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Boston Globe
4 days ago
- Business
- Boston Globe
Trump says after Xi call that US and China will resume trade talks
The Republican president also said Xi 'graciously' invited him and first lady Melania Trump to China, and Trump reciprocated with his own invitation for Xi to visit the United States. The Chinese foreign ministry said Trump initiated the call between the leaders of the world's two biggest economies. Advertisement Trump had declared one day earlier that it was difficult to reach a deal with Xi. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 'I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!' Trump posted Wednesday on his social media site. Trade negotiations between the United States and China stalled shortly after a May 12 agreement between the two countries to reduce their tariff rates while talks played out. Behind the gridlock has been the continued competition for an economic edge. The U.S. accuses China of not exporting critical minerals, and the Chinese government objects to America restricting its sale of advanced chips and its access to student visas for college and graduate students. Trump has lowered his 145% tariffs on Chinese goods to 30% for 90 days to allow for talks. China also reduced its taxes on U.S. goods from 125% to 10%. The back and forth has caused sharp swings in global markets and threatens to hamper trade between the two countries. Advertisement Treasury Secretary Scott Bessent had suggested that only a conversation between Trump and Xi could resolve these differences so that talks could restart in earnest. The underlying tension between the two countries may still persist, though. Even if negotiations resume, Trump wants to lessen America's reliance on Chinese factories and reindustrialize the U.S., whereas China wants the ability to continue its push into technologies such as electric vehicles and artificial intelligence that could be crucial to securing its economic future. The United States ran a trade imbalance of $295 billion with China in 2024, according to the Census Bureau. While the Chinese government's focus on manufacturing has turned it into a major economic and geopolitical power, China has been muddling through a slowing economy after a real estate crisis and coronavirus pandemic lockdowns weakened consumer spending. Trump and Xi had last spoken in January, three days before Inauguration Day. The pair discussed trade then, as well as Trump's demands that China do more to prevent the synthetic opioid fentanyl from entering the United States. Trump had long expressed optimism about the prospects for a major deal, before his post suggesting Xi was making that difficult. Last week, Trump went further, posting, 'The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,' Trump posted. 'So much for being Mr. NICE GUY!'
New York Post
02-06-2025
- Business
- New York Post
Why China's mineral monopoly has emerged as key obstacle in US tariff talks: ‘They hold virtually all of the cards'
China's exploitation of its monopoly over rare earth elements has become a major sticking point in high-stakes trade talks with President Trump – and experts warn the US needs to prepare for the worst. Beijing has infuriated Trump officials by failing to loosen its crackdown on exports of seven 'heavy' rare earth metals which are essential for gadgets like smartphones and electric cars as well as military hardware like F-35 fighter jets and drones. On Friday, Trump fumed that China had 'totally violated' the terms of a preliminary trade agreement struck in Geneva, which included a 90-day tariff truce that runs until mid-August. Trump didn't elaborate, but US Trade Representative Jamieson Greer said one concern was that China 'continues to, you know, slow down and choke off' the flow of critical minerals to the US. Advertisement Treasury Secretary Scott Bessent on Sunday said Trump and Chinese President Xi Jinping will speak soon to iron out the trade issues including the dispute over critical minerals. 'What China is doing is they are holding back products that are essential for the industrial supply chains of India, of Europe. And that is not what a reliable partner does,' Bessent said in an interview with CBS' 'Face the Nation.' 'They are withholding some of the products that they agreed to release during our agreement — maybe it's a glitch in the Chinese system, maybe it's intentional. We'll see after the President speaks with the party chairman.' Advertisement 6 Rare earth metals are necessary to manufacture most tech gadgets and advanced military hardware. REUTERS Nonetheless, any talk from China of a trade truce is 'little more than window dressing,' according to longtime mining executive Mark A. Smith, whose firm NioCorp has a rare earths facility under development in Nebraska. 'China is strategically choosing minerals for export restrictions that have a disproportionate impact on our military readiness and national defense,' Smith said. 