Xi trade armistice clears way for more market gains

FILE PHOTO: U.S. President Donald Trump and China's President Xi Jinping shake hands after making joint statements at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj/File Photo

By Jonathan Spicer and Lewis Krauskopf

NEW YORK (Reuters) – One of the darkest clouds hanging over Wall Street somewhat dissipated on the weekend when China and the United States agreed to shelve any new tariffs and reset discussions, at least temporarily halting an increase in their tensions over trade.

Investors said the agreement, lasting 90 days, between Chinese President Xi Jinping and U.S. President Donald Trump at the G20 summit, spelled a reprieve for stocks and could pave the way for a positive bookend to a volatile trading year.

U.S. stock index futures jumped as trading for the week began late on Sunday, with benchmark S&P 500 e-mini futures up 1.55 percent. Treasury futures were soft, suggesting an appetite for risk-taking could extend last week’s gains in the stock market.

The trade tension between Washington and Beijing, along with an uncertain outlook for U.S. rate hikes, have for months dogged prospects for equities. The U.S. pledge not to boost tariffs on $200 billion of Chinese goods could mark the most important deal in years between the world’s top two economies.

“It sets a pretty positive tone (and) stocks should have a decent rally into December,” said Nathan Thooft, Boston-based global head of asset allocation for Manulife Asset Management.

Thooft said he believed the Trump administration was using a threat to raise tariffs to 25 percent on Jan. 1, from 10 percent now as a negotiating tactic. “So when you start to see evidence that there is the ability to come to some type of agreement, that has to be viewed as a positive,” he said.

The stock market logged an official correction after a selloff in October and continued volatility in November that, just over a week ago, had left the benchmark S&P 500  stock index down 10 percent from its all-time high.

Markets rebounded last week on comments perceived as dovish from Federal Reserve Chair Jerome Powell, though the S&P was up only 2.4 percent in 2018.

The latest trade standoff began in September when the United States imposed the 10-percent tariffs, prompting China to respond with its own. Ahead of the leaders’ dinner in Argentina, investors had been bracing for a range of outcomes including a worse-case end to talks and more tit-for-tat measures that would have continued to crimp economic and corporate profit growth.

Instead, the Americans and Chinese officially lauded the result.

Beijing agreed to buy what the White House called a “very substantial” amount of agriculture, energy, industrial and other products. While the clock ticks on the 90-day tariff reprieve, the two sides will try to work out thorny issues including technology transfer, intellectual property and cyber theft.

“It’s not solved by any stretch of the imagination,” said Thooft. But risk assets and cyclical U.S. sectors like materials and industrials should benefit, he said on Sunday.

An initial jump late on Sunday of nearly 2 percent in Nasdaq 100 e-mini futures suggested that technology companies, many of which were hardest hit in the selloff, could rebound.

Gary Shapiro, CEO of the Consumer Technology Association, said he was encouraged by the trade talks and warned that raising tariffs to 25 percent as the White House had threatened “would likely hurt consumers, put several American companies out of business and displace thousands of American workers.”

POWELL TESTIMONY

Energy prices could also rebound on Monday since cooling trade tensions could boost the world economy and spur demand.

Oil prices had dropped from a four-year high of about $76 per barrel in early October to just above $50 on Friday. But U.S. crude oil was up 2.7 percent to $52.37 a barrel as of 6:07 p.m. EST (2307 GMT) on Sunday.

Aside from trade policy, Wall Street’s attention has also been trained on Fed policy.

Powell was scheduled to testify on Wednesday to a congressional Joint Economic Committee. But the hearing is expected to be postponed to Thursday because major exchanges will be closed on Wednesday in honor of former U.S. President George H.W. Bush, who died on Friday at the age of 94.

Last week, Powell backed the Fed’s gradual tightening but said its policy rate was “just below” a range of estimates of the so-called neutral level that neither stimulates nor cools growth. In response, stocks shot up and largely recovered November’s earlier losses.

In the wake of Powell’s speech, Nicholas Colas, co-founder of DataTrek Research, said: “what happens in Buenos Aires will determine if stocks post a positive 2018.”

The specter of a global trade war has hovered over the market since March when Trump announced tariffs on imported steel and aluminum. He also recently said the United States was studying auto tariffs, which could ripple through Europe and Japan, while a pact with Canada and Mexico left some investors heartened about potential progress with China.

Nancy Lazar, economist at research firm Cornerstone Macro, said in a note that the 90-day tariff delay and China’s “incremental concessions” are good news.

“But given the stern U.S. stance, we’re certainly not raising our outlook,” she said of a 2.8-percent growth estimate for the fourth quarter, still comfortably above potential.

