More than 14 percent of $140 billion in annual U.S. farm exports have been or are likely to be hit by retaliatory tariffs in trade disputes with countries

such as China and Mexico, a top U.S. trade negotiator said Thursday.

Mexico imposed tariffs on American products including steel, pork and bourbon Tuesday, striking back against import duties on steel and aluminum imposed by U.S. President Donald Trump.

The duties raised trade tensions and further complicated efforts to renegotiate the trillion-dollar North American Free Trade Agreement between Canada, the United States and Mexico.

Trump blames the 1994 pact for U.S. manufacturing job losses to lower-cost Mexico.

Mexico is the largest export market for U.S. pork, the product likely being targeted for retaliatory tariffs more than any other commodity, said Gregg Doud, the chief agricultural negotiator for the office of the U.S. trade representative.

“We’ve got to get this NAFTA thing sorted out,” he told a room full hog farmers at an agricultural event in Iowa.

China has also imposed tariffs on U.S. pork and other products. It was the second-largest destination for U.S. pork by volume last year.

Trump has threatened tariffs on up to $150 billion worth of Chinese exports as part of a different dispute over Chinese intellectual property protections.

Separately, Trump has withdrawn from the multilateral Trans-Pacific Partnership promoted by Japan, the top destination for U.S. chilled and frozen beef. Europe is expected to become a bigger competitor to U.S. meat in Japan unless Washington strikes a new deal with Tokyo.

“I am very concerned about the situation with Japan,” Doud said.

A bright spot for U.S. pork is an agreement that allows U.S. pork exporters to ship meat to Argentina for the first time in 26 years, Doud said.

“These things now that we have to fix are very, very difficult,” he said. “This is going to get a little more difficult here in the short term.”

Ty Rosburg, who transports hogs for a living in Iowa and heard Doud speak, said he worried trade disputes could hurt the farmers who are his customers. Still, he said he believed U.S. officials were attempting to improve trade.

“I guess at some point you have to trust they’re working for the greater good and hope that we don’t get bit too bad,” he said.
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U.S. President Donald Trump said on Thursday after White House talks with Japanese Prime Minister Shinzo Abe that the two leaders were working together to improve trading relations and that Abe promised new Japanese investment in the United States.

At a joint news conference, Trump said Abe told him Japan was buying “billions and billions of dollars of additional products of all kinds – military jets, airliners from Boeing, lots of farm products.”

“We’re working hard to reduce our trade imbalance which is very substantial, remove barriers to U.S. exports and to achieve a fair and mutually beneficial economic partnership,” Trump said.

Japan, a key American ally, is among a number of countries hit by metal tariffs Trump has imposed this year. The Trump administration has also threatened levies on imports of Japanese cars.

Trump has made clear he prefers a bilateral deal to reduce the U.S. trade deficit with Japan, while Abe’s government says multilateral agreements would be best.

“The United States seeks a bilateral deal with Japan that is based on the principle of fairness and reciprocity,” Trump said on Thursday.

Abe said he had a detailed and candid exchange of views with Trump and the discussions focused on North Korea.

Trump said his administration encouraged Japanese investment in new plants in the United States.

“The prime minister told me that will happen,” he said. “We want new auto plants going into Michigan and Pennsylvania and Ohio.”
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South Sudan said Thursday it had agreed with its northern neighbor Sudan to repair oil infrastructure facilities destroyed by conflict within three months to boost production in Africa’s youngest country.

Michael Makuei Lueth, South Sudan’s information minister, told Reuters that officials agreed with their visiting Sudanese counterparts to “evaluate and assess the damage” to South Sudan’s oilfields in the Heglig area in the country’s north.

“There is an agreement between the two oil ministries of the two countries. They agreed to cooperate and work together in order to repair [the damage],” he said.

South Sudan depends virtually entirely on oil sales for its revenue but production has declined since war broke out in the country in 2013.

The oil is shipped to international markets via a pipeline through Sudan.

Fighting was triggered by a political disagreement between President Salva Kiir and his former deputy Riek Machar, and a regionally brokered peace pact failed to end the war after violations by both parties.

Officials from the two countries “agreed that within the period of three months they will repair all the oil blocks and resume oil production in the region,” he said referring to the infrastructure in the oil blocks.

The war has uprooted a quarter of South Sudan’s population of 12 million, ruined the country’s agriculture and battered the economy.

A joint force would also be established by both countries to protect the oilfields from attacks by rebel forces in South Sudan and Sudan.
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The U.S. and China have reached a deal to lift sanctions against the giant Chinese ZTE telecommunications company that hobbled the firm when the United States banned the sale of American-made components it needed for its consumer products, U.S. Commerce Secretary Wilbur Ross said Thursday.

Ross told CNBC the accord will force ZTE, which employs nearly 75,000 workers, to pay a $1 billion fine for violating the U.S. ban on trade with North Korea and Iran, put another $400 million in escrow, and within 30 days replace its entire management and board.

Ross said going forward, the deal imposes the “most strict” compliance on ZTE. He said the penalties should serve as a very strong deterrent for “other potential bad actors” to force compliance with U.S. trade restrictions.

“If they do violate it again, in addition to the billion dollars they are paying us up front, we had them put $400 million in escrow,” he said. “The total deal is $1.4 billion. That money will be forfeited if they violate anything … and we still retain the power to shut them down again.”

ZTE must hire a new compliance team selected by the U.S. Commerce Department for a 10-year term.

“We are literally embedding a compliance department of our choosing into the company to monitor it going forward,” Ross said. “They will pay for those people, but the people will report to the new chairman.”

“This is a pretty strict settlement,” he added. “The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls.”

The commerce secretary said he did not think the settlement of the ZTE dispute would have any impact on ongoing contentious trade and tariff talks between the U.S. and China, the world’s two biggest economies.

Washington and Beijing have threatened each other with massive new tariffs on up to $150 billion of exports from the two countries, the fallout from the U.S. demand that China buy more American goods to sharply cut last year’s $375 billion Chinese trade surplus with the U.S.

The ZTE agreement was reached after weeks of talks between U.S. and Chinese officials. The dispute stemmed from a U.S. decision to block sales of American-made components ZTE needs to manufacture its products for seven years, until 2025. The agreement calls for a 10-year suspended ban that can be activated if ZTE commits new trade violations.

Most of the world first heard of the dispute over ZTE nearly a month ago following a tweet by U.S. President Donald Trump.

