Los Angeles Times - 02.08.2019

C4 FRIDAY, AUGUST 2, 2019 S LATIMES.COM/BUSINESS

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all of its 300-point gain and
ended the day down by a
similar amount, a swing of
about 600 points.
The trade war with China
has been going on for a year
and a half, with off-and-on
talks and several rounds of
tit-for-tat tariffs between
the world’s two largest econ-
omies.
After a breakdown of ne-
gotiations in May, Trump
ratcheted up tariffs to 25%
from 10% on $200 billion of
imports from China, and he
threatened to hit the re-
maining $300 billion Chinese
goods with duties. (Trump
last year imposed 25% du-
ties on $50 billion of Chinese
merchandise.)
Come September,
Trump will have slapped pu-
nitive tariffs on virtually all
Chinese imports coming
into the U.S.
U.S. business groups,
while accustomed to
Trump’s unpredictability
and fondness for tariffs as a
pressure tactic, were none-
theless dismayed by the new
tariff announcement.
A month ago, after meet-
ing with Xi at the Group of 20
economic summit in Japan,
Trump announced that he
would hold off on more tar-
iffs while the two sides re-
started talks.
This week, senior U.S.
and Chinese trade officials
met in Shanghai, and ac-
cording to a White House
statement issued Wednes-
day, the conversations were
“constructive,” and China
reportedly has renewed its
vow to increase purchases of
United States agricultural
products.
“We thought we had a
ceasefire, they were still ne-
gotiating, and now for this to
come out, it’s very concern-
ing,” Priest said.
Trump himself described
the new 10% duty as a “small
additional tariff ” in his
tweet, and later reacted non-
chalantly about the market
dip, saying that he “ex-
pected” it. Trump continued
to insist that the U.S. is rak-
ing in cash as a result of the
tariff, with China paying.
But experts overwhelmingly
agree that’s not the case, as

American consumers and

businesses bear the brunt of

the cost.

“Raising tariffs by 10% on

an additional $300 billion of

imports from China will only

inflict greater pain on

American businesses, far-

mers, workers and consum-

ers, and undermine an oth-

erwise strong U.S. econo-

my,” said Myron Brilliant,

head of international affairs

at the U.S. Chamber of Com-

merce.

Trump, as he has for

months, expressed opti-

mism Thursday about an

eventual deal with Xi. “We

look forward to continuing

our positive dialogue with

China on a comprehensive

Trade Deal, and feel that the

future between our two

countries will be a very

bright one!” Trump said in a

tweet.

But analysts and busi-

ness groups worried that

throwing new tariffs on

China would have the oppo-

site effect and drive them

away from the bargaining ta-

ble and prompt retaliatory

actions from Beijing.

China has slapped

counter-tariffs each time,

but last year imported only

$120 billion of American

products, compared with

$540 billion that the U.S.

buys from China.

“China does not import

enough to respond in kind,

so any retaliation will be

qualitative and dispropor-

tionately impact U.S. com-

panies operating in China,”

said Craig Allen, president

of the U.S.-China Business

Council. “We are particularly

concerned about increased

regulatory scrutiny, delays

in licenses and approvals,

and discrimination against

U.S. companies in govern-

ment procurement ten-

ders.”

Trump, in other public

comments in recent days,

has suggested that China is

reluctant to make a deal be-

fore the 2020 election in the

hope that he may lose and

that a Democratic president

would give them more bene-

ficial terms as part of a trade

agreement.

China experts say Beijing

wouldn’t necessarily be

holding out for a Democrat

in the White House, given

that there is bipartisan sup-

port among presidential

candidates as well as in Con-

gress to get tough on China.

At the same time, they say,

Chinese leaders would prob-

ably welcome dealing with

another president and ad-

ministration.

“I think they’ve decided

[Trump’s] unreliable,” said

Nicholas Lardy, a China

economy specialist at the

Peterson Institute for Inter-

national Economics.

Initially, he said, “they

thought that this guy wants

to make a deal, and we know

how to deal and can reach an

agreement, some compro-

mise on each side. But I

think their view is that

Trump has changed the

terms of what he’s asking for

repeatedly, and he’s unpre-

dictable.”

American officials, how-

ever, have lodged similar

complaints, that Beijing had

reneged on commitments it

made during negotiations.

Although Trump has

often talked about wanting

China to buy more U.S.

goods to reduce the trade

deficit, his negotiators have

been pressing China to make

fundamental changes in its

state-run economy that

would open up markets to

American firms and protect

their intellectual property.

In recent weeks, analysts

have become more pes-

simistic that the two sides

can reach a substantive and

sustainable deal, especially

after Trump’s blacklisting of

the Chinese telecom firm

Huawei.