With U.S. corporate leaders increasingly voicing concerns over rising costs associated with tariffs, Wall Street appeared set on Monday to welcome any development that eases those pressures.

(Reporting by Jonathan Spicer and Lewis Krauskopf; Editing by Grant McCool and Sandra Maler)

U.S. weekly jobless claims hit more than 48-and-a-half-year low

FILE PHOTO: Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits dropped to a more than 48-1/2-year low last week as the labor market strengthens further, but trade tensions are casting a shadow over the economy’s outlook.

Other data on Thursday showed manufacturing activity in the mid-Atlantic region accelerated in July amid a surge in orders received by factories. But the Philadelphia Federal Reserve survey also showed manufacturers paying more for inputs and less upbeat about business conditions over the next six months.

Fewer manufacturers planned to increase capital spending, suggesting trade tensions, marked by tit-for-tat import tariffs between the United States and its trade partners, including China, Canada, Mexico and the European Union, could be starting to hurt business sentiment.

The survey came on the heels of the Federal Reserve’s Beige Book report on Wednesday, showing manufacturers in all districts worried about the tariffs and reporting higher prices and supply disruptions, which they blamed on the new trade policies.

“Yesterday’s Beige Book and the recent decline in the investment intentions balance in the Philly Fed survey show that escalating trade tensions are starting to have a material impact on companies’ confidence about the future,” said Brian Coulton, chief economist at ratings agency Fitch.

Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 207,000 for the week ended July 14, the lowest reading since early December 1969, the Labor Department said. Economists polled by Reuters had forecast claims rising to 220,000 in the latest week.

The second straight weekly decline in claims, however, likely reflects difficulties adjusting the data for seasonal fluctuations around this time of the year when motor vehicle manufacturers shut assembly lines for annual retooling.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 220,500 last week.

The dollar firmed against a basket of currencies. Stocks on Wall Street were lower, while prices for U.S. Treasuries rose.

WORKER SHORTAGE

The claims data covered the survey week for the nonfarm payrolls component of July’s employment report. The four-week average of claims dipped 500 between the June and July survey periods, suggesting solid job growth this month.

The economy created 213,000 jobs in June, with the unemployment rate rising two-tenths of a percentage point to 4.0 percent as more Americans entered the labor force, in a sign of confidence in their job prospects.

Federal Reserve Chairman Jerome Powell told lawmakers this week that with appropriate monetary policy, the job market will remain strong “over the next several years.”

The labor market is viewed as being near or at full employment. There were 6.6 million unfilled jobs in May, an indication that companies cannot find qualified workers.

That was reinforced by the Beige Book, which showed worker shortages persisting in early July across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, information technology professionals and truck drivers.

Thursday’s survey from the Philadelphia Fed showed its business conditions index jumped to a reading of 25.7 in July from 19.9 in June. The survey’s measure of new orders increased to 31.4 from a reading of 17.9 in June.

But its gauge of factory employment fell as did the average workweek. Manufacturers also continued to report higher prices for both purchased inputs and their own manufactured goods. The survey’s prices paid index soared to 62.9 this month, the highest level since June 2008, from 51.8 in June.

The index has risen 30 points since January. Sixty-three percent of manufacturers in the region reported paying more for inputs this month compared with 54 percent in June.

The price increases are likely related to tariffs on steel and aluminum imports, which were imposed by the Trump administration to protect domestic industries from what it says is unfair foreign competition.

Wednesday’s Beige Book mentioned a machinery manufacturer in the Philadelphia area who described the effects of the steel tariffs as “chaotic to its supply chain, disrupting planned orders, increasing prices, and prompting some panic buying.”

The Philadelphia survey’s index for future activity decreased for the fourth straight month. Capital spending plans over the next six months also fell as did intentions to hire more factory workers.

“Further escalation could create worse conditions and this remains a downside risk to the otherwise positive outlook over the next year,” said Adam Ozimek, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

China issues U.S. travel warning amid trade tensions

FILE PHOTO: The People's Republic of China flag and the U.S. Stars and Stripes fly on a lamp post along Pennsylvania Avenue near the U.S. Capitol during Chinese President Hu Jintao's state visit, in Washington, D.C.,U.S., January 18, 2011. REUTERS/Hyungwon Kang/File Photo

BEIJING (Reuters) – China’s embassy in Washington has issued a security advisory to Chinese nationals traveling to the United States, the latest such warning as trade tensions escalate between the two countries.

The embassy warned Chinese tourists to be aware of issues including expensive medical bills, the threats of public shootings and robberies, searches and seizures by customs agents, telecommunications fraud and natural disasters.

