— Russia is absorbing Ukraine’s declining share of global grain, according to the latest report from the U.S. Department of Agriculture, as Moscow angles to claw back revenue lost to Western sanctions.
— China condemned the U.S. as a “destroyer” of the multilateral trading system in a new report — but has refrained from meaningfully retaliating after the U.S. issued an executive order to restrict American investments into Chinese high tech companies.
— A bipartisan duo re-upped legislation to require congressional approval before the president can introduce national security-related tariffs. The latest effort from lawmakers to assert authority over Washington’s trade agenda.
Happy Monday, Aug. 14. Welcome to Morning Trade I hope by now you’ve all had a chance to read about the exclusive club, of which our very own Doug Palmer is a member. (As is Doug McKalip, chief agricultural negotiator in the Office of the U.S. Trade Representative, and Douglas Irwin, an economics professor at Dartmouth.) I’m sure there’s more of you out there in the world of global trade but I’m drawing a blank. Let us know who we’re missing or send us your trade news at: email@example.com, firstname.lastname@example.org and email@example.com. You can also follow us on X: _arihawkins, @gavinbade and @tradereporter.
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KREMLIN GAINS ON GLOBAL GRAIN: Russia is poised to grab more of Ukraine’s share of global grain exports this year, according to the USDA, which forecasts that Kyiv will produce only about two-thirds of the country’s pre-war supply of wheat.
The latest USDA forecast indicates Moscow may be able to use its grain exports to claw back revenue lost to sanctions imposed by the Biden administration and other Western governments as war rages in Ukraine.
Key tidbits: Moscow is projected to export 48 million tons of wheat and nearly 9 million tons of coarse grains in the 2023-24 marketing year. That’s a rise from the 2021-22 season, when it exported 33 million tons of wheat and 7.6 million tons of coarse grains, Doug reports.
Those figures are far above expectations for Ukraine, which is expected to export just 10.5 million tons of wheat over the same time period, down from about 19 million in the 2021-22 marketing year, which included the first few months of the war. Kyiv’s coarse grain exports will also fall to 21.4 million tons in 2023-24, down from 32.9 million in 2021-22.
The report comes as Russia and Ukraine escalate attacks against each other’s exports infrastructure in the weeks following Moscow’s exit of the Black Sea Grain deal, which has reignited anxiety over the market and global food security.
Moscow has intentionally targeted such infrastructure “to increase their own market share and keep food prices artificially high” by continuing to attack Ukraine, said a U.S. official, who was granted anonymity to discuss internal conversations.
Global food prices ticked up 1.3 percent in July following Russia’s exit of the deal. A delicate market has implications for the White House, as President Joe Biden hopes to show voters that inflation is easing ahead of the 2024 election. Food prices that surged during the pandemic have finally leveled off.
Something to watch: Biden said in June that the U.S. is working with EU partners to help store Ukrainian grain across the border. But the Polish government recently said it would consider extending an embargo amid concerns that Ukrainian grain would flood its market, per DW.
Quick reminder: Russian President Vladimir Putin exited the Black Sea Grain deal in July, which closed off Ukraine’s ability to bypass a Russian blockade of the country’s Black Sea ports and navigate through Turkey’s Bosphorus Strait to reach global markets.
ALL TALK, NO RETALIATION: China’s Ministry of Commerce slammed the U.S. for its role as a “destroyer” of the multilateral trading system embodied in the World Trade Organization in a report Friday that echoes the annual one submitted to Congress by USTR.
The report comes after the U.S. issued an executive order barring Americans from investing in some Chinese companies developing advanced technologies, which will require investors to notify the federal government of transactions in sensitive industries, when it goes into effect next year.
China’s Commerce Ministry also said on Thursday that the U.S. had deviated from market norms, and accused Washington of “blatant economic coercion and tech bullying.”
Beijing’s sharp rhetoric has sparked concerns among American investors. “It is naive to think that there won’t be some type of retaliation from China,” said Tom Plumb, CEO of a proprietary mutual fund company, who added that China could restrict exports of rare earths used in consumer electronics, per Reuters.
But China has yet to materially respond to the new measures, which come at a critical time as both countries engage in an arms race of sorts over who will control the next generation of critical technology. The executive order also comes as China grapples with a worsening economic environment, which could make Beijing less inclined to escalate an economic standoff with Washington.