Amonth ago in Japan,

Trump said he would allow

U.S. suppliers to export

parts to Huawei, but there

have been no details yet on

what that means.

Analysts say that Beijing

has drawn a linein the trade

talks, demanding that tariffs

be lifted and restrictions on

Huawei removed.

They also want changes

made by China to be under-

taken by administrative

regulations, not codified in

national law, as the U.S. side

has insisted.

New tariffs would hit range of goods

U.S. TRADERepresentative Robert Lighthizer, center, and Treasury Secretary Steven T. Mnuchin, meet

with China’s vice premier, Liu He, on Wednesday. The talks were “constructive,” the White House said.

Ng Han GuanAFP/Getty Images

[T ariffs,from C1]

cutive producer is Lena

Waithe of “Master of None.”

The show, co-produced by

Sony Pictures Television, re-

ceived a two-season order

from the Amazon.com-

owned streaming service a

year ago.

Quixote Studios Chief

Executive Mikel Elliott, in

a phone interview this week,

said the early interest bodes

well for the new north Valley

facility, which has been

in the works for about 2^1 ⁄ 2

years.

He said the company was

interested in the space

partly because of the low

cost of building there, com-

pared with other areas

closer to L.A.'s entertain-

ment industry. Quixote,

which already had an equip-

ment warehouse nearby on

Norris Avenue, was also en-

ticed by the potential for am-

ple parking, often a rare lux-

ury for L.A. production staff.

“We’re going to develop

Pacoima into a production

hub,” Elliott said. “That real

estate was relatively afford-

able, and it’s an attractive lo-

cation.”

Los Angeles’ status as

the heart of film and TV pro-

duction has been threat-

ened for years by other

states and countries that

lure studios with generous

incentives. States including

Georgia and Louisiana have

eaten into California’s share

of shoots with tax credits of

up to 30% and 40%, respec-

tively. Furthering Califor-

nia’s effort to combat run-

away production, the state

last year extended its own

film and TV tax credit pro-

gram to 2025, adding five

years to its lifespan. The pro-

gram hands out $330 million

in annual tax credits to se-

lected productions.

Lately, the era of “peak

TV” and demand for high-

end productions for tech

companies such as Netflix

and Amazon have been a

bright spot for local shoot-

ing. On-location filming

days for TV dramas in great-

er L.A. increased 17.3% to 842

in the second quarter of 2019

from the same period in 2018,

according to a July report

from FilmL.A. Television

comedy shooting rose 3.2%

to 485 days. Meanwhile,

overall filming fell 3.9% dur-

ing the quarter, driven by a

steep decline in feature film

shoots and commercials.

But despite the overall

drop in production, stages in

the L.A. area are working at

capacity because of the rise

in demand for streaming

content, said Paul Audley,

president of FilmL.A., the

nonprofit group that han-

dles film permits for the

county. The shortage has

forced production compa-

nies to use abandoned big-

box retail stores for their

shoots, he said.

“A soundstage is actually

designed for doing the

work,” Audley said. “Having

these stages allows us to

plan for those larger budget

projects to come back to

L.A.”

Pacoima isn’t a total no-

man’s land for the film and

television industry. The area

is home to prop studios and

equipment warehouses, as

well as Air Hollywood, a stu-

dio used for aviation scenes,

said Los Angeles City Coun-

cilwoman Monica Rodri-

guez, who represents the

area as part of Council Dis-

trict 7. Still, the new studio

could provide a boost to the

local economy, she said.

“We’ve had some foot-

print, but this significantly

grows the [entertainment]

industry in our district,” she

said.

Others are working to

build out stage space to

meet demand in the San

Fernando Valley, where

there’s more space to build

than in Los Angeles’ tradi-

tional studio locations. Pa-

coima-based Line 204 Stu-

dios is constructing a

240,000 square-foot studio

complex in Sun Valley, for

example.

Elliott of Quixote, who

got his start in 1992 by driv-

ing commercial photogra-

phers to various shoots in a

motor home, provides stage

space across the L.A. River

from Griffith Park, as well as

three stages in West Holly-

wood and three more in New

Orleans. Quixote has about

240 employees.

He said he’s not done ex-

panding yet, with plans to

grow his business signifi-

cantly in Pacoima with addi-

tional stages and office

space. “We’re going to dou-

ble our footprint over the

next three to four years.”

QUIXOTE STUDIOS’new $30-million facility in Pacoima boasts five soundstages

totaling 75,000 square feet, 20,000 square feet of office space and a cafe.

Jake RossQuixote Studios

Hollywood in Pacoima:

Studio facility unveiled

[P acoima, from C1]