“Public security in the United States is not good. Cases of shootings, robberies, and theft are frequent,” the embassy said in the alert published on Thursday to its website.

“Travellers in the United States should be alert to their surroundings and suspicious individuals, and avoid going out alone at night.”

Aside from an additional warning about the risk of natural disasters, the advisory was similar to one the embassy posted in January.

Tensions are high between the two countries over the threat of tariffs.

U.S. President Donald Trump’s administration is set to impose tariffs on $34 billion worth of additional goods from China on Friday citing unfair Chinese trade practices, and has threatened successive waves of duties on up to $450 billion in Chinese imports.

China has vowed to retaliate in kind with its own tariffs on U.S. agricultural products and other goods and to take more “qualitative” measures if Trump escalates the conflict.

China’s Foreign Ministry, when asked on Tuesday if the timing of the alert was politically motivated, said the summer was the high season for Chinese going to the United States and that Chinese embassies had an obligation to warn citizens about potential risks abroad.

“This kind of reminder from the Chinese embassy in the relevant country, I think this is absolutely a matter that is in the scope of our duty,” ministry spokesman Lu Kang told a regular news briefing.

There was little mention of the latest embassy alert on Chinese social media.

China frequently issues travel warnings for Chinese abroad, generally in war-afflicted regions.

But some foreign governments have argued that Beijing uses other means, such as curtailing outbound tourism, to settle political or trade scores, though the Chinese government typically denies such issues are linked.

China banned all group tours to South Korea for part of 2017 in the wake of Seoul’s decision to install the U.S. Terminal High Altitude Area Defense system (THAAD), which has a powerful radar Beijing worries can penetrate Chinese territory.

(Reporting by Michael Martina and Ben Blanchard; Editing by Nick Macfie)

Xi warns Taiwan will face ‘punishment of history’ for separatism

Chinese President Xi Jinping speaks at the closing session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China March 20, 2018.

By Philip Wen and Ben Blanchard

BEIJING (Reuters) – Chinese President Xi Jinping told self-ruled Taiwan on Tuesday that it would face the “punishment of history” for any attempt at separatism, offering his strongest warning yet to the island claimed by China as its sacred territory.

In response, the government of Taiwan, one of China’s most sensitive issues and a potentially dangerous military flashpoint, said it hoped China could “break free” of the old clichés of threats and force.

China’s hostility toward Taiwan has risen since the 2016 election of President Tsai Ing-wen, a member of the island’s pro-independence Democratic Progressive Party.

China suspects Tsai wants to push for formal independence, which would cross a red line for Communist Party leaders in Beijing, though Tsai has said she wants to maintain the status quo and is committed to ensuring peace.

China has been infuriated by U.S. President Donald Trump’s signing into law legislation last week that encourages the United States to send senior officials to Taiwan to meet Taiwan counterparts, and vice versa.

The United States does not have formal ties with Taiwan but is required by law to help it with self-defense and is the island’s primary source of weapons.

China will push for the “peaceful reunification of the motherland” and work for more Taiwanese to enjoy the opportunities of its development, Xi told the 3,000-odd delegates to the annual session of parliament.

“It is a shared aspiration of all Chinese people and in their basic interests to safeguard China’s sovereignty and territorial integrity and realize China’s complete reunification,” Xi said in a speech at the end of the session.

“Any actions and tricks to split China are doomed to failure and will meet with the people’s condemnation and the punishment of history,” he added, to loud applause.

China had the will, confidence and ability to defeat any separatist activity, Xi said.

“The Chinese people share a common belief that it is never allowed and it is absolutely impossible to separate any inch of our great country’s territory from China.”

In Taiwan, the China policy-making Mainland Affairs Council said the government was firm in its conviction to protect Taiwan’s “sovereign dignity” and the well-being of its people.

“We also hope that mainland China’s leaders, at this time of entering into a new administration period, can break free of clichéd thinking of strong intimidation,” it added.

In a visit likely to further irritate China, U.S. Deputy Assistant Secretary of State Alex Wong will be in Taiwan this week, the island’s foreign ministry said.

PATRIOTIC SPIRIT

China has also been worried about independence activists in the former British colony of Hong Kong following big street protests there in 2014 calling for universal suffrage.

Xi said China would uphold Hong Kong’s high degree of autonomy, but would also seek to increase “national consciousness and patriotic spirit” in the financial center.

Taiwan has shown no interest in being run by China, and has accused China of not understanding how democracy works, pointing out that Taiwan’s people have the right to decide its future.