Some U.S. lawmakers, both Republicans and Democrats, balked at Trump’s effort to reach an accord on ZTE, saying that firm was a threat to U.S. national security through intelligence gathering on its devices. But Trump ignored the complaints, pushing Ross to settle the dispute.
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President Donald Trump’s tariff on imported solar panels has led U.S. renewable energy companies to cancel or freeze investments of more than $2.5 billion in large installation projects, along with thousands of jobs, the developers told Reuters.

That’s more than double the about $1 billion in new spending plans announced by firms building or expanding U.S. solar panel factories to take advantage of the tax on imports.

The tariff’s bifurcated impact on the solar industry underscores how protectionist trade measures almost invariably hurt one or more domestic industries for every one they shield from foreign competition. 

Trump announced the tariff in January over protests from most of the solar industry that the move would chill one of America’s fastest-growing sectors.

​Utility-scale projects

Solar developers completed utility-scale installations costing a total of $6.8 billion last year, according to the Solar Energy Industries Association. Those investments were driven by U.S. tax incentives and the falling costs of imported panels, mostly from China, which together made solar power competitive with natural gas and coal.

The U.S. solar industry employs more than 250,000 people, about three times more than the coal industry, with about 40 percent of those people in installation and 20 percent in manufacturing, according to the U.S. Energy Information Administration.

“Solar was really on the cusp of being able to completely take off,” said Zoe Hanes, chief executive of Charlotte, North Carolina solar developer Pine Gate Renewables.

Companies with domestic panel factories are divided on the policy. Solar giant SunPower Corp opposes the tariff that will help its U.S. panel factories because it will also hurt its domestic installation and development business, along with its overseas manufacturing operations.

“There could be substantially more employment without a tariff,” said Chief Executive Tom Werner.

​Lost profits, jobs

The 30 percent tariff is scheduled to last four years, decreasing by 5 percent per year during that time. Solar developers say the levy will initially raise the cost of major installations by 10 percent.

Leading utility-scale developer Cypress Creek Renewables LLC said it had been forced to cancel or freeze $1.5 billion in projects, mostly in the Carolinas, Texas and Colorado, because the tariff raised costs beyond the level where it could compete, spokesman Jeff McKay said.

That amounted to about 150 projects at various stages of development that would have employed 3,000 or more workers during installation, he said. The projects accounted for a fifth of the company’s overall pipeline.

Developer Southern Current has made similar decisions on about $1 billion of projects, mainly in South Carolina, said Bret Sowers, the company’s vice president of development and strategy.

“Either you make the decision to default or you bite the bullet and you make less money,” Sowers said.

Neither Cypress Creek nor Southern Current would disclose exactly which projects they intend to cancel. They said those details could help their competitors and make it harder to pursue those projects if they become financially viable later.

Both are among a group of solar developers that have asked trade officials to exclude panels used in their utility-scale projects from the tariffs. The office of the U.S. Trade Representative said it is still evaluating the requests.

Other companies are having similar problems.

Stockpiling panels

For some developers, the tariff has meant abandoning nascent markets in the American heartland that last year posted the strongest growth in installations. That growth was concentrated in states where voters supported Trump in the 2016 presidential election.

South Bend, Indiana-based developer Inovateus Solar LLC, for example, had decided three years ago to focus on emerging Midwest solar markets such as Indiana and Michigan. But the tariff sparked a shift to Massachusetts, where state renewable energy incentives make it more profitable, Chairman T.J. Kanczuzewski said.

Some firms saw the tariff coming and stockpiled panels before Trump’s announcement. For example, 174 Power Global, the development arm of Korea’s Hanwha warehoused 190 megawatts of solar panels at the end of last year for a Texas project that broke ground in January.

The company is paying more for panels for two Nevada projects that start operating this year and next, but is moving forward on construction, according to Larry Greene, who heads the firm’s development in the U.S. West.

‘A lot of robots’

Trump’s tariff has boosted the domestic manufacturing sector as intended, which over time could significantly raise U.S. panel production and reduce prices.

Panel manufacturers First Solar and JinkoSolar , for example, have announced plans to spend $800 million on projects to increase panel construction in the United States since the tariff, creating about 700 new jobs in Ohio and Florida. Last week, Korea’s Hanwha Q CELLS joined them, saying it will open a solar module factory in Georgia next year, though it did not detail job creation.

SunPower Corp, meanwhile, purchased U.S. manufacturer SolarWorld’s Oregon factory after the tariff was announced, saving that facility’s 280 jobs. The company said it plans to hire more people at the plant to expand operations, without specifying how many.

But SunPower has also said it must cut up to 250 jobs in other parts of its organization because of the tariffs.

Jobs in panel manufacturing are also limited because of increasing automation, industry experts said.

Heliene, a Canadian company in the process of opening a U.S. facility capable of producing 150 megawatts worth of panels per year, said it will employ between 130 and 140 workers in Minnesota.

“The factories are highly automated,” said Martin Pochtaruk, president of Heliene. “You don’t employ too many humans. There are a lot of robots.
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Britain, France and Germany have joined forces to urge the United States to exempt European companies from any sanctions the U.S. will slap on Iran after pulling out of an international nuclear agreement.

In a letter dated Monday to U.S. Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo, ministers from the three European countries said they “strongly regret” President Donald Trump’s decision last month to withdraw from the Iran deal. Trump has said sanctions will be imposed on any company doing business with Tehran.

 

The three European countries were also signatories of the 2015 deal, which was meant to stop Iran from developing nuclear weapons in exchange for the lifting of economic sanctions.

 

In their letter, made public on Wednesday, the ministers said that “as close allies we expect that the extraterritorial effects of U.S. secondary sanctions will not be enforced on EU entities and individuals, and the United States will thus respect our political decision and the good faith of economic operators within EU legal territory.”

 

The ministers, which included British Foreign Minister Boris Johnson, French Finance Minister Bruno Le Maire and his German counterpart Olaf Scholz, said they want the U.S. to “grant exemptions” for EU companies that have been doing business with Iran since the deal came into force in 2016. They also said Iran should not be cut out of the SWIFT system for international money transfers.

 

Many companies from Europe and the U.S. have been steadily building up their investments in Iran in the past few years in the wake of the nuclear deal, particularly in the fields of pharmaceuticals, banking and oil.

 

France’s Le Maire tweeted Wednesday that EU “businesses must be able to pursue their activities.”

 

 
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Arms control experts estimate that the dismantlement of North Korea’s nuclear program could take a decade to complete, and cost $20 billion, if a nuclear agreement is reached between U.S. President Donald Trump and North Korean leader Kim Jong Un when they meet in Singapore on June 12.

“The hard work has not yet begun, and it is gong to take sustained energy on the part of the United States, South Korea, Japan, China and North Korea. It’s going to be a multiyear long process,” said Daryl Kimball, the executive director of the Arms Control Association in Washington.