'They hold virtually all of the cards.' Since 2023, China has implemented export controls on at least 16 critical minerals as part of what DC insiders and other experts describe as a highly targeted campaign aimed at disrupting US defense and tech supply chains. Advertisement In the case of the seven heavy rare earth metals most recently targeted with new licensing rules, China controls as much as 99% of global processing capacity. In turn, the Trump administration has irritated China by imposing ever-tighter export controls on US-made computer chips needed in artificial intelligence. Trump's proposed takeover of resource-rich Greenland is widely seen as part of his strategy to curtail the country's reliance on China. Elsewhere, the US recently struck terms on a mineral rights deal with Ukraine, even as talks to end the war with Russia have floundered. Mineral sites in Greenland and Ukraine, however, are many years away from making a dent in US demand. Experts said they are best seen as part of a broader strategy that includes increased domestic mining, as well as close collaboration with resource-rich allies to decrease reliance on China. 6 China has a dominant hold on the world's supply and processing capacity for rare earth metals. Getty Images Advertisement 'It's a reliability of access problem,' one House aide briefed on the situation told The Post. 'As we stand right now, I think we're very underprepared and you can't buy processing capacity off the shelf.' The risk of a total embargo in response to rising geopolitical tensions may seem far-fetched, but it has a precedent. In 2010, China briefly sparked chaos when it halted shipments of rare earth elements to Japan while the two countries were locked in a territorial dispute. Some insiders believe that China would inevitably resort to similar tactics in the event of a more serious diplomatic dispute with the US – such as a potential invasion of Taiwan. Congress needs to 'anticipate the worst,' according to Rep. Don Bacon (R-Neb.), a retired Air Force officer and a member of the House Armed Services Committee. 6 Rep. Don Bacon (R-Neb.) arrives for a House Republican conference meeting at the US Capitol on May 6, 2025 in Washington, DC. Getty Images 'After 30 years in the military, I found that we tend to exaggerate the enemy's capabilities, but we tend underestimate their intentions,' Bacon said in an interview. 'And I think if this is an option for China and we're playing hardball, oh, yeah, they can shut this stuff down if they wanted. That's why it's very important that we find alternative areas.' A White House official said Trump is taking corrective action after former President Joe Biden 'deprioritized domestic mining and delayed permitting for years in favor of 'green' energy projects.' 'In President Trump's first 100 days, he has taken bold, decisive steps to reverse course,' the official said. 'He signed Executive Order 14241 to ramp up American mineral production, launched a National Critical Minerals Strategy, fast-tracked permitting for key projects, and initiated a Section 232 investigation into Chinese mineral imports.' Advertisement 'The administration is also pursuing new market mechanisms, export controls on mineral recycling, and a fund to accelerate US dominance in this vital sector,' the White House official added. 6 President Trump has accused China of violating a preliminary trade agreement. AFP via Getty Images The Center for Strategic and International Studies warned in a recent report the US military was 'particularly vulnerable' to any disruption to shipments of heavy rare earths. First announced in April, China's licensing requirements on rare earth magnets left Western firms scrambling to restock before their dwindling stockpiles ran out. The broad shift toward 'just-in-time' supply chains over the last few decades means many companies retain just three-to-six months' worth of critical minerals. Advertisement Not even Elon Musk, who has cultivated close ties to both Beijing and Trump while leading Tesla, is immune from the negative effects. During Tesla's April 22 earnings call, Musk admitted that China's export controls on rare earth magnets could delay production of the company's Optimus humanoid robot. 6 NioCorp CEO and Executive Chairman Mark A. Smith has called on the US to boost domestic mining of rare earths. NioCorp Developments / YouTube Metals traders and other executives across various industries are already 'very, very concerned' and have begun sounding the alarm on Capitol Hill about how problematic a long-term shutdown would be for the economy, the House aide said. 'In the emails that we get about the potential impact of a sustained and meaningful rare earth control on the US market, the response is pretty frantic,' the House aide said. Advertisement 6 Experts warn that a sustained embargo of rare earth shipments could cause supply chain chaos. AFP via Getty Images Some legislative efforts are underway in Congress to address the budding crisis. Rep. Rob Wittman (R-Va.), who leads the House Select Committee on China's Critical Minerals Policy Working Group, has backed a trio of bills aimed at fixing the US supply chain and fighting back against China's attempts to leverage its monopoly. As The Post has reported, industry officials have also called on the US government to ease burdensome regulations and environmental permitting processes that have chilled investment in rare earth mining and caused major delays for existing projects.