The new U.S. law on Taiwan adds to strains between China and the United States over trade, as Trump has enacted tariffs and called for China to reduce its huge trade imbalance with the United States, even while Washington has sought Beijing’s help to resolve tension with North Korea.

Taiwan has thanked the United States for the law and its support, but its foreign ministry said on Monday there were no plans for any senior leaders, such as the president, to visit the United States.

While stepped-up Chinese military exercises around Taiwan over the past year have rattled the island, Xi reiterated China’s assertion that its rise was not a threat to any country, though China considers Taiwan to be merely a Chinese province not a nation.

“Only those who are in the habit of threatening others will see everyone else as a threat,” Xi said.

(Additional reporting by Stella Qiu and Christian Shepherd, and Twinnie Siu and Fabian Hamacher in TAIPEI; Writing by Ben Blanchard; Editing by Robert Birsel and Clarence Fernandez)

Exclusive: U.S.-Mexico sugar deal struck ahead of NAFTA talks; industry divided

By Adriana Barrera and Dave Graham

MEXICO CITY (Reuters) – The U.S. and Mexican governments reached a deal in a dispute over trade in sugar on Monday, sources said, averting steep U.S. duties and Mexican retaliation by Mexico on imports of American high-fructose corn syrup ahead of the renegotiation of NAFTA.

Two sources, speaking on condition of anonymity, said the two sides were working on final details of a deal in Washington that would end a year of wrangling. The latest talks began in March, two months after President Donald Trump took power vowing a tougher line on trade to protect U.S. industry and jobs.

They are seen as a precursor as well as significant hurdle to the more complex discussions on the North American Free Trade Agreement between the United States, Mexico and Canada, which are expected to start in August.

One source said the sugar deal would benefit both the United States and Mexico, with another saying Mexico will agree to export less refined sugar and send a lower quality of crude sugar to the United States than it previously did.

Both sides also would avoid potentially inflammatory tariffs that could have kicked in if a deal was not reached.

Some members of the U.S. sugar industry, however, are not happy with the reported deal and were pressuring the Trump administration to stop it, one source said. Some of their Mexican counterparts also expressed anger at what they see as unfavorable terms.

ICE U.S. domestic raw sugar futures for July delivery finished down 2.9 percent at 27.66 cents per lb, in the largest one-day loss in over a year.

U.S. Commerce Secretary Wilbur Ross came close to hammering out a compromise deal before an earlier deadline in May, but it fell through as the U.S. sugar lobby upped its pressure on U.S. lawmakers, said two sources familiar with the talks.

The powerful lobby includes the politically connected Fanjul family, Imperial Sugar, owned by Louis Dreyfus Co, and U.S. cane and beet growers.

Mexico had free access to the U.S. sugar market under NAFTA, but U.S. sugar refiners accused it of dumping subsidized sugar, undercutting their businesses. In retaliation, the United States slapped large duties on the Mexican sweetener, but a 2014 agreement suspended the tariffs in return for quotas and price floors for Mexican sugar.

The new deal would lower the proportion of refined sugar Mexico can export to the United States to 30 percent of total exports, from 53 percent, one source said. It also cuts the quality of Mexico’s crude sugar exports to 99.2 percent, from 99.5 percent, the source said, tackling a key complaint of U.S. refiners, who said Mexican crude sugar was close to refined and going straight to consumers.

The U.S. sugar market is protected by a complex web of price supports and import quotas, which confection makers and other critics say artificially inflates domestic prices. NAFTA opened the doors to Mexican sugar in 2008.

(Reporting by Adriana Barrera, Dave Graham and Anthony Esposito; Additional reporting by Christine Prentice in New York; Editing by Frank Jack Daniel and Paul Simao)

Mexico warns it will end NAFTA talks if U.S. proposes tariffs

Mexico's Economy Minister Ildefonso Guajardo delivers a speech during a "Made in Mexico" event in Mexico City, Mexico,

(Reuters) – Mexico’s economy minister Ildefonso Guajardo warned that his country will break off negotiations on the North American Free Trade Agreement (NAFTA) if the United States were to propose tariffs on products from Mexico, Bloomberg reported on Monday.

“The moment that they say, ‘We’re going to put a 20 percent tariff on cars,’ I get up from the table,” Guajardo told Bloomberg in an interview.

U.S. President Donald Trump has vowed to scuttle NAFTA, the 1994 trade accord which also includes Canada, if he cannot recast it to benefit U.S. interests, raising the risk of a major economic shock for Mexico.

Mexico, which is preparing to discuss changes to some trade rules under the NAFTA, has however expressed confidence that Trump will not be able to impose harsh barriers on imports anytime soon.