President Trump has said he expects a “very positive result” from the North Korea nuclear summit, but he also said it will likely be the beginning of a process to resolve differences over the extent of the North’s denuclearization, and the specifics regarding what sanctions relief, economic aid and security guarantees would be offered in return.

U.S. Defense Secretary Jim Mattis said on Sunday that North Korea would only receive sanctions relief after it takes “verifiable and irreversible steps to denuclearization.”

This position aligns closer to the Kim government’s stance that denuclearization measures and concessions be matched action for action. And it backs away from demands made by some in the president’s national security team that Pyongyang quickly and unilaterally dismantle all its weapons of mass destruction before any concessions would be offered.

Nuclear costs

North Korea is estimated to have 20 to 80 nuclear warheads, both known and covert nuclear research and processing sites, and thousands of ballistic missiles that can be launched from mobile vehicles, and submarine based launchers have been tested in recent years.

With such an extensive nuclear arsenal it could cost $20 billion to achieve the U.S. goal of complete, irreversible, and verifiable nuclear dismantlement (CVID), according to a recent study conducted by Kwon Hyuk-chul, a Kookmin University professor of security strategy.

Kwon based his assessment in part on past nuclear deals with North Korea and Ukraine’s experience in dismantling its nuclear arsenal after the fall of the Soviet Union in the 1990s. 

“In the process of the nuclear dismantlement of Ukraine, all of the strategic nuclear warheads that Ukraine possessed were transferred to Russia and were dismantled there. In doing so, the United States provided large-scale containers and technical support to assist with safe dismantling,” said Kwon.

The Kookmin University study estimates it would costs $5 billion to dismantle the North’s nuclear arsenal and supporting facilities. Another $5 billion, Kwon said, would be needed to fulfill a U.S. pledge, made as part of a 1994 nuclear agreement with North Korea, to build two light water reactors to generate electrical power.

Another $10 billion in economic aid would be needed both as incentives to convince the leadership to give up its nuclear deterrent and to help transition the over 3,000 to 10,000 nuclear workers into peacetime professions.

President Trump recently said he does not expect the U.S. to provide any government aid but could offer American private investment if North Korea gives up its nuclear weapons. Instead he said the Kim government should look to South Korea and China for any direct economic assistance.

Denuclearization roadmap

A recent Stanford University report estimates it would take over 10 years to permanently dismantle the North’s nuclear program.

Stanford nuclear scientist Siegfried Hecker, who visited North Korea in the past to assess the country’s plutonium program, Robert Carlin, a former CIA Korea analyst, and researcher Elliot Serbin, conducted the detailed study of the North’s nuclear program.

The researchers listed specific categories that must be verified by outside inspectors including; nuclear fissile material of plutonium, tritium for fusion Hydrogen bombs, enriched uranium, nuclear reactors, centrifuge facilities, long and medium and short range missiles, test engines, and space launch vehicles.

The authors proposed a three-phase denuclearization process that would halt or limit further activity in the first year, roll back or dismantle over five years, and permanently eliminate North Korea’s nuclear capabilities in 10 years.

Lee Yoon-jee in Seoul contributed to this report.
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Mexico put tariffs on American products ranging from steel to pork and bourbon on Tuesday, retaliating against import duties on metals imposed by

President Donald Trump and taking aim at Republican strongholds ahead of U.S. congressional elections in November.

Mexico’s response further raises trade tensions between the two countries and adds a new complication to efforts to renegotiate the NAFTA trade deal between Canada, the United States and Mexico.

American pork producers, for whom Mexico is the largest export market, were dismayed by the move.

Trump last week rattled some of the closest U.S. allies by removing an exemption to tariffs on imported steel and aluminum that his administration had granted to Mexico, Canada and the European Union.

Meanwhile, Trump economic advisor Larry Kudlow revived the possibility on Tuesday that the president will seek to replace the trillion dollar North American Trade Agreement (NAFTA) with bilateral deals with Canada and Mexico, something both countries say they oppose.

Following news of the new Mexican tariffs, which take effect immediately, the peso tumbled to its weakest level since February 2017, making it one of the worst performers among major currencies.

Mexico’s retaliatory list, published in the government’s official gazette, included a 20 percent tariff on U.S. pork legs and shoulders, apples and potatoes and 20 to 25 percent duties on types of cheeses and bourbon.

A net importer of U.S. steel, Mexico is also putting 25 percent duties on a range of U.S. steel products.

Mexico’s trade negotiators designed the list, in part, to include products exported by top Republican leaders’ states, including Indiana where Vice President Mike Pence was formerly governor, according to a trade source familiar with the matter.

Bourbon-producing Kentucky is the home state of Senate Majority Leader Mitch McConnell, a Republican.

The new tariffs could also have political implications in some hotly contested races as the Republicans seek to maintain control of both chambers in Congress in November’s election, illustrating the potential perils of Trump’s aggressive efforts to set right what he sees as unfair trade balances with allies and rivals.

Midwestern worries

Iowa, where one incumbent Republican representative, Rod Blum, is seen as vulnerable, is an example of a place where Trump’s party could be hurt. The state is the top pork producing state in the United States and Mexico is its main export market by volume.

“We need trade and one of the things we’re concerned about is long-term implications that these trade issues will have on our partnerships with Mexico and Canada and other markets,” said Iowa Secretary of Agriculture Mike Naig, a Republican.

“Our customers around the world start going to other parts of the world for their supplies, that is a serious problem,” he said.

Chicago Mercantile Exchange hog futures at one point fell more than 2 percent following the Mexico pork tariff announcement.

“It certainly casts a negative pall over the market,” said CME livestock futures trader Dan Norcini.

The president of the U.S. National Pork Producers Council, Jim Heimerl, said Mexico accounted for nearly 25 percent of all pork shipments last year, adding that “a 20 percent tariff eliminates our ability to compete effectively in Mexico.”

“This is devastating to my family and pork producing families across the United States,” said Heimerl, a pork producer from Johnstown, Ohio.

In Minnesota, about 14 percent of the state’s $7.1 billion of annual agricultural exports goes to Mexico, one of the state’s top export markets, said Matthew Wohlman, Minnesota Department of Agriculture deputy commissioner.

The Mexican tariffs will hit its pork, dairy and potato exports, Minnesota state officials said.

U.S. Senator Mark Warner, a Democrat from Virginia, called the new tariffs a “gut punch” to farmers in his state, who he said exported more than $68 million in pork to Mexico last year.

“The President’s trade war is going to cost Virginia ag jobs,” he wrote in a tweet.

