China warns Trump over potential steel and aluminum tariffs

China is warning President Trump that it will take action if he puts heavy tariffs on imports of steel and aluminum.

U.S. Commerce Secretary Wilbur Ross on Friday recommended that Trump impose measures against foreign suppliers of the metals in the name of national security, the latest sign of a tougher stance on trade by the administration.

Trump has until mid-April to decide what to do.

“If the United States’ final decision affects China’s interests, we will take necessary measures to defend our rights,” said Wang Hejun, a senior official at China’s Commerce Ministry, according to a report Saturday by state-run news agency Xinhua.

The short article didn’t provide further details on how Beijing might respond. Ross’ recommendations came in the middle of China’s Lunar New Year holiday when government offices and businesses largely shut down for a week.

Experts have warned that trade tensions are likely to rise this year between the U.S. and China, the world’s two largest economies, as Trump decides how to act on a series of investigations his administration launched last year.

He already imposed tariffs on imports of solar panels and washing machines, which affect businesses in China and many other countries. China and some other big exporters have filed cases with the World Trade Organization over that move.

The fear for some American businesses is that more U.S. trade actions could prompt Beijing to respond with tit-for-tat measures against U.S. companies that rely on its huge market.

Since Trump’s move on solar panels and washing machines, China has announced it is investigating U.S. exports of sorghum, an agricultural product, and imposing measures on styrene, which is used to make plastic products.

If Beijing wanted to really turn up the heat, experts say it could take steps against American exports of soybeans, of which it bought $14 billion worth in 2016, or planes made by Boeing. It could also make life difficult inside China for major U.S. companies like Apple and Intel.

But Chinese leaders are also conscious that any of these moves would also have a knock-on impact on its own economy. Chinese farmers need American soybeans to feed their livestock, and the country’s rapidly growing aviation industry is ordering a lot of Boeing jetliners to help meet demand.

China, whose economy has benefited tremendously from its aggressive efforts to take advantage of global commerce, would prefer to avoid an escalating spat with its biggest trading partner.

The Chinese Commerce Ministry on Saturday urged the U.S. to “exercise restraint in using trade protection tools, and observe multilateral rules,” according to the Xinhua report.

Wang, who’s leads the ministry’s trade remedy and investigation bureau, said the findings of the U.S. report on steel and aluminum were “groundless.”

Outside experts agree with that to some extent. They said Ross’ investigation didn’t provide evidence that imported steel is a risk to U.S. national security and warned that his recommendations set a dangerous precedent.

But China has long been criticized by analysts, industry groups and government officials in the U.S. and Europe for dumping cheaply produced steel and aluminum on global markets at rock bottom prices.

Hundreds of U.S. sanctions have helped reduce Chinese steel imports, but they haven’t forced China to play by the rules.

China is no longer among the top 10 steel exporters to the U.S., but it has been accused of routing its steel through other countries, such as Vietnam.

— Patrick Gillespie and Serenitie Wang contributed to this report.

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Big business to Trump: Tariffs could backfire

The Business Roundtable has a message for President Trump: The tariffs your administration has proposed would backfire.

On Friday, the Commerce Department publicly released its recommendations to the president on steel and aluminum imports. Commerce Secretary Wilbur Ross has put three options on the table: across-the-board tariffs, targeting select countries with even higher tariffs and capping how much steel comes into the country.

In a statement, the Business Roundtable, a Washington-based lobbying group that represents some of the most powerful businesses in the country, said it disagreed with the administration’s entire rationale for taking action on steel and aluminum imports.

The Commerce Department is advising that Trump take action under a little known trade law from 1962.

If Trump invokes Section 232 of the Trade Expansion Act, as is recommended, that means he believes steel and aluminum imports hurt the country’s national security.

Critics like the Business Roundtable say that justification is a stretch, and could open the door for tit-for-tat responses from other countries in the name of national security.

“Business Roundtable is concerned that acting on the Commerce Department’s recommendations to use Section 232 to restrict steel and aluminum imports will result in foreign retaliation against U.S. exporters and harm the U.S. economy,” the group said.

They continued: “Using Section 232 could embolden other countries to use ‘national security’ to restrict U.S. goods and services entering their markets. We urge the President not to take Section 232 action and, instead, develop a different approach to address global overcapacity of steel and aluminum that does not put the U.S. economy at such high risk.”

The president has until April to choose any one of the options presented to him, or a combination.

