Morning News Brief

Jun 26, 2018
Originally published on June 26, 2018 8:48 am
Copyright 2018 NPR. To see more, visit http://www.npr.org/.

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PRESIDENT DONALD TRUMP: So thank you Harley-Davidson for building things in America. I think you're going to even expand. I know your business is now doing very well, and there's a lot of spirit right now in the country that you weren't having so much in the last number of months that you have right now.

NOEL KING, HOST:

That is how the president praised an American company at a White House event last year. The president said he wanted to protect Harley-Davidson.

STEVE INSKEEP, HOST:

Which makes the latest news all the more startling. Harley-Davidson says it will shift some production out of the United States to Europe. It's an effort to avoid escalating European tariffs as President Trump escalates a trade war.

KING: All right. So how did we get to this point? In January of this year, President Trump announced tariffs on washing machines and solar panels. That kicked off months of threats and bluffs and then actual trade penalties coming from the White House. And now here we are with at least one American company shifting American jobs away from the U.S. to steer clear of the president's conflicts.

INSKEEP: NPR business correspondent Jim Zarroli is covering this story from New York.

Hey there, Jim.

JIM ZARROLI, BYLINE: Good morning.

INSKEEP: OK, so we heard what the president used to say about Harley-Davidson. Now he's tweeting about Harley-Davidson, that he feels that they're waving the white flag, that they were just using his policies as an excuse to move production. Any sign that Harley-Davidson is just telling the truth - they're moving to Europe because they don't want to be in the middle of this?

ZARROLI: Well, that's what they're saying. I mean, you remember the Trump administration put tariffs on 50 billion dollars' worth of imports from Europe. Europe retaliated with tariffs of its own on some American products, and they included Harley-Davidson motorcycles. Now, the company says these tariffs will make its motorcycle sales hurt, and so by shifting production outside the United States, they're essentially bypassing them. The thing is, as you noted, Trump has talked about Harley-Davidson several times since he took office. He likes to hold it up as, you know, here's an - a successful American company that actually does manufacturing in the U.S. So Trump seems to see the fact that it's leaving as a kind of betrayal. I mean, he - you know, he wants to - he wants it to stay and help fight the good fight against what he sees as unfair trade practices.

INSKEEP: And we should be clear. Harley's still going to make motorcycles in United States, but they say they're going to move some production to Europe because they sell thousands of motorcycles there, and they're each going up by a couple thousand bucks because of tariffs. Have other companies made similar decisions?

ZARROLI: Well, there have been a few that have said they're having to lay people off because of the tariffs. But remember, we're really early on in this, you know, trade battle, if you call it that. We're certainly seeing a lot of companies trying to - you know, trying to get the lay of the land, trying to understand how they're going to be affected by what's happening. There are some companies that like what Trump is doing because they think they're facing unfair competition from other countries, especially China. There are many others that are worried that the tariffs will hurt them; they'll have to pay more for products they import. The administration has put tariffs on steel and aluminum. A lot of companies think, you know, that that will - they use those in manufacturing, and they'll be hurt.

INSKEEP: Oh, yeah. We've been reporting on this program about companies that use foreign steel, American companies that feel that they're going to be hurt by these tariffs. Any connection between tariff policy and the Dow dropping?

ZARROLI: Yeah. I think that - I think investors just basically don't seem to understand where the administration is going on trade. And you see, you know, some days, they get really nervous, and prices drop. And then, you know, some days, they - that - the anxiety kind of wanes, and the market comes back.

INSKEEP: Jim, thanks very much.

ZARROLI: You're welcome.

INSKEEP: That's NPR's Jim Zarroli. Now, bear in mind, this is a multifront war, if war is the proper term for where we're at. The trade war also involves U.S. trade conflict with China. NPR's Rob Schmitz has been following all of that from Shanghai.

Hey there, Rob.

ROB SCHMITZ, BYLINE: Good morning, Steve.

INSKEEP: OK. So let's note that at the same time that we're hearing about Harley-Davidson, we're hearing about new possible Trump administration restrictions on Chinese investments in American tech companies. That may also have had something to do with the market drop yesterday. And White House trade adviser Peter Navarro appeared on CNBC to calm people's nerves. Let's listen.

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PETER NAVARRO: Let me be really clear. There's no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan. All we're doing here with the president's trade policy is trying to defend our technology when it may be threatened. So this whole idea that somehow there's going to be investment restrictions to the world - please, discount that.

INSKEEP: OK. So I think he's saying, don't worry too much about this, but also, they're trying to defend American technology. There's a policy in there somewhere. How did we get to this point?

SCHMITZ: Well, this started on Sunday when The Wall Street Journal, followed by other newspapers, ran stories based on sources close to the White House who said the U.S. Treasury Department was planning to announce restrictions on Chinese investment in U.S. tech companies by the end of this week. And the justification for that was that the U.S. needs to do something not only about ongoing Chinese theft of U.S. technology, but also about China's plans to turn its country into this global technology leader - this Made in China 2025 plan that administration officials are worried about. After these stories were published, the Dow took a big dip, as you mentioned. And suddenly, officials like Steven Mnuchin, treasury secretary, and Peter Navarro, who you just played, were in damage-control mode, and that - they didn't really clarify much. And now we've got global markets bracing themselves for yet another possible blow to the flow of global capital.