America first

Mexico announced its response to Trump’s move last week but it did not provide details of tariff levels or a full list of products at the time.

The United States and Mexico do $600 billion in annual trade and about 16 percent of U.S. goods exports go to its southern neighbor. However, the Mexican economy relies more on trade than does the U.S. economy, with about 80 percent of its exports sold to America.

The trade fights with Mexico and Canada are part of the Trump administration’s “America First” economic agenda, which has also put Washington on a collision course with China over trade.

Washington and Beijing have threatened tit-for-tat tariffs on goods worth up to $150 billion each, as Trump has pushed Beijing to open its economy further and address the United States’ large trade deficit with China.

The United States imposed tariffs of 25 percent on imported steel and 10 percent on aluminum in March, citing national security grounds. Last week Washington said it was ending a two-month exemption it had granted to imports from Canada, Mexico and the European Union.

The dispute with Mexico over tariffs makes it more difficult to conclude talks on renegotiating NAFTA between the three countries, discussions that began last year because Trump said the deal needed to be reworked to better serve the United States. Canada has also strongly objected to the metals tariffs.

The U.S. side has linked lifting its tariffs to a successful outcome of the NAFTA negotiations.

Separately, Mexico took steps on Tuesday to make it more attractive for other countries to send it pork by opening a tariff-free quota for some pork imports. Economy Minister Ildefonso Guajardo said his country would now “surely” look to Europe for pork products, used in many traditional dishes in Mexico.
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U.S. President Donald Trump is “seriously contemplating” trying to reach separate trade deals with Canada and Mexico instead of reshaping the more than two-decade-old North American Free Trade Agreement with both neighbors, a White House economic adviser said Tuesday.

Trump economic adviser Larry Kudlow told Fox News, “He prefers bilateral negotiations, and he is looking at two much different countries.”

The U.S., Canada and Mexico have for months engaged in talks to revise NAFTA, which has been in force since 1994. But Kudlow said separate deals “might be able to happen more rapidly.”

However, Kudlow said Trump does not plan to withdraw from the three-nation agreement.

“He is seriously contemplating a shift in the NAFTA negotiations … [and] he asked me to convey this,” Kudlow said. The adviser said Trump “believed bilateral is always better. He hates large treaties.”

Trump has long assailed multinational trade deals and within days of assuming power last year, withdrew the U.S. from the Trans-Pacific Partnership with 11 other Pacific rim nations.

On Monday, he said on Twitter, “The U.S. has made such bad trade deals over so many years that we can only WIN!”

He declared, “China already charges a tax of 16% on soybeans. Canada has all sorts of trade barriers on our Agricultural products. Not acceptable!”

Trump contended, “Farmers have not been doing well for 15 years. Mexico, Canada, China and others have treated them unfairly. By the time I finish trade talks, that will change. Big trade barriers against U.S. farmers, and other businesses, will finally be broken. Massive trade deficits no longer!”

The NAFTA talks have stalled on U.S. demands to increase American components in duty-free NAFTA autos, as well as its argument that any new agreement end after five years.

Kudlow said he told top Canadian officials Monday about Trump’s hope for bilateral trade talks and is awaiting for reaction from Ottawa.

“The important thought is he may be moving quickly towards these bilateral discussions instead of as a whole,” Kudlow said.

Trump’s trade talks with China, Mexico, Canada and the European Union have proved contentious. The U.S. leader last week drew the ire of Canada, Mexico and the EU by imposing tariffs on their aluminum and steel exports.

Canadian Prime Minister Justin Trudeau called the tariffs “insulting and unacceptable.” In a weekend television interview, Kudlow called the U.S.-Canada trade dispute a “family quarrel.”

 
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Starbucks Corp, the world’s biggest coffee chain, said on Monday Executive Chairman Howard Schultz is stepping down, effective June 26.

Schultz, who has been with Starbucks for nearly four decades, is credited with turning the company into a popular household name and growing it from 11 stores to more than 28,000 in 77 countries.

Last year, Schultz stepped down as chief executive officer to become executive chairman, handing the top job to Kevin Johnson.

Most recently, he was involved in steering the company through an anti-bias training program that was kickstarted after a Philadelphia cafe manager’s call to police resulted in the arrests of two black men who were waiting for a friend.

Starbucks’ board named Myron Ullman, who was previously chairman and CEO of struggling retailer J.C. Penney Co, as its new chair and Mellody Hobson vice chair effective upon Schultz’s retirement.

Schultz will also resign from Starbucks’ board and will be named chairman emeritus, the company said in a statement.
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German chemicals and pharmaceuticals giant Bayer will discard the name Monsanto when it takes over the controversial US seeds and pesticides producer this week, it said Monday.

But Bayer executives insisted Monsanto practices rejected by many environmentalists, including genetic modification of seeds and deployment of “crop protection” technologies like pesticides, were vital to help feed a growing world population.

“The company name is and will remain Bayer. Monsanto will no longer be a company name,” chief executive Werner Baumann told journalists during a telephone conference.

Bayer’s $63 billion (54 billion euro) buyout of Monsanto — one of the largest in German corporate history — is set to close Thursday, birthing a global giant with 115,000 employees and revenues of some 45 billion euros.

Bosses plan to name the merged agrichemical division Bayer Crop Science once the merger is complete, German business newspaper Handelsblatt reported, citing “industry sources”.

The Monsanto brand “was an issue for some time for Monsanto management,” noted Liam Condon, president of Bayer’s crop science division, adding that the US firm’s employees were “not fixated on the Monsanto brand” but “proud of what they’ve achieved.”

Weedkiller arms race

Producing high-tech genetically modified seeds, many designed to grow crops resistant to its proprietary pesticides, Monsanto has been a target for environmentalist protests and lawsuits over harm to health and the environment for decades.

“It’s understandable that Bayer wants to avoid having bought Monsanto’s negative image with the billions it has spent on the firm,” said Greenpeace campaigner Dirk Zimmermann.

“More important than giving up the Monsanto name would be a fundamental transformation in the new mega-company’s policies,” he added, accusing Bayer of having “no interest in developing future-proof, sustainable solutions for agriculture.”

Activists fear the firm’s addition to Bayer will further reduce competition in the hotly-contested agrichemical sector, limiting farmers’ and consumers’ choices if they want to avoid GM and chemically treated crops.

What’s more, in recent years weeds have begun to emerge that are resistant to products like Monsanto staple glyphosate, marketed as Roundup alongside “Roundup-ready” seeds beginning in the 1990s.

As agrichemical firms scramble to respond with new pesticides and resistant seeds, there are fears of an arms race with ever-more-potent weedkillers.