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DOJ says Trump and politics did not play a role in the AT&T lawsuit

The government on Friday asked a judge to strike AT&T’s defense that the Justice Department is unfairly targeting the telecommunications company because of politics, thus selectively enforcing antitrust law in their lawsuit to stop its merger with Time Warner, CNN’s parent company.

By striking that line of defense, AT&T would not be able to argue that President Donald Trump’s views regarding CNN and the merger (which as a candidate he pledged to stop) affected the DOJ’s decision block the deal last year with a lawsuit.

Justice Department lawyer Craig Conrath said in a status conference hearing on Friday that such a defense is “not true” and would create a side show during the trial.

Conrath said they have an affidavit from Makan Delrahim, the head of the Justice Department’s Antitrust Division which brought the suit, asserting that politics and the president’s views were not part of the motivation behind the suit. Delrahim also says in the affidavit that he received no directions or instructions from outside the antitrust unit regarding the merger, Conrath said.

Just before he joined the DOJ, Delrahim said in a Canadian television interview he saw no major antitrust problems with the deal.

The DOJ says it brought the case because it believes AT&T’s purchase of Time Warner will harm consumers and that it has nothing to do with politics or any animus toward CNN.

“We want to leave CNN right where it is, doing just what it is doing,” Conrath said during the hearing on Friday. “CNN does not matter.”

AT&T says prices would not increase significantly for consumers, and that such a merger is important to help it evolve as it faces competition from new technology companies.

AT&T also said it had offered certain remedies to the Justice Department similar to what the department had accepted in the Comcast-NBC Universal deal. AT&T and Time Warner also pledged to offer arbitration to competitors if distribution negotiations broke down, and promised to never “go dark” in the middle of such negotiations.

AT&T is also seeking communications between the White House and the Attorney General’s office, as well as the Attorney General’s office and the antitrust division of the DOJ regarding AT&T and the merger. Judge Richard Leon said he would rule on Tuesday whether AT&T could obtain more information about the existence of such communications.

Daniel Petrocelli, head of AT&T’s legal team who previously represented Trump in several cases related to Trump University, said that reviewing such communications and discovering whether politics did have an impact on the case is important to “the public trust and confidence in the integrity of government enforcement and decisions.” He added that it is an “uncomfortable subject” and that “this is not something we relish.”

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Tax cut scoreboard: Workers $6 billion; Shareholders: $171 billion

It’s raining stock buybacks on Wall Street — thanks to President Trump’s massive corporate tax cuts.

The White House has celebrated the tax cut bonuses unveiled by the likes of Walmart, Bank of America and Disney.

Yet shareholders, not workers, are far bigger direct winners from the Tax Cuts and Jobs Act of 2017.

American companies have lavished Wall Street with $171 billion of stock buyback announcements so far this year, according to research firm Birinyi Associates. That’s a record-high for this point of the year and more than double the $76 billion that Corporate America disclosed at the same point of 2017.

Wall Street loves buybacks because they tend to boost the share price in part by inflating a key measure of profitability. In just the past three days, Cisco, Pepsi and drug maker AbbVie have promised a total of $50 billion of buybacks.

“It’s the largest ever — and nothing has really changed, except the tax law,” said Jeffrey Rubin, director of research at Birinyi Associates.

Under pressure from Washington, dozens of major companies have decided to share the tax windfall with workers — or at least some of it. Trump said during his State of the Union that roughly three million workers have received tax cut bonuses. Other companies like Wells Fargo have raised the minimum wage for workers, providing a lasting boost in pay.

But the amount of money allocated so far on bonuses and wage hikes pales in comparison with Wall Street’s buyback bonanza.

S&P 500 companies have devoted about $5.6 billion to bonuses and wage hikes because of the tax law, according to research from academics Rick Wartzman and William Lazonick as well as the Academic-Industry Research Network. The group added up commitments from the 50 companies in the S&P 500 that had announced plans to reward workers through February 15.

“Our worst nightmare is coming true,” said Frank Clemente, executive editor of Americans for Tax Fairness, a group that fights for progressive tax reform. “We predicted that the lion’s share of the benefits of this tax cut would go to already-wealthy shareholders and CEOs, not to a company’s workers.”

A survey of Morgan Stanley analysts released last week found that just 13% of companies’ tax cut savings will go to pay raises, bonuses and employee benefits. 43% will reward investors with stock buybacks and dividends.

The tax-inspired buyback boom may just be getting started. Bank of America recently predicted that S&P 500 companies will use repatriated foreign profits to buy back about $450 billion of stock.