KING: So a lot of uncertainty, Rob. It doesn't seem like this is something the Chinese are enjoying at all. How are they reacting?

SCHMITZ: No. You know, as Jim Zarroli mentioned to you a minute ago, U.S. businesses are having a hard time preparing for an uncertain future. Think about China. You know, China's second largest economy in the world, one of America's largest trading partners. It's trying to figure out how to prepare. Up to now, the Chinese have responded to what they know, and what they know for certain is that the Trump administration plans to impose tariffs on Chinese products July 6. So one thing China seems to be doing to prepare for this is to gradually devalue its currency. Recently, we've seen the yuan steadily decline in the value to the U.S. dollar, and that makes Chinese exports to the U.S. cheaper; it helps reduce tariffs on these products. Today, China announced it's eliminating import tariffs on soybeans from several countries, and it's doing that to prepare for its own upcoming tariffs on imported U.S. soybeans. So - and then lastly...

INSKEEP: Oh, so replacing U.S. soybeans with soybeans from somewhere else, essentially, is what they...

SCHMITZ: Yeah. They're looking at eliminating the entire tariffs for soybeans in - from India, South Korea and other countries.

INSKEEP: OK. Rob, thanks very much, really appreciate it.

SCHMITZ: Thank you.

INSKEEP: That's NPR's Rob Schmitz.

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INSKEEP: Now, amid all of this, the president held a rally last night in Columbia, S.C.

KING: Right. His supporters cheered while the president railed against illegal immigrants. Now, that was happening even as the Trump administration softened its zero tolerance policy at the border. The head of Customs and Border Protection told reporters yesterday that his agency has stopped referring cases involving parents who have crossed the border illegally over to prosecutors. That decision comes after the president's executive order purportedly ending family separations last week.

INSKEEP: So much to discuss there. And it's an election year. Trump held the South Carolina rally to support incumbent Governor Henry McMaster, who faces a runoff to keep his job. The state is one of six holding primaries. NPR congressional correspondent Scott Detrow is here.

Hey there, Scott.

SCOTT DETROW, BYLINE: Good morning.

INSKEEP: So what kinds of odds is Governor McMaster facing?

DETROW: It's interesting. This is one of a couple of races today where Trump's endorsement is on the ballot but where Trump endorsed against the candidate running on the more Trumplike platform. So this is a runoff where McMaster's running against John Warren. He's a businessman running as an outsider. That may sound familiar to you. But McMaster was an early supporter of Trump, and the president is rewarding loyalty here - same dynamic, little bit more of a dramatic scale playing out in a Staten Island congressional primary today where Republican Dan Donovan running against former Congressman Ryan Grimm (ph). You may remember Grimm as someone convicted on tax evasion and also a lawmaker who once threatened to throw a reporter off a balcony.

INSKEEP: Wow.

DETROW: ...Running as - some grievances saying he was politically targeted in his prosecution - outsider-type themes - but Trump here is endorsing Donovan. We'll see whether voters go with the president or go with the candidate trying to carry the spirit of the president.

INSKEEP: And that's relevant. Staten Island is part of New York City, one of the few parts of New York City where you could get a Republican congressman.

DETROW: That's right.

INSKEEP: And so Republicans will be paying attention. They're fighting for every seat they can keep. Now, there's also a crowded Democratic governor's primary in Maryland, right?

DETROW: Yeah - interesting race because you have one of the most popular governors in the country, Republican Larry Hogan, running for a second term. He's a moderate who has distanced himself from Trump - and very popular with Democratic voters, as well. Usually, when someone's that popular, they don't get a lot of challengers, but you've got a jampacked Republican primary and a lot of involvement from national figures getting involved here. One thing to flag is that Vermont Senator Bernie Sanders endorsed former NAACP President Ben Jealous in this race. Sanders has a very mixed track record this year with endorsements. A lot of his candidates have not won even though he's gotten involved. He's hoping for a high-profile win here that he can point to, saying, I've got clout in primaries.

INSKEEP: I can't let you go without mentioning Mitt Romney running for Senate in Utah - had to put out an article or got to put out an article the other day saying exactly what his view was of President Trump, that he would oppose him when he opposes him, but not all the time.

DETROW: That's right. But it's pretty notable that Romney has chosen to oppose President Trump a lot less and a lot less vocally than he had in 2016 when he was one of the most high-profile Republicans saying, this person should not be president, not fit to be president, does not represent the Republican Party. Now it's the general line of, I don't disagree - I don't agree with him on a lot of personal things he says, but generally, by and large, I like his policies.

INSKEEP: Because it's such a heavily Republican state, does it look like he's cruising toward the Senate?

DETROW: I think that's fair to say.

INSKEEP: OK. Scott, thanks very much, really appreciate it.

DETROW: Thank you.

INSKEEP: That's NPR's Scott Detrow.

(SOUNDBITE OF MONMA'S "BONFIRE") Transcript provided by NPR, Copyright NPR.