a14 eZ re the washington post.saturday, november 16 , 2019
Economy & Business
retail
Consumers cut back
on large purchases
U.S. retail sales rebounded
moderately in October, although
consumers did cut back on
purchases of big-ticket
household items such as
furniture and discretionary
spending, which could temper
expectations for a strong holiday
shopping season.
Signs from the Commerce
Department report on Friday
that consumer spending was
slowing faster than economists
had expected — and news that
production at factories tumbled
again in October — revived
concerns about a downshift in
the economy, which had receded
after a recent raft of fairly upbeat
data.
Economists slashed their
economic growth estimates for
the fourth quarter following
Friday’s reports.
“ The consumer is still
spending, but not robustly
enough to support other sectors,
especially business investment,”
said Joel Naroff, chief economist
at Naroff Economic Advisors in
Holland, Pa.
Federal Reserve Chair Jerome
H. Powell on Thursday told
lawmakers that “the U.S.
economy is the star economy
these days,” c ompared with other
advanced economies, and
“there’s no reason that can’t
continue.”
Retail sales gained 0.3 percent
last month. But the increase
i n sales, which reversed
September’s unrevised
0.3 percent drop, reflected
higher motor vehicle and
gasoline prices. Economists
polled by Reuters had forecast
retail sales climbing 0.2 percent
in October after falling in
September for first time in seven
months.
— ReutersFinanceFed: U.S. financial
system is ‘resilient’The U.S. financial system
appears stable overall, though
high levels of corporate debt, the
impact of an extended period of
low global interest rates, and
emerging “stablecoin” proposals
could pose risks, the Federal
Reserve reported F riday.
In its latest twice-yearlyreview of financial stability, the
Fed said that conditions had
changed little since its last report
in May, and that “the core of the
financial sector appears
resilient.”
Some asset values are high, the
Fed noted, pointing in particular
to commercial real estate values.
But “risk appetite” was felt to be
in line with “historical norms,”
household debt “at a modest
level relative to income,” l everage
levels low among the largest
banks, and the use of potentially
volatile short-term funding
posing only a modest risk to
financial institutions.
But the report highlighted the
Fed’s ongoing concern with
record-high levels of corporate
debt, which some Fed officials
worry could go bad if business
slows and worsen any economic
downturn. In addition, the Fed
said low global borrowing costs
could over time erode bank,
insurance company and pension
fund returns, prompting them to
take more risks.
Over time, emerging financial
technologies — such as the
“stablecoin” c rypto-currency
network proposed by Facebook
— could cause trouble, it said.
— Reutersalso in Business
J.C. Penney on Friday reported a
smaller-than-expected quarterly
loss, as the struggling retailer
benefited from lower advertising
expenses and an increase in
margins, sending its shares up
nearly 14 percent. To appeal totoday’s modern shopper, the 117-
year-old retailer has partnered
with resale clothing company
thredUP and is also testing a new
store to attract customers with
everything from a yoga studio to
a video-game lounge and lifestyle
workshops.Volkswagen will invest
$66.12 billion by 2024 to develop
electric and hybrid cars as well
as digital technologies, the
multibrand car- and truck-
making group said on Friday.
Volkswagen plans to build 75
variants of electric car and
around 60 hybrid vehicle
models, it said. By 2029, around
26 million electric cars will be
built, and 20 million vehicles
will use VW’s electric MEB
vehicle platform, the carmaker
said.Goldman Sachs agreed to pay
$20 million to settle an investor
lawsuit accusing traders at the
bank, along with 15 other
financial institutions, of rigging
prices for bonds issued by
Fannie Mae and Freddie Mac. As
part of the settlement, disclosed
Friday in a court filing, Goldman
Sachs will cooperate with
investors in their case against
the other banks. The firm also
agreed to make changes to its
antitrust compliance policies
related to bond trading. A
federal judge in Manhattan must
approve the settlement.
— From news servicesdigestdaniel acker/bloomberg news
A turkey stands in a barn at a farm in Morton, Ill., this week,
perhaps wondering, as the Thanksgiving holiday approaches, how
one applies for a pardon. The U.S. Agriculture Department’s World
Agricultural Supply and Demand Estimates project that Americans
will consume 5.30 billion pounds of turkey in 2019, a slight increase
from 2018, with 6 37 million pounds exported to other countries.○
dow 28,004.