The new law gives companies a tax break — paying between 8% and 15.5% instead of the usual 35% — to bring money sitting overseas back to the United States. That’s in addition to the savings created by the steep decline in the corporate tax rate to 21% from 35%.

Workers have benefited in other ways from the tax law. For instance, Visa and Aflac have boosted their 401(k) matching programs after the tax overhaul. Boeing has promised to invest $300 million on workers through training, upgraded facilities and charitable giving.

Workers can also benefit indirectly from stock buybacks if shareholders end up using their winnings to make investments that create new jobs.

“It frees up capital to back into the economy. What good does $2 trillion sitting offshore in tech companies’ accounts do?” asked Nicholas Colas, co-founder of DataTrek Research.

But some companies wishing to use their tax savings on new factories or hiring workers may not have seen enough evidence that expansion is warranted.

“Just because you have the cash coming in doesn’t magically create opportunities to invest,” said Colas.

Colas also said that buybacks provide an important signal that can boost stock prices. “When stock prices rise, they inspire more confidence and confidence leads to more hiring and wage increases,” he said.

Critics of buybacks note that America’s wealthiest families tend to benefit disproportionately from a booming stock market — and thus buybacks.

The top 10% of households owned 84% of all stocks in 2016, according to paper published last year by NYU professor Edward Wolff. The richest 1% owned 40% of stocks by themselves.

“If you want to understand why there is such extreme inequality, this use of corporate cash is a big part of it,” said Lazonick, who is a professor at the University of Massachusetts Lowell.

Wartzman, director of Claremont Graduate University’s KH Moon Center for a Functioning Society, argues that there are more productive uses of capital than buybacks. He suggested boosting wages, ramping up benefits and training workers.

“It’s not to say shareholders shouldn’t get a piece of the pie,” he said, “but why such an inordinate piece?”

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Google Chrome will now block annoying ads

Google will now block annoying ads on its Chrome browser.

The move comes more than eight months after the company announced plans to automatically block ads that don’t ascribe to the Better Ads Standards, a collection of best practices to make ads less annoying.

Starting Thursday, Chrome will block the following on desktop: ads that take over the browser, pop-up ads, autoplay videos with sound, and large sticky ads that take over the bottom of the screen and don’t move.

On mobile, ads that will be blocked include those with flashing animation, ads displayed before the content is loaded, and full-screen scroll over ads.

But the company said it won’t block all ads, only those deemed most intrusive by researchers at the Coalition for Better Ads. Over 40,000 people took part in surveys to determine the worst offenders.

“By focusing on filtering out disruptive ad experiences, we can help keep the entire ecosystem of the web healthy, and give people a significantly better user experience than they have today,” Chrome Vice President Rahul Roy-Chowdhury said in a blog post this week.

Google said it will rate websites as passing, warning, or failing, and alert websites to violations. Site owners can access the evaluation through a Google tool and can ask to be reviewed again once they address the bad ads.

If a website has a lot of intrusive ads and ignores notifications from Google for 30 days, the browser will start blocking ads.

Google doesn’t want to kill ads entirely. It makes the vast majority of its revenue through its ad network — or about $95 billion in 2017.

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Google Chrome will now block annoying ads

Google will now block annoying ads on its Chrome browser.

The move comes more than eight months after the company announced plans to automatically block ads that don’t ascribe to the Better Ads Standards, a collection of best practices to make ads less annoying.

Starting Thursday, Chrome will block the following on desktop: ads that take over the browser, pop-up ads, autoplay videos with sound, and large sticky ads that take over the bottom of the screen and don’t move.

On mobile, ads that will be blocked include those with flashing animation, ads displayed before the content is loaded, and full-screen scroll over ads.

But the company said it won’t block all ads, only those deemed most intrusive by researchers at the Coalition for Better Ads. Over 40,000 people took part in surveys to determine the worst offenders.

“By focusing on filtering out disruptive ad experiences, we can help keep the entire ecosystem of the web healthy, and give people a significantly better user experience than they have today,” Chrome Vice President Rahul Roy-Chowdhury said in a blog post this week.

Google said it will rate websites as passing, warning, or failing, and alert websites to violations. Site owners can access the evaluation through a Google tool and can ask to be reviewed again once they address the bad ads.

If a website has a lot of intrusive ads and ignores notifications from Google for 30 days, the browser will start blocking ads.

Google doesn’t want to kill ads entirely. It makes the vast majority of its revenue through its ad network — or about $95 billion in 2017.

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