Washington Insider - Friday

Ag, Other Industries Brace as Trump Signals Steel, Aluminum Tariffs Coming

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Ag, Other Industries Brace as Trump Signals Steel, Aluminum Tariffs Coming

Statements by President Donald Trump that he was planning to put duties in place on imports of steel and aluminum have prompted major concerns by agriculture interests and others on the potential impacts the moves could have.

Trump told representatives of the U.S. steel and aluminum industries at what was billed as a "listening session" at the White House Thursday that he would impose tariffs of 25% on steel imports and 10% on aluminum, though he did not offer any other specifics. "It'll be for a long period of time," Trump said. "We'll be signing it next week. And you'll have protection."

Reactions on a host of fronts:

The reports out of Washington have rippled across the country, sending U.S. stock markets plummeting and sparking concern from a host of lawmakers and industries, including agriculture.

Putting such tariffs in place would be "terribly counterproductive," said Senate Agriculture Committee Chairman Pat Roberts, R-Kan. "Every time you do this, you get a retaliation, and agriculture is the number one target. I think this is terribly counterproductive for the ag economy."

While Roberts and others have continued to press the administration on concerns of potential retaliatory actions for moves like tariffs on imports, all Roberts would say when asked why it does not appear Trump has heeded those concerns is "Good question."


Nationwide Stay on WOTUS Rule Implementation Lifted as Expected

The stay on implementation of the waters of the U.S. (WOTUS) rule has been lifted via a decision issued Feb. 28 by the U.S. Court of Appeals for the Sixth Circuit. The court issued the stay October 2015, but in light of the Supreme Court ruling last January that the circuit court lacked jurisdiction on the WOTUS rule, the court lifting of the stay was widely expected.

The Supreme Court issued its final judgement on the matter February 23 and the action taken today by the Sixth Circuit dismisses all challenges to the WOTUS rule, citing the Supreme Court ruling that Federal District Courts have jurisdiction in the matter. Presumably, that means a stay on implementation issued by a Federal District Court in North Dakota covering 13 states is still in effect. And, U.S. agricultural interests have taken their efforts to Federal District Court in Texas, seeking a nationwide stay on WOTUS implementation from that court.


Washington Insider: Tax Cut Data Fight

Certainly, the legislative fight over the new Republican tax cut was tough, but the New York Times this week says the new law is providing a "powerful weapon for its supporters and detractors, as well as investors and analysts." Both sides are actively mining data on how companies are spending their windfalls and hope to "sway the behavior of voters and executives alike."

In the two months since President Trump signed the $1.5 trillion tax bill into law, a vast arsenal of spreadsheets has begun to capture, in real time, the effect of the tax cut as it works its way through corporate balance sheets. Traders are compiling data to find value in a volatile stock market. Advocates of corporate responsibility are hoping to shame companies into passing more of their savings on to employees or charities. Partisans are using it to sway public opinion.

All of this, the NYT says, even though "none of the data, as of yet, yield anywhere close to a full picture." But that has not stopped politicians and organizations from using it to advance their goals.

After Congress approved the final version of the tax cut bill, John Kartch, of the conservative-leaning Americans for Tax Reform, started a list that began with AT&T, Comcast and five other companies that had announced wage increases or worker bonuses and credited the moves to the tax cuts. It has since grown to more than 400 companies and emerged as Republicans' favorite talking point for their new law.

Democrats are building their own list of companies announcing stock buybacks and have showcased that as evidence the bill is benefiting the rich rather than trickling down to workers. Wall Street analysts have since released even more detailed estimates of how companies are responding to the law, which lowered taxes for corporations and so-called pass-through businesses. The nonprofit research group Just Capital plans to provide one of the most detailed accountings to date: a ranking of companies on how much of their tax windfalls are going to workers, customers, communities and shareholders.

"What we want to create is sort of a living thing that puts companies on notice," said Martin Whittaker, chief executive of Just Capital, a nonpartisan group that has compiled data on how 90 public corporations plan to spend their tax savings and which will send letters to 875 companies seeking more information on those plans. Its initial release includes breakdowns of how individual companies will allocate their tax savings, based on their public statements and disclosures.

The group's initial findings suggest shareholders of 90 large corporations -- including Home Depot, Pfizer and Capital One -- are reaping far more of the benefits of the law than workers or consumers. Pay or benefit increases for workers account for 6% of the savings those companies report from the law, the group calculates, while job creation accounts for 22%. More than half of the money going directly to workers takes the form of one-time bonuses, as opposed to permanent raises or benefits.

Those bonus announcements have dominated headlines, though, in part because of the tireless compilation work of Kartch, the vice president for communications at Americans for Tax Reform. "Nobody was expecting those announcements," Kartch said; Republicans had largely argued that corporate rate cuts would unleash business investment, which would raise productivity and, with it, worker pay.

Other conservatives, including Republican leaders in Congress, followed suit, but Kartch's crowdsourced list seemed to catch the most fire. President Trump tweeted an article about it after it reached 100 companies. The Drudge Report linked to it for a day on its home page. Tips poured in, about bosses passing out bonus checks in breakrooms or posting about them on company bulletin boards. A 19-year-old fan of the law emails Kartch frequently with any bonus news he can find. Conservatives credit the stream of bonus news, in part, for the bill's improving poll numbers.

"It will get more detailed with time," Kartch said, "but for now, it's all the raw material up there for anybody who wants it."

Bonus and wage announcements are only one slice of the law's impact. In early December, researchers in the office of Sen. Chuck Schumer of New York, the Senate minority leader, began tracking another slice: the surge in stock buybacks that has accompanied the law. The team scours earnings calls, Google and social media for buyback announcements, and frequently blasts the results out to reporters. Schumer has taken to denouncing the buyback increases regularly on the Senate floor.

So, we will see. Both sides in this fight have enormous stakes in the outcome, and the analyses themselves are extremely complicated, especially since some fine-tuning is continuing that could make differences in perceptions. Thus, this is a debate that producers should watch carefully as it proceeds, and especially as the "fog of war" continues to thicken, Washington Insider believes.


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