Some scientists already suspect glyphosate could cause cancer, with a 2015 World Health Organization study determining it was “probably carcinogenic” — although Bayer and other defenders of the chemical have contested the research.

In 2017, attempts to block the European Union’s five-year renewal of its approval for the weedkiller were unsuccessful.

But activists are lobbying governments and France has vowed to outlaw the substance within three years.

When launching the Monsanto takeover bid, Bayer also promised it would not introduce genetically modified crops in Europe.

“We will listen to our critics and work together where we find common ground,” Baumann said, but added that “agriculture is too important to allow ideological differences to bring progress to a standstill”.

With the world population set to reach almost 10 billion people by 2050, Bayer argues its products and methods are needed to meet demand for food.

‘Number one in seeds’

Bayer has put massive resources behind the deal, raising $57 billion in financing including a new share issue worth six billion euros announced Sunday.

It will also sell large parts of its existing agrichemical and crop seeds business to BASF in concessions to competition authorities on both sides of the Atlantic.

Once the buyout and the sales to BASF are completed, Leverkusen-based Bayer’s crop science business plus Monsanto will account for around half its turnover, with the remainder coming from pharmaceuticals and over-the-counter health products.

At around 19.7 billion euros in 2017, Monsanto and Bayer’s combined agriculture sales outweighed those of competitors ChemChina, DowDuPont and BASF, according to figures provided by Bayer.

“We estimate that Bayer will become number one in seeds and number two in crop protection globally” following the merger, analysts at Standard and Poor’s wrote Monday.

Nevertheless, the ratings agency downgraded its score for Bayer’s debt from “A-” to “BBB,” while upgrading the outlook to “stable”.

“Bayer’s stronger business position in agriculture products… does not fully offset the increased debt in its capital structure,” the analysts wrote.

 

 

 

 

 
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Institutional investors with $26 trillion in assets under management called on Group of Seven leaders on Monday to phase out the use of coal in power generation to help limit climate change, despite strong opposition from Washington.

Government plans to cut greenhouse gas emissions were too weak to limit warming as agreed by world leaders at a Paris summit in 2015, they wrote. U.S. President Donald Trump announced a year ago that he was pulling out of the pact.

“The global shift to clean energy is under way, but much more needs to be done by governments,” the group of 288 investors wrote in a statement before the G7 summit in Canada on June 8-9.

Signatories included Allianz Global Investors, Aviva Investors, DWS, HSBC Global Asset Management, Nomura Asset Management, Australian Super, HESTA and some major U.S. pension funds including CalPERS, it said.

As part of action to slow climate change, the investors called on governments to “phase out thermal coal power worldwide by set deadlines,” to phase out fossil fuel subsidies and to “put a meaningful price on carbon.”

The investors also urged governments to strengthen national plans for cutting greenhouse gas emissions by 2020 and to ensure that companies improve climate-related financial reporting.

Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGC), said it was the first time that such a broad group of investors had called for a phase-out of thermal coal, used in power generation.

“There is a lot more momentum in the investor community” to put pressure on governments, she told Reuters. The IIGC was among backers of the statement, delivered to G7 governments and to the United Nations.

G7 nations Canada, Britain, France and Italy are members of a “Powering Past Coal” alliance of almost 30 nations set up last year and which seeks to halt use of coal power by 2030. Japan, Germany and the United States are not members.

The investors wrote that countries and companies that implement the Paris climate agreement “will see significant economic benefits and attract increased investment.” U.S. gross domestic product was $18.6 trillion in 2016, World Bank data show.

Trump doubts scientific findings that heatwaves, downpours and rising sea levels are linked to man-made greenhouse gas emissions and wants to bolster the U.S. fossil fuel industry.

Worldwide, coal is now used to generate almost 40 percent of electricity.
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British civil servants have warned of shortages of food, fuel and medicines within weeks if the U.K. leaves the European Union without a trade deal, a newspaper reported Sunday.

The Sunday Times said government officials have modeled three potential scenarios for a “no deal” Brexit: mild, severe and “Armageddon.”

It said under the “severe” scenario, the English Channel ferry port of Dover would “collapse on day one” and supermarkets and hospitals would soon run short of supplies.

 

Britain wants to strike a deal on future trade relations with the EU before it officially leaves the bloc on March 29, 2019, but officials are also drawing up plans for negotiations ending without an agreement.

 

The U.K.’s Department for Exiting the European Union rejected the downbeat scenario, saying it was drawing up no-deal plans but was confident “none of this would come to pass.”

 

Britain and the EU are aiming to strike an overall Brexit agreement by October, so parliaments in other EU nations have time to ratify it before Britain leaves the bloc.

 

But British Prime Minister Theresa May’s Conservative government is split between ministers who favor a clean-break “hard Brexit,” that would leave Britain freer to strike new trade deals around the world, and those who want to keep the country closely aligned to the EU, Britain’s biggest trading partner.

 

 EU leaders are frustrated with what they see as a lack of firm proposals from the U.K. over how to resolve major issues around customs arrangements and the status of the border between Northern Ireland and the Republic of Ireland. That will be the U.K.’s only land border with the EU after Britain leaves the bloc.

 

Irish Deputy Prime Minister Simon Coveney said Saturday that the U.K. must produce “written proposals” for the border within two weeks, ahead of a June 28-29 EU summit.

 

 British Home Secretary Sajid Javid said Sunday that the British government would have “a good set of proposals” to submit to the bloc at its June meeting.

 

 

 

 
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China has warned that any agreements with Washington in their talks on settling a sprawling trade dispute “will not take effect” if threatened U.S. sanctions including tariff hikes go ahead.

The statement Sunday came shortly after delegations led by U.S. Commerce Secretary Wilbur Ross and China’s top economic official, Vice Premier Liu He, held another round of talks on China’s pledge to narrow its trade surplus with the United States by purchasing more American goods. 

The Chinese statement said the two sides made “positive and concrete progress,” but neither side released details.

The statement said, “If the United States introduces trade sanctions including increasing tariffs, all the economic and trade achievements negotiated by the two parties will not take effect.”

Ross said U.S. and Chinese officials have discussed specific American export items Beijing might buy as part of its pledge to narrow its trade surplus with the United States.

The two sides began a new round of talks in Beijing this weekend aimed at settling a simmering trade dispute.

Ross gave no details at the start of his meeting Sunday with Liu, China’s top economic official. But Chinese envoys promised after the last high-level meeting in Washington in mid-May to buy more American farm goods and energy products.

President Donald Trump is pressing Beijing to narrow its politically volatile surplus in trade in goods with the United States, which reached a record $375.2 billion last year. He’s threatening to hike duties on up to $150 billion of Chinese imports.