Mexican officials expect talks to start in June, Bloomberg reported.

Trump spoke positively about a border adjustment tax being pushed by Republicans in Congress as a way to boost exports in an interview with Reuters last week.

Trump has sent conflicting signals about his position on the border adjustment tax in separate media interviews last month, saying in one interview that it was “too complicated” and in another that it was still on the table.

The White House and the Mexican government were not immediately available for comment.

(Reporting by Kanishka Singh in Bengaluru; Editing by Sai Sachin Ravikumar)

China supporting steel exports, U.S. imposes hefty tariffs

Columns of steel are stacked inside the China Steel production factory in Kaohsiung, southern Taiwan

By Ruby Lian and David Lawder

SHANGHAI/WASHINGTON (Reuters) – China said it would persist with controversial tax rebates to steel exporters to support the sector’s painful restructuring, defying a United States move to impose punitive import duties on Chinese steel products.

A worldwide steel glut has become a major trade irritant, with China under fire from global rivals who say it is dumping cheap exports after a slowdown in demand at home.

In a marked escalation of the spat, the United States on Tuesday said it would impose duties of more than 500 percent on Chinese cold-rolled flat steel, widely used for car body panels, appliances and in construction.

However, China’s Ministry of Finance said it would “continue to implement a tax rebate policy on steel exports” as it tries to finance a costly capacity closure plan.

By far the world’s largest steel producer, China plans to eliminate 100-150 million tonnes of annual production – more than the U.S. produces per year – over the next five years. The cabinet said central government-controlled firms will cut steel and coal production capacity by a tenth in 2016-17.

The finance ministry said China was making special funds available to curb overcapacity in both steel and coal and would reward local authorities for exceeding their targets and meeting them early.

The policy document, though dated May 10, was published just hours after the U.S. tariffs were announced. It is the latest policy announced by different departments including the Ministry of Human Resources and Social Security to push forward capacity cuts.

ON G7 MENU

The U.S. Commerce Department said the new duties effectively increase more than five-fold the import prices on Chinese-made cold-rolled flat steel products, which totaled $272.3 million in 2015. It found that products were being sold in the U.S. below cost and with unfair subsidies.

China’s Commerce Ministry expressed its “strong dissatisfaction” with the U.S. ruling, and said the United States should rectify its mistakes as soon as possible.

“The United States adopted many unfair methods during the anti-dumping and anti-subsidy investigation into Chinese products, including the refusal to grant Chinese state-owned firms a differentiated tax rate,” it said.

The Group of Seven rich nations plans to address the steel glut when it meets in Japan later this month, in a move seen likely to add to pressure on China.

Analysts said the potential closing off of the U.S. market would not substantially reduce China’s exports, accounting for just 2 percent of its total shipments.

“The duty will not have a big impact on China’s overall steel exports because the volume to the United States is very small… but because of anti-dumping, export destinations are becoming more and more dispersed,” said Kevin Bai, an analyst with CRU in Beijing.

CHINA DENIES FLOODING MARKETS

While a flood of cheap Chinese steel has been blamed for putting some overseas producers out of business, China denies its mills have been dumping their products on foreign markets, stressing that local steelmakers are more efficient and enjoy far lower costs than their international counterparts.

China has also denied there are any inducements in place that encourage steelmakers to sell their products overseas, saying trade flows are determined by the market.

“Global demand is increasing, and Chinese steel products are very competitive, so exports are increasing a little, but the steel sector is mainly used to satisfy domestic demand and there has never been any policy support for large volumes of exports,” China Iron and Steel Association (CISA) chairman Ma Guoqiang said at a conference this week.

However, a vaguely-worded statement from the central bank and several other government bodies last month said China would encourage exports and provide financing for steel and coal firms looking to move overseas.

While the government has offered as much as 100 billion yuan ($15 billion) to help handle worker layoffs, China’s debt-ridden steel sector cannot afford to abandon the financial lifeline provided by exports.

Foreign sales reached a record 112.4 million tonnes last year, up 19 percent, though total value fell 10.5 percent to $62.8 billion as a result of plunging prices.

More than half of large steel mills still made losses last year, according to the CISA.

Steelmakers have called on more proactive support for the export business, with Chen Ying, the general manager of Jiangsu Shagang, telling a conference on Monday that boosting foreign sales would help speed up the country’s restructuring efforts.

“China should support exports – steel product exports and moving projects and plants abroad,” she said.

(Reporting by Ruby Lian and David Lawder, with additional reporting by David Stanway and Michael Martina; Editing by Lincoln Feast and Ian Geoghegan)