Boston Globe
23-04-2025
- Business
- Boston Globe
Trump's inner circle reportedly weighs push for higher taxes on millionaires
The concept, however, faces strenuous opposition, including from longtime allies of the president. Outside Trump advisers Newt Gingrich, Steve Moore and Larry Kudlow have come out strongly against it, arguing the plan undermines the president's promise to cut taxes and will discourage economic growth, as has the influential Fox News host Sean Hannity. House Speaker Mike Johnson (R-Louisiana) and GOP Sens. Dave McCormick (Pennsylvania) and Ted Cruz (Texas), among other congressional Republicans, have also made clear that they dislike the idea of raising taxes and do not expect it to become incorporated into new legislation. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Gingrich posted a note on social media Tuesday that he said came from Trump, indicating that the president would 'love the idea of a small increase' but that it would probably hurt Republicans politically, so 'if you can do without it, you're probably better off' not raising taxes. A White House spokesman did not immediately respond to a request for comment on the note. Advertisement Treasury Secretary Scott Bessent has expressed openness to a range of ideas, including the possibility of raising taxes on Americans earning more than $5 million per year, two of the people said. The weighing of multiple options reflects the difficult math facing the GOP as Republicans try to extend their 2017 tax law, which could add more than $4 trillion in new tax cuts as the national debt surges. GOP lawmakers have explored significant spending cuts - including to Medicaid, the health insurance program for the poor - but are aware of the political drawbacks of doing so while extending hundreds of billions of dollars in tax cuts for the most affluent Americans that the 2017 law delivered. Those obstacles have encouraged some Trump allies to explore higher taxes on the ultrarich. Yet that idea remains a steep ask for Republicans who have for decades resisted any measures to increase taxes. While most analysts and aides think it's unlikely to advance, the growing number of Trump officials open to higher taxes on the rich reflects an ideological schism in the Republican Party, as a newer and more populist wing rejects some of the traditional conservative dogma that has dominated the party for decades. Several people cautioned many options are being considered as Trump advisers brainstorm ways to reach an agreement on tax legislation. Most of the tax cuts approved by Republicans in 2017 are set to expire at the end of this year without congressional action. Advertisement 'I don't see it getting through the Senate Finance Committee - there's not a chance,' said Doug Holtz-Eakin, president of the center-right think tank American Action Forum, who added that the idea is unlikely to pass the House, either. 'They'll deflect and say they want to consider all possibilities, but it won't have the votes. … They'll see this as a punitive tax on rich people for no reason. They don't like the politics. They don't like the economics. They're not interested.' Bannon has pitched various ideas for how Republicans can recoup some revenue by raising taxes on the rich. One proposal would allow the top tax rate to revert to its level before the 2017 tax law, from 37 percent to 39.6 percent. (This would raise taxes for those with more than $626,350 in earnings.) Bannon has also proposed creating a new bracket with higher taxes for those earning $1 million or more, arguing the GOP should act on behalf of its increasingly working-class voting base. Bannon and some other Trump allies have also discussed a third idea to create an even higher top tax bracket, for those earning more than $3 million or $5 million, two of the people said. 'This guts the AOC-Bernie 'oligarchy tour,'' Bannon said, referring to the populist rallies being held by Rep. Alexandria Ocasio-Cortez (D-New York) and Sen. Bernie Sanders (I-Vermont). Bannon has been trying to convince Republicans to embrace higher taxes on the rich since Trump's first term. 'Politically, it's game, set, match - it's a no-brainer. This would destroy the Democrats.' Critics say that even a higher tax on millionaire income will not do much to address economic inequality. The wealthiest Americans typically benefit from increases in the value of their stock holdings, but Republicans are not currently considering higher taxes on either capital gains or unrealized paper gains. Advertisement Fewer than 0.1 percent of Americans - or roughly 150,000 returns - earned more than $2.6 million in 2020, according to federal data. 'If you want to tax billionaires, you have to go after their wealth. It's quite plausible they raise the top rate because it's not where the money is,' Steve Rosenthal, who was a senior fellow at the Tax Policy Center, a nonpartisan think tank, said of the GOP. 'The money is in the wealth, the retirement savings, the unrealized gains, all of which goes tax-free. So taxing income may not be that big a deal.' Related : At a meeting earlier this month with Senate Majority Leader John Thune (R-South Dakota), Trump mused about the potential merits of the idea without committing to it, the people said. Those comments were first reported by Semafor. Allowing the top tax rate to go back to 39.6 percent would raise roughly $400 billion over the next decade, according to Kyle Pomerleau, senior fellow at the American Enterprise Institute, a center-right think tank. 'On the Hill, they have a ton of requests and they're looking for ways to offset their costs,' Pomerleau said. 