“Our meetings so far have been friendly and frank, and covered some useful topics about specific export items,” Ross said.

Ross was accompanied by agricultural, treasury and trade officials. Liu’s delegation included China’s central bank governor and commerce minister.

There was no indication whether the talks also would take up American complaints that Beijing steals or pressures foreign companies regarding their technology. The White House renewed a threat this week to hike duties on $50 billion of Chinese technology-related goods over that dispute.

Private sector analysts say that while Beijing is willing to compromise on its trade surplus, it will resist changes that might threaten plans to transform China into a global technology competitor.

Ross had a working dinner Saturday evening with Liu, also at the same guesthouse in Beijing.

China has promised to “significantly increase” purchases of farm goods, energy and other products and services. Still, Beijing resisted pressure to commit to a specific target of narrowing its annual surplus with the United States by $200 billion.
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Britain will not sign a trade agreement with the United States that is not in the country’s best interests, Trade Minister Liam Fox said Saturday after European Union officials filed a complaint with the World Trade Organization over stiff U.S. tariffs on steel and aluminum imports.

“If we can’t come to an agreement that we believe is in the interests of the United Kingdom, then we wouldn’t be signing any trade agreement,” Fox said Saturday in an interview with BBC radio.

Fox’s comments came one day after European Union officials submitted a formal complaint to the WTO, the first in a series of retaliatory actions, including possible tariffs, against the U.S. Fox said the tariffs are “illegal” and that British Prime Minister Theresa May would raise the issue at the Group of Seven meeting next week in Canada.

Trans-Atlantic and North American trade tensions escalated when the U.S. imposed on Friday a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from the European Union, Canada and Mexico. The U.S. also negotiated quotas or volume limits on other countries, such as South Korea, Argentina, Australia and Brazil, instead of tariffs.

In a separate dispute, China is prepared to target billions of dollars in U.S. products, many of which come from America’s agricultural heartland, where Trump enjoys strong voter support.

Commerce Secretary Wilbur Ross arrived in Beijing Saturday in an attempt to avert an all-out trade war between the world’s two largest economies. On China’s target list are U.S. soybean farmers, who export about 60-percent of their soybeans to China.

A dairy farmer who also grows soybeans in the midwestern state of Nebraska, Ben Steffen, is angry about the U.S. tariffs “because it hits me in my pocketbook from multiple angles.”

California farmer Jeff Colombini, who grows walnuts, cherries and apples, is concerned about the financial damage a trade war could bring.

“With these tariffs, its going to make the product[s] too expensive for the consumers in Mexico and in Canada and in the EU,” he said. “I have 200 employees, and they depend on the success of this operation for their jobs and to feed and clothe their families.”

The imposition of the tariffs is also not popular with some members of Congress, including those from Trump’s own party, whose states are dependent on exports.

“Imposing steel and aluminum tariffs on our most important trading partners is the wrong approach and represents an abuse of authority intended only for national security purposes,” said Bob Corker of Tennessee, who is the chairman of the Senate Foreign Relations Committee.

“You don’t treat allies the same way you treat opponents,” Republican Senator Ben Sasse of Nebraska said on Twitter. “Blanket protectionism is a big part of why we had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’”

Tennessee has three major auto assembly plants. Nebraska is a significant exporter of cattle, corn, soybeans and hogs.

Mexico said, in response, it will penalize U.S. imports, including pork bellies, apples, grapes, cheeses and flat steel.

“There’s a reason why” the countries are carefully selecting which American products to target in response, said William Reinsch, senior adviser at the Center for Strategic and International Studies.

“Most of bourbon is made in Kentucky, which is the state of the Senate majority leader. Harley Davidsons are made in Wisconsin, which is the state of the speaker of the House,” Reinsch told VOA News. “Usually when other countries retaliate, and the Chinese have done something similar, is they’re good at maximizing political pain by picking out products that are made in places where people are politically important.”

“Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers,” said Republican Orrin Hatch, who chairs the Senate’s finance committee and is a longtime advocate of breaking down trade barriers.

Expected higher prices for U.S. consumers on some products is only one side of the equation, said Ross, who noted that steel and aluminum makers in the U.S. are adding employment and opening facilities as a result of the U.S. government action.

“You can create a few jobs, however, you’re going to lose more in the process,” as consuming industries will be placed at a disadvantage of paying more for raw materials compared to their foreign competitors, Simon Lester, trade policy analyst at the libertarian Cato Institute, told VOA News.

 
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An anonymous bidder offered more than $3.3 million Friday for a private lunch with Warren Buffett, an amount just short of the record paid in 2016 and 2012 for the chance to pick the brain of the renowned investor and philanthropist.

An online auction that raises money for the Glide Foundation’s work to help the homeless in San Francisco ended Friday night on eBay with a winning bid of $3,300,100. The winner wished to remain anonymous.

Third highest price paid

The price was the third highest in the 18 years Buffett has offered the lunch. Winners paid $3,456,789 in 2012 and 2016, which remain the most expensive charity items ever sold on eBay.

Buffett has raised more than $26 million for the Glide Foundation through the annual auctions. Bidders continue to pay high prices for the chance to talk with Buffett, who leads Nebraska-based Berkshire Hathaway, and the event raises a significant part of Glide’s $20 million annual budget.

Buffett supports Glide because of the work the charity does to help people. His first wife, Susie, introduced him to Glide after she volunteered there.

“Glide really takes people who have hit rock bottom and helps bring them back. They’ve been doing it for decades,” Buffett said.

Glide provides meals, health care, job training, rehabilitation and housing support to the poor and homeless.

One topic off limits

Buffett has said he gets asked about a variety of topics during the lunch. The only subject that’s off limits is what Buffett might invest in next.

The winners of the lunch auction typically dine with Buffett at Smith and Wollensky steak house in New York City, which donates at least $10,000 to Glide each year to host the lunch.

Buffett’s company owns more than 90 companies including insurance, furniture, railroad, jewelry, utility and candy businesses. Berkshire Hathaway also has major investments in companies including Coca-Cola Co., Apple, American Express and Wells Fargo & Co.
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The U.S. economy added 223,000 jobs in May, sending the unemployment rate to an 18-year low of 3.8 percent. The Labor Department says hourly wages also grew, bumping average worker pay up 2.7 percent from this time last year. And yet, despite the improving job picture, economists say there may be dark clouds forming on the horizon. Mil Arcega reports.
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U.S. Commerce Secretary Wilbur Ross arrived in Beijing on Saturday for talks on China’s promise to buy more American goods after Washington revived tensions by renewing its threat of tariff hikes on Chinese high-tech exports.