Both Washington and Beijing have called for closer ties between the world’s economic superpowers. On Friday, U.S. National Security Council spokesperson John Kirby played down comments from Joe Biden calling Beijing a “ticking time bomb” and said the president was referring to the country’s economic and social tensions.
REINING IN THE WHITE HOUSE: Rep. Mike Gallagher, chair of the House Select Committee on China, and Ways and Means Committee member Rep. Don Beyer (D-Va.) reintroduced a bill on Friday that would establish congressional authority over the Section 232 tariffs process.
The measure, which was first introduced in January 2019, would require congressional review of the president’s use of Section 232 of the Trade Expansion Act of 1962 to introduce trade restrictions in the interests of national security.
Remember: The bill would take away a tool used during the Trump administration to impose sweeping tariffs on imports of steel and aluminum, which led key trading partners like Canada, Mexico and the European Union to hit back with retaliatory measures.
Part of a trend: Biden last week signed the Taiwan trade bill into law, but said in a statement that he would treat provisions that “impermissibly infringe” on his authority as “non-binding,” drawing backlash from lawmakers.
The Tariff Reform Coalition, which includes a broad-based alliance of trade associations, praised the measure in a statement, and said “the last five years have demonstrated the need for fundamental reform of the authority granted to the President under Section 232.”
COMMERCE WEIGHS NEW TIN TARIFFS: The Commerce Department’s International Trade Administration will issue determinations this week that could lead to steep duties on tin mill steel, which is used in making cans for soups, beans, baby formula and deodorant.
The rundown: Ohio steel manufacturer Cleveland-Cliffs and the United Steelworkers in January petitioned the administration to impose duties between 13.5 percent and 294.3 percent on more than $1 billion worth of imported tin mill steel from Canada, China, Germany, Netherlands, South Korea, Taiwan, Turkey and the United Kingdom.
Commerce will issue its preliminary anti-dumping determinations in the closely-watched case by Wednesday, according to its May 31 Federal Register notice. However, it often takes the department a day to publicly announce anti-dumping decisions after they are made to give it time to inform all the countries first.
As an aside: The decision is poised to come days after United States Steel Corp. rejected a takeover offer from Cleveland-Cliffs, in a move that would have formed one of the world’s largest steelmakers. U.S. Steel is now considering a sale after fielding “multiple unsolicited” proposals, according to a news release.
Slammed by industry: The Consumer Brands Association, which represents nearly 2,000 companies including Campbell Soup Company and Del Monte Foods Inc., released a study with The Juday Group which showed the tariffs could raise the prices of canned products by up to 58 cents, or about 30 percent a can.
Opposition mounts: A coalition of 36 bipartisan members of Congress wrote a letter in June, advising the ITC and Commerce against the duties.
Virginia Democrats Tim Kaine and Mark Warner re-upped the complaint in a letter in July, and said “tariffs on ally countries would be out of step with the Administration’s efforts to rebuild and enhance relationships with these nations and work on areas of mutual importance.”
TAIWAN IN WASHINGTON: Taiwanese Vice President and presidential contender Lai Ching-te, made a transit stop in New York City on Saturday en route to a state visit to attend the inauguration of Paraguay’s new president, Santiago Peña Palacios, per Andrew Zhang and Phelim Kine. China called Lai a separatist and threatened retaliation on Sunday, in a typical display of dissatisfaction with Taiwan’s growing engagement with the United States.
— Ed Gresser, vice president of PPI who served for nine years at USTR, submitted comments on ways trade policy can better support America’s underserved communities. He focuses on “regressivity and tilts” against low-income Americans in consumer goods tariffs, the “Pink Tax” which imposes higher rates on women’s clothing than on men’s and avenues for getting more input from low-income communities on trade policy.
— Trade data from January to May indicates a decline in imports and the dollar value of plastics and related commodities compared to the same time last year, according to a report from the Plastics Industry Association.
— China lifted its pandemic-era restrictions on group tours to 78 locations in Europe, North America, Africa and the Asia-Pacific, in a move that could boost global tourism, Ari reports.
— A Russian warship fired shots at a merchant ship moving across the southwestern Black Sea on Sunday, Gian Volpicelli reports.
— China’s State Council on Sunday issued guidelines aimed at optimizing the country’s foreign investment environment, including tax and visa measures, per Reuters.
— The USDA is advising vanilla extract exporters to halt shipments to the EU after the bloc introduced a new requirement on residual levels of ethylene oxide, per Export Compliance Daily.