UP 222.93, 0.8% ○nasdaQ 8,540.
UP 61.81, 0.7% ○s&P 500 3,120.
UP 23.83, 0.8% ○gold $1,468.
down $4.90, 0.3% ○crude oil $57.
UP $0.95, 1.7% ○10-year treasury
down $1.30 Per $1,000; 1.83%
Yieldcurrencies
$1=108.80 Y en, 0.90 eUrostrade practice, to run the agency.
Having once been a young lawyer
at USTR, he values the contribu-
tions of career professionals.
His portfolio carries make-or-
break implications for the presi-
dent’s political fortunes. Trump
took office vowing to rebalance
trade to benefit what he called the
forgotten men and women of the
industrial heartland.
Factories added 484,000 jobs
on Trump’s watch, but manufac-
turing employment peaked two
months ago and has been shrink-
ing in key states such as Wiscon-
sin, Pennsylvania and Michigan.
Pat Buchanan, whose 1992 Re-
publican primary campaign an-
ticipated many of Trump’s eco-
nomic and cultural themes, ap-
plauded Lighthizer’s efforts.
“A mb. Lighthizer is first-rate,
the best man in memory in his
post, and one of the few who
understands economic national-
ism, and that trade is about more,
much more, than pure econom-
ics,” Buchanan said in an email.
“Not until Trump and Lighthizer
did we have a US t eam so dedicat-
ed to the proposition of America
First. But, is it a hard thing to turn
the ship around after decades of
‘free-trade’ inter-dependency.”I
ndeed, while Lighthizer’s
charm offensive on Capitol
Hill has won Democrats’ plau-
dits, Pelosi has yet to schedule a
vote on the USMCA’s implement-
ing legislation. And Lighthizer is
said to be growing frustrated with
some Democrats’ demands for ad-
ditional concessions on protect-
ing labor rights under the agree-
ment.
Likewise, on the China talks,
after coming close to a deal in
early May, n egotiators have tread-
ed water. While enjoying a cordial
relationship with the top Chinese
negotiator, Vice Premier Liu He,
Lighthizer is profoundly skeptical
of the Chinese government’s will-
ingness to comply with any agree-
ment. His repeat visits to Beijing
also have left h im unimpressed. “I
don’t know how you live here,” he
once told a China-based Ameri-
can diplomat.
The president last month an-
nounced an “agreement in princi-
ple” on a limited deal, which is
intended to be only the first in a
multistep process. But even se-
curing this deal has proved elu-
sive, and Chinese officials have
not publicly confirmed the bene-
fits that Trump claims he has
secured for farmers.
“He sees his life and work to
limit the damage China has done
to the global trading system and
U.S. economy,” said one Lighthiz-
er associate, who spoke on the
condition of anonymity to speak
frankly. “It would be an incredible
lost opportunity after a year and a
half of drama and Peking Opera, if
all we get are some soybean pur-
chases.”
Bannon calls Lighthizer “an
American hero” a nd likens him to
the late actor Jimmy Stewart. But
on each of the seven Chinese
trade practices that the adminis-
tration has said must be curtailed,
“China’s doing more today than
when we got in,” Bannon said.
[email protected]Meagher & Flom, Lighthizer had
been anticipating retiring to his
oceanfront Palm Beach, Fla., con-
do, about three miles north of
Trump’s Mar-a-Lago, before the
president-elect called.
Bannon, who said he helped
bring Lighthizer to Trump’s a tten-
tion, likened the trade chief’s rela-
tionship to the president to that
between a board chairman and a
corporate attorney. T he president
provides the vision — and serves
as chief public spokesman — for
the administration’s trade policy.
And Lighthizer figures out how to
make it work, using his detailed
knowledge of U.S. trade law.
“He never speaks unless he
absolutely knows everything
about the topic,” Bannon said.
“Trump gravitates to that. He
likes him personally and admires
him as a professional.”
Lighthizer has also made allies
of other powerful White House
figures, including Trump’s s on-in-
law Jared Kushner, who was in-
strumental in the negotiations to
rewrite the North American Free
Trade Agreement, and congres-
sional Democrats.