The talks focus on adding details to China’s May 19 promise to narrow its politically volatile surplus in trade in goods with the United States, which reached a record $375.2 billion last year.

President Donald Trump threw the status of the talks into doubt this week by renewing a threat to hike tariffs on $50 billion of Chinese goods over complaints Beijing steals or pressures foreign companies to hand over technology.

Compromise on surplus

Private sector analysts say that while Beijing is willing to compromise on its trade surplus, it will resist changes that might threaten plans to transform China into a global technology competitor.

China has promised to “significantly increase” purchases of farm goods, energy and other products and services. Still, Beijing resisted pressure to commit to a specific target of narrowing its annual surplus with the United States by $200 billion.

Following Beijing’s announcement, U.S. Treasury Secretary Steven Mnuchin said the dispute was “on hold.” But the truce appeared to end with this week’s announcement that Washington was going ahead with tariff hikes on technology goods and also would impose curbs on Chinese investment and purchases of U.S. high-tech exports.

Technology competitor

The move reflects growing American concern about China’s status as a potential tech competitor and complaints Beijing improperly subsidizes its fledgling industries and shields them from competition.

Foreign governments and businesses cite strategic plans such as “Made in China 2025,” which calls for state-led efforts to create Chinese industry leaders in areas from robots to electric cars to computer chips.

“The U.S. focus on so-called industrially significant technologies heightens the risk of escalation between the two countries,” BMI Research said in a report. “Indeed, while China has shown itself willing to compromise in the area of trade deficit reduction, it will not take any actions which threaten its strategically important ‘Made in China 2025’ program.”

Trump also has threatened to raise tariffs on an additional $100 billion of Chinese goods, but gave no indication this week whether that would go ahead.

Earlier, China responded with a threat to retaliate with higher duties on a $50 billion list of American goods including soybeans, small aircraft, whiskey, electric vehicles and orange juice. It criticized Trump’s move this week and said it reserved the right to retaliate but avoided repeating its earlier threat.

Tariffs on Canada, Europe Mexico

Trade analysts warned Ross’s hand might be weakened by the Trump administration’s decision Thursday to go ahead with tariffs on steel and aluminum imports from Canada, Europe and Mexico.

That might alienate allies who share complaints about Chinese technology policy and a flood of low-priced steel, aluminum and other exports they say are the result of improper subsidies and hurt foreign competitors.
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Turkish Foreign Minister Mevlut Cavusoglu is scheduled to meet with U.S. Secretary of State Mike Pompeo in Washington on Monday amid souring relations between the NATO allies and trading partners over economic and other issues.

The talks come as Turkish sectors, such as the major steel industry, reel from the higher tariffs imposed by the U.S. administration on Turkey and other nations.

“Huge, huge effect, steel producers are desperate, the psychology is terrible among producers,” said Tayfun Senturk, a Turkey-based international steel trader. “For the last three months, there have been no new U.S. orders, and the U.S. is a major market for Turkish producers, especially in piping. If it continues for a few years, there will be closures.”

In March, President Donald Trump introduced 25 percent tariffs on steel from several primary producers. Turkey didn’t enjoy an exemption given to the European Union, Canada and Mexico that ended Friday.

“This is mainly a dispute with China and secondly the European Union. Why was Turkey targeted? I don’t understand,” Senturk said.

Turkey is the eighth-largest steel producer in the world and second only to Germany in Europe. Last year, Turkey was the sixth-largest exporter to the United States.

There are growing suspicions among Turkish steel producers that politics rather than economics is behind the steel tariffs.

“There have been steps by the steel industry to try to build an understanding with the USA. As far as I know, it is not progressing, because of political reasons,” steel trader Senturk said. “They [steel producers] are saying this would not have happened if the situation [between the U.S. and Turkey] was all right like it was 10 years ago.”

In addition to the manufacturing industry, Turkey’s financial sector could be next to feel the repercussions from strained U.S. relations. U.S. regulatory authorities are considering a significant fine against Turkish state-owned Halkbank after one of its senior officials was convicted in a New York court in January of violating U.S. sanctions against Iran.

“Everybody is expecting a huge fine against Halkbank, but this is a political decision,” political scientist Cengiz Aktar said. Analysts predict the fine could exceed the $9 billion imposed on France-based BNP Paribas bank for breaking U.S. sanctions on Iran.

The fallout of such a fine could be considerable given international investors’ concerns about the Turkish economy.

“If we see major sanctions on Turkey, politically driven ones, the pressure on the currency could be substantial,” said economist Inan Demir of Nomura International, a Japan-based financial holding company.

This year the Turkish lira has already fallen more than 20 percent.

Worse could still be in store for Turkey, analysts say. Washington’s withdrawal from the international-brokered nuclear deal with Tehran could put Ankara and Turkish business in a tight spot. Trump has announced the introduction of trade sanctions against Iran. The U.S. has also warned that companies in violation of the measures could become targets themselves.

Ankara appears unfazed by Washington’s warnings.

“It is an opportunity for Turkey,” said Turkish Economy Minister Nihat Zeybekci. “We will continue to have trade with Iran while complying with the U.N. resolutions on nuclear activities. We believe in this: The stronger Iran gets in this region, the stronger Turkey becomes as well.”

Analysts suggest Zeybekci’s combative stance could be just political rhetoric, given Turkey is in the midst of campaigning for general and presidential elections set for June 24. Taking a tough stand against Washington is seen to play well with the ruling AKP nationalist voting base.

Complying with U.S. sanctions on Iran, however, could come at a substantial cost for Ankara.

“Turkey is in a difficult position. We have to remember Iran is one of the main actors, along with Russia, providing oil and gas to Turkey,” said former senior Turkish diplomat Aydin Selcen, who served in Iraq and Washington.

“It will be difficult for Turkish banks and Turkish companies to do business in Iran, but it will be difficult to find an alternative for natural gas and oil from Iran. So Turkey will have to tread carefully,” he added.

The prosecution in Turkey of U.S. pastor Andrew Brunson on terrorism charges threatens further measures by Washington against Ankara.

“It’s a show trial taking place, and it has already hurt the bilateral relationship,” U.S. Ambassador-at-Large Sam Brownback said Wednesday in a press briefing. “I think there will be more items to follow … from the United States towards Turkey if they continue to hold him.”

Ankara says Brunson’s trial is a matter for the courts, but, analysts warn, as U.S.-Turkish relations continue souring, the economic price Ankara will pay is likely to rise.
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U.S. employers extended a streak of solid hiring in May, adding 223,000 jobs and helping lower the unemployment rate to an 18-year low of 3.8 percent.