'The budget people are trying to make the numbers work and you have the Trump people who seem open to it, but traditional conservatives do not seem to like it whatsoever.' Republicans may also be interested in pairing a new millionaire tax hike with legislation to increase the cap on how much state and local taxes Americans can deduct off their federal taxes - a cap introduced in 2017 that also affected more affluent households. That idea, however, would likely leave higher-earners worse off in general and will likely be rejected, said Erica York, vice president at the Tax Foundation. Advertisement A spokeswoman for Vought declined to comment. Taylor Van Kirk, a Vance spokeswoman, said in a statement that 'only President Trump determines the administration's policy agenda' and that Vance is 'fully committed to supporting and executing on those priorities.' The Treasury Department said in a statement: 'Our administration and Congress are considering a wide range of options. Secretary Bessent is laser-focused on executing the President's policy agenda, which includes making his historic Tax Cuts and Jobs Act permanent and no tax on tips, on overtime, and on social security. The Republican Party is unified both in the Cabinet and in Congress in executing President Trump's policies, with record pace and purpose.' Vance's openness to higher taxes in some circumstances has provoked alarm among some conservatives given his strong position to claim the GOP presidential nomination in 2028. Vance in 2023 said he opposes further cuts to the corporate tax rate, which the president's 2017 tax law lowered from 35 percent to 21 percent. While in the Senate, Vance also explored bipartisan measures to close tax loopholes for large businesses. Moore, whom Trump selected to be on the Federal Reserve Board during his first administration, pointed to former president George H.W. Bush's embrace of higher tax hikes as a fatal political miscalculation - an article of faith among many conservatives. Moore expressed concern the party could forgetting that failure. 'This is a potential crisis in the party,' said Moore, president of the Committee to Unleash Prosperity. 'It sounds like Bernie Sanders economics.' Advertisement
Boston Globe
10-04-2025
- Business
- Boston Globe
Asia shares jump after US stocks soared to historic gains when Trump paused most of his tariffs
Stephen Innes, managing partner at SPI Asset Management, called the reaction 'from fear to euphoria.' Advertisement 'It's now a manageable risk, especially as global recession tail bets get unwound, and most of Asia's exporters breathe a massive sigh of relief,' he said, referring to the tariffs on China, which Trump has kept. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up On Wall Street, the S&P 500 surged 9.5%, an amount that would count as a good year for the market. It had been sinking earlier in the day on worries that Trump's trade war could drag the global economy into a recession. But then came the posting on social media that investors worldwide had been waiting and wishing for. 'I have authorized a 90 day PAUSE,' Trump said, after recognizing the more than 75 countries that he said have been negotiating on trade and had not retaliated against his latest increases in tariffs. Advertisement Treasury Secretary Scott Bessent later told reporters that Trump was pausing his so-called 'reciprocal' tariffs on most of the country's biggest trading partners, but maintaining his 10% tariff on nearly all global imports. China was a huge exception, though, with Trump saying tariffs are going up to 125% against its products. That raises the possibility of more swings ahead that could stun financial markets. The trade war is not over, and an escalating battle between the world's two largest economies can create plenty of damage. U.S. stocks are also still below where they were just a week ago, when Trump announced worldwide tariffs on what he called 'Liberation Day.' But on Wednesday, at least, the focus on Wall Street was on the positive. The Dow Jones Industrial Average shot to a gain of 2,962 points, or 7.9%. The Nasdaq composite leaped 12.2%. The S&P 500 had its third-best day since 1940. The relief came after doubts had crept in about whether Trump cared about the financial pain the U.S. stock market was taking because of his tariffs. The S&P 500, the index that sits at the center of many 401(k) accounts, came into the day nearly 19% below its record set less than two months ago. That surprised many professional investors who had long thought that a president who used to crow about records for the Dow under his watch would pull back on policies if they sent markets reeling. Wednesday's rally pulled the S&P 500 index away from the edge of what's called a 'bear market.' That's what professionals call it when a run-of-the-mill drop of 10% for U.S. stocks, which happens every year or so, graduates into a more vicious fall of 20%. The index is now down 11.2% from its record. Advertisement Wall Street also got a boost from a relatively smooth auction of U.S. Treasurys in the bond market Wednesday. Earlier jumps in Treasury yields had rattled the market, indicating increasing levels of stress. Trump himself said Wednesday that he had been watching the bond market 'getting a little queasy.' Analysts say several reasons could be behind the rise in yields, including hedge funds and other investors having to sell their Treasury bonds to raise cash in order to make up for losses in the stock market. Investors outside the United States may also be selling their U.S. Treasurys because of the trade war. Such actions would push down prices for Treasurys, which in turn would push up their yields. Regardless of the reasons behind it, higher yields on Treasurys add pressure on the stock market and push upward on rates for mortgages and other loans for U.S. households and businesses. The moves are particularly notable because U.S. Treasury yields have historically dropped — not risen — during scary times for the market because the bonds are usually seen as some of the safest possible investments. This week's sharp rise had brought the yield on the 10-year Treasury back to where it was in late February. After approaching 4.50% in the morning, the 10-year yield pulled back to 4.34% following Trump's pause and the Treasury's auction. That's still up from 4.26% late Tuesday and from just 4.01% at the end of last week. In energy trading, benchmark U.S. crude fell 35 cents to $62.00 a barrel. Brent crude, the international standard, declined 48 cents to $65.00 a barrel. Advertisement In currency trading, the U.S. dollar fell to 146.82 Japanese yen from 147.38 yen. The euro cost $1.0966, up from $1.0954. AP Business Writer Stan Choe contributed.