Lighthizer has been careful to
avoid the spotlight, seldom speak-
ing to reporters and allowing
Trump to play the starring role in
the trade war.
“Lighthizer does care a lot
more about managing his rela-
tionships inside the government
than he does outside,” said one
former senior USTR official, who
spoke on the condition of ano-
nymity to talk candidly. “A nd I
can’t say he’s made a miscalcula-
tion on that in this administra-
tion because so many policies
have foundered on poor internal
coordination.”
The USTR has avoided the
State Department’s cratering mo-
rale and the Commerce Depart-
ment’s chronic dysfunction. He
relies on a core group of loyalists,
including many veterans of Skad-
den, where he once directed theeral Electric and Honeywell. But
more than 18 months into
Trump’s trade war, the cloudy
outlook for Lighthizer’s t alks with
China — which might involve the
elimination of some, all or none of
the existing tariffs — complicates
Trice’s planning.
“A ny competent businessman
knows you need certainty and
predictability. This is the antithe-
sis of that,” he said. “A deal with-
out the removal of the tariffs
doesn’t do us any good.”
Other trade war victims are
petitioning the government for a
taxpayer bailout. The administra-
tion already is paying $28 billion
to farmers who have lost export
sales because of China’s retaliato-
ry tariffs. The Hardwood Federa-
tion recently submitted a propos-
al to the Agriculture Department,
seeking financial aid to offset an-
nual industry losses estimated at
$651 million.
Some of the nation’s sawmills
“are concerned they’re not going
to survive,” said Dana Cole, the
federation’s executive director.L
ighthizer, 72, grew up in
Ashtabula, a Great Lakes
port in northeast Ohio,
which suffered with the steel in-
dustry’s decline. The son of a
doctor, he was educated in a Cath-
olic school and read Gentlemen’s
Quarterly as a teenager.
His hometown’s steady deteri-
oration, however, coupled with
his legal work on behalf of steel
companies seeking protection
from foreign rivals, forged protec-
tionist views that were at odds
with the era’s bipartisan consen-
sus on trade.
“For 30 years, he was a voice in
the wilderness,” said his older
brother James, president of the
Civil War Trust. “He’s emphatic
about it. He really believes we’ve
given away the store.”
The wilderness years ended
with Trump’s 2016 triumph. A
partner at Skadden, Arps, Slate,more warmly on Capitol Hill,
where his opposition to the tradi-
tional “free trade” g ospel overlaps
with liberal Democrats’ globaliza-
tion critique. The administration
has been pushing House Speaker
Nancy Pelosi (D-Calif.) to sched-
ule a vote on the U.S.-Mexico-Can-
ada agreement (USMCA). But
with about 15 legislative days re-
maining in 2019, the deal risks
slipping into a prolonged elec-
tion-year limbo.
The emerging China deal,
meanwhile, appears likely to fall
short of Lighthizer’s stated goal:
to compel China to make struc-
tural changes in its economy that
will prevent it from supplanting
the United States as the global
technology leader. Amid signs of a
modest initial harvest, the trade
chief is resisting demands from
the Chinese — and U.S. corpora-
tions — to scrap tariffs on $112 bil-
lion in consumer goods that took
effect Sept. 1.
“Our economic relationship
with China has been unbalanced
and grossly unfair to American
workers, farmers, ranchers and
businesses for decades,” Lighthiz-
er told the Senate Finance Com-
mittee in June. “A fter an exhaus-
tive process, we put tariffs on
certain Chinese products and are
preparing to do more if certain
issues cannot be resolved satis-
factorily.”
Ta riffs are the core of Lighthiz-
er’s negotiating strategy. But they
represent a costly complication
for many American businesses.
Jasco, an Oklahoma City-based
maker of lighting, home security,
cables and power products, has
been hit by each of Trump’s four
rounds of China tariffs. The levies
on Chinese imports have raised
the 400-worker company’s annu-
al costs by up to $50 million and
erased its profits, according to
chief executive Jason Trice.
He’s won some tariff exclusions
and passed along price increases
to customers, which include Gen-Chamber of Commerce, the Na-
tional Association of Manufactur-
ers and the Business Roundtable,
according to his office calendar
on the U.S. Trade Representative
(USTR) website.