 

The Labor Department says average hourly pay rose 2.7 percent from a year earlier, a slightly faster annual rate than in April. But pay growth remains below levels that are typical when the unemployment rate is this low.

 

Still, the report shows that the nearly 9-year old economic expansion – the second-longest on record – remains on track. Employers appear to be shrugging off recent concerns about global trade disputes.

 

The job market is also benefiting a wider range of Americans: The unemployment rate for high school graduates reached 3.9 percent, a 17-year low. For black Americans, it hit a record low of 5.9 percent.

 

The solid hiring data coincides with other evidence that the economy is on firm footing after a brief slowdown in the first three months of the year. The economy grew at a modest 2.2 percent annual rate in the January-March quarter, after three quarters that had averaged roughly 3 percent annually.

 

Some economists remain concerned that the Trump administration’s aggressive actions on trade could hamper growth. The administration on Thursday imposed tariffs on steel and aluminum imports from key allies in Europe, Canada and Mexico. Earlier in the week, it threatened to hit China with tariffs on $50 billion of its goods.

 

Still, while Trump has made such threats since March, most employers so far haven’t suspended hiring.

 

And consumers have started to spend more freely, after having pulled back in the January-March quarter. That gain could reflect in part the effect of the Trump administration’s tax cuts, which might be encouraging more Americans to step up spending. Consumer spending rose in April at its fastest pace in five months.

 

Some of the spending reflects more money needed to pay higher gas prices, a potential trouble spot for consumers in the coming months. The average price of a gallon of gas nationwide reached $2.96 on Thursday, up 15 cents from a month ago, according to AAA. Some economists calculate that higher gas costs could offset up to one-third of the benefit of the tax cuts.

 

Companies are spending more on industrial machinery, computers and software _ signs that they’re optimistic enough about future growth to expand their capacity. A measure of business investment rose in the first quarter by the most in 3{ years. That investment growth has been spurred partly by higher oil prices, which have encouraged the construction of more drilling rigs.

 

Manufacturers have benefited from the healthier business spending and have increased hiring. In April, factories expanded production of turbines and other heavy machinery by the most in seven months.

 

Macroeconomic Advisers, a forecasting firm, says it now foresees the economy expanding at a robust 4 percent annual pace in the April-June quarter, which would be the fastest in nearly four years. That is up from its forecast last week of less than a 3 percent rate for the current quarter.

 

Yet even with unemployment at an 18-year low, wage growth has been chronically sluggish in most industries, leaving many Americans still struggling to pay bills, particularly as inflation has ticked up. Still, companies are starting to pay more to lure workers from other companies, a trend that could lead to broader pay gains in coming months.

 

Mark Zandi, chief economist at Moody’s Analytics, said higher pay for job-switchers tends to augur more robust raises for everyone else.

 

At the same time, Martha Gimbel, head of economic research at the job listing site Indeed, notes that wages for people who remain in their jobs have actually declined in recent months. That suggests that many employers have yet to worry about their workers being lured away.

 

 
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Some U.S. trading partners are vowing to retaliate against U.S interests over President Donald Trump’s decision to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from the European Union, Canada and Mexico beginning on Friday.
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U.S. employers are thought to have hired at a solid pace in May and helped extend the economy’s nearly nine-year expansion, the second-longest on record, despite uncertainty caused by trade disputes.

Economists have forecast that employers added 190,000 jobs last month and that the unemployment rate remained at a 17-year low of 3.9 percent, according to data provider FactSet.

The Labor Department’s May jobs report will be released at 8:30 a.m. EDT Friday.

Economy firm footing

Solid hiring data would coincide with other evidence that the economy is on firm footing after a brief slowdown in the first three months of the year. The economy grew at a modest 2.2 percent annual rate in the January-March quarter, after three quarters that had averaged roughly 3 percent annually.

Some economists remain concerned that the Trump administration’s aggressive actions on trade could hamper growth. The administration on Thursday imposed tariffs on steel and aluminum imports from key allies in Europe, Canada and Mexico. Earlier in the week, it threatened to hit China with tariffs on $50 billion of its goods.

Still, while Trump has made such threats since March, most employers so far haven’t suspended hiring.

​Consumer spending up

And consumers have started to spend more freely, after having pulled back in the January-March quarter. That gain could reflect in part the effect of the Trump administration’s tax cuts, which might be encouraging more Americans to step up spending. Consumer spending rose in April at its fastest pace in five months.

Some of the spending reflects more money needed to pay higher gas prices, a potential trouble spot for consumers in the coming months. The average price of a gallon of gas nationwide reached $2.96 on Thursday, up 15 cents from a month ago, according to AAA. Some economists calculate that higher gas costs could offset up to one-third of the benefit of the tax cuts.

More hiring, more growth

Companies are spending more on industrial machinery, computers and software, signs that they’re optimistic enough about future growth to expand their capacity. A measure of business investment rose in the first quarter by the most in 3½ years. That investment growth has been spurred partly by higher oil prices, which have encouraged the construction of more drilling rigs.

Manufacturers have benefited from the healthier business spending and have increased hiring. In April, factories expanded production of turbines and other heavy machinery by the most in seven months.

Macroeconomic Advisers, a forecasting firm, said Thursday that it now foresees the economy expanding at a robust 4 percent annual pace in the April-June quarter, which would be the fastest in nearly four years. That is up from its forecast last week of less than a 3 percent rate for the current quarter.

Wage growth lagging

Yet even with unemployment at a 17-year low, wage growth has been chronically sluggish in most industries, leaving many Americans still struggling to pay bills, particularly as inflation has ticked up.

Average hourly pay rose just 2.6 percent in April from a year earlier, before adjusting for inflation. That’s far below historic trends: Paychecks were rising at roughly a 4 percent pace in 2000, the last time unemployment was this low.

Still, companies are starting to pay more to lure workers from other companies, a trend that could lead to broader pay gains in coming months. Workers who switched jobs received annual pay increases averaging 4 percent in April, compared with average gains of 2.9 percent for those who stayed in their jobs, according to data compiled by the Federal Reserve Bank of Atlanta.

Mark Zandi, chief economist at Moody’s Analytics, said higher pay for job-switchers tends to augur more robust raises for everyone else.

“Employers will have no choice but to adjust their pay scales to ensure wage parity across their entire workforce,” Zandi said.

At the same time, Martha Gimbel, head of economic research at the job listing site Indeed, notes that wages for people who remain in their jobs have actually declined in recent months. That suggests that many employers have yet to worry about their workers being lured away.
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