Boston Globe
08-04-2025
- Business
- Boston Globe
IRS chief to quit over deal to share data with immigration authorities, per Washington Post
Treasury Department officials in recent days sought to circumvent IRS executives so immigration authorities could access private taxpayer information, the people said. Those conversations largely excluded Krause's input. Advertisement Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi L. Noem signed an agreement Monday allowing the practice, although IRS lawyers had counseled that the deal probably violates privacy law. Krause learned of the deal after representatives from the Treasury Department released it to Fox News, the people said. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Disagreements over the agency's future direction also factored into Krause's decision to leave, the people said. She felt unable to push back on moves the U.S. DOGE Service was forcing through the agency, the people said, including dramatic staffing cuts, a technology infrastructure overhaul and long-term IRS priorities. 'She no longer feels like she's in a position where she can impact the decision-making that's happening,' said a person familiar with the situation. 'And [she believes] that some of the decisions that are being made now are things the IRS can never recover from.' Advertisement Representatives from the White House and Treasury Department did not immediately respond to requests for comment. Krause was the IRS's chief operations officer before she became acting commissioner on Feb. 28. Her predecessor Doug O'Donnell retired rather than clash with DOGE and immigration enforcement officials who wanted broad access to confidential personal taxpayer data. O'Donnell replaced Danny Werfel, the Biden-appointed IRS commissioner who hoped to remain in office during Trump's term. But Trump announced plans to fire him and bring on former congressman and auctioneer Billy Long (R), a six-term lawmaker without experience on tax-writing committees. The Trump administration has moved aggressively to bring the IRS in line with the president's priorities. Officials held a recent gathering with tax IT engineers to discuss building a cross-government data-sharing system that would allow agencies to use private personal tax information to hunt for fraud in social safety net programs. IRS lawyers warned Krause that the initiative likely violated privacy laws, which prevent the sharing of personal data even with other government agencies. Monday's agreement with DHS would permit immigration enforcement officials to obtain highly protected tax information for people the Trump administration hopes to detain and deport. A redacted copy of the memorandum was filed in the U.S. District Court for Washington, D.C., as part of a lawsuit brought by worker and immigrant advocacy groups seeking to block the data-sharing. The possibility of such an agreement had raised alarms among current and former IRS officials who said it was a privacy breach and contravened the tax agency's longtime guarantee that taxpayers suspected of being in the country illegally wouldn't have their information turned over to immigration enforcement. Undocumented workers' wages are subject to the same tax withholding and reporting requirements that applies to other U.S. residents. Advertisement DHS officials previously suggested they'd ask the IRS for help locating 7 million people. There are about 11 million undocumented immigrants in the United States, according to federal officials' estimates. Improper disclosure of tax information is punishable with prison time and hefty fines. Taxpayers whose privacy is violated are entitled to monetary compensation. Under the terms of Monday's agreement, ICE officials must provide the targeted person's name and address, and the specific reason disclosure could be relevant to a non-tax-related criminal investigation. DHS spokeswoman Tricia McLaughlin said the 'government is finally doing what it should have all along: sharing information across the federal government to solve problems.' The memorandum sets out a 'clear and secure process to support law enforcement's efforts to combat illegal immigration,' a Treasury Department spokesperson said. Krause is the latest executive to leave the IRS amid a broad leadership shake-up. Employees who accept the deferred resignation offer are set to leave the agency on April 28, roughly two weeks after the April 15 tax filing deadline. Dozens of IT and cybersecurity officials have been placed on leave. About 7,000 employees were laid off in February, with more cuts announced last week. The administration plans to slash the agency's headcount by about 25 percent compared to where it was in January, as part of the White House's effort to shrink the size of the federal government. IRS officials recently told employees the agency is undergoing a reduction-in-force, starting with closing its civil rights office, and the Treasury Department is offering early retirement to some employees aged 50 and older. Advertisement Younger employees can until mid-April sign up for the deferred resignation program Krause opted for, though not every position is eligible.