But the stepped-up engage-
ment has produced only an un-
easy truce, with business groups
remaining deeply skeptical of
Lighthizer’s tariff-heavy strategy.
“There are still points of friction,”
said Rufus Yerxa, president of the
National Foreign Trade Council.
“There are still major, major con-
cerns about the direction of
Trump’s trade policy.”
Lighthizer’s aides, as is their
custom, did not respond to a
request for comment.T
hose doubts date to Lighthi-
zer’s first months in office.
In September 2 017, he
joined several prominent chief
executives in a conference room
near Capitol Hill for what should
have been a friendly get-together.
Lighthizer was a former Senate
Republican aide, a veteran of the
Reagan administration and a
well-heeled corporate lawyer. His
audience included the heads of
corporations such as Walmart,
Bank of America and AT&T, men
and women who were pillars of
the economy and of the Republi-
can Party.
But on this day, Lighthizer
sounded more like an adversary
than an ally, dismissing the CEOs’
objections to Trump’s protection-
ism as the pleading of “special
interests.”
The verbal clash with the Busi-
ness Roundtable’s board of direc-
tors wasn’t an isolated event.
Weeks later, at another private
session with corporate chieftains,
Lighthizer’s indifference to con-
cerns about the probable costs of
the president’s plan to confront
China left members of the
U.S.-China Business Council simi-
larly dismayed.
Lighthizer has been receivedBY DAVID J. LYNCHAt an invitation-only gathering
of chief executives in mid-Sep-
tember, Robert E. Lighthizer
made his pitch for President
Trump’s protectionist trade poli-
cy.
Seated between United Parcel
Service CEO David Abney and
Boeing chief Dennis Muilenburg,
Lighthizer, the chief U.S. trade
negotiator, argued that attempts
to integrate China into the global
economy have failed American
workers. Trump’s bare-knuckled
alternative is warranted, he said,
even if it costs the economy in the
short term.
Attendees at the Yale School of
Management conference — held
beneath an open-air, rooftop tent
with views of the U.S. Capitol
building — weren’t convinced. In
a snap poll, 80 percent com-
plained that “business confi-
dence is suffering as a result of
U.S. trade policy.”
The president’s embrace of tar-
iffs, which the Federal Reserve
says is sapping business invest-
ment and economic growth, was
the executives’ biggest gripe.
“He’s under enormous pres-
sure from the Wall Street faction,”
said Stephen K. Bannon, the for-
mer White House chief strategist.
“Lighthizer hasn’t lost any of the
toughness. He has an open door
to hear complaints, and he’s h ear-
ing a lot of them.”
As Trump approaches his third
anniversary in the White House,
Lighthizer is one of only a few
senior officials to retain both the
president’s confidence and his
professional reputation.
Much is at stake. White House
National Economic Council Di-
rector Larry Kudlow said late
Thursday that a deal with China
could be close and that upbeat
sentiment led the stock market to
close at record levels on Friday.
Trump and Lighthizer say for-
eign countries for decades have
taken advantage of Washington’s
inattentiveness to rip off the Unit-
ed States. By confronting U.S.
trading partners on multiple con-
tinents, they promise to rebal-
ance global commerce in favor of
American workers.
Like a more polished version of
his freewheeling boss, Lighthizer
has busted precedent, bent rules
and left a trail of discomfited
traditionalists in his wake. No
constituency has been more un-
settled than corporate America.
Now Lighthizer and the busi-
ness community are awkward
partners in a rush to seal two
major prizes: a North American
trade accord, which awaits law-
makers’ approval, and an unfin-
ished deal with China.
In S eptember alone, Lighthizer
met or spoke by phone with the
leaders of Apple, General Motors,
Cisco, Dow, UPS, Boeing, Honey-
well and Arcelor Mittal, as well as
representatives from the U.S.
Trump’s trade-war general faces moment of truth
Jabin botsford/the washington Post
Top U.S. trade negotiator Robert Lighthizer, seen in January, has expressed skepticism of China’s willingness to comply with any deal.China talks, USMCA deal
converge to thrust
Lighthizer into s potlightUPLOADED BY "What's News" vk.com/wsnws TELEGRAM: t.me/whatsnws