By Peter Ward February 10, 2017
Mapping the Cost of a Trade War
Donald Trump’s trade policies have as their stated aim the protection of American businesses and jobs, but many argue that these policies are far more likely to hurt the country’s economy. In a Washington Post article heavy on maps and graphics, Ana Swanson, Ted Mellnik, and Darla Cameron show how Trump’s protectionism could set off a trade war, and which regions will be most affected.
Trump’s trade policies so far include rewriting the NAFTA free-trade agreement with Canada and Mexico and new taxes to make imports more expensive and boost the appeal American goods. However, actions like these could spark retaliation from other countries, and a scenario where countries take turns increasing restrictions to give priority to their own goods and services, say economists.
Research from the Brookings Institution’s Metropolitan Policy Program shows that nearly 6 million U.S. jobs are directly tied to trade and another 6 million are indirectly tied to trade. A job indirectly tied to trade, for example, is the truck driver who transports the goods being traded.
The first map in the article shows the counties in America that are most dependent on trade. Unsurprisingly the biggest metro areas have the largest direct ties to exports.
Another graphic lists the counties with the highest exports as a percentage of GDP. Columbus, Indiana tops the list, with a percentage of 50.6%, followed by Beaumont, Texas, with 40%.
Trump to Roll Back Conflict Minerals Disclosure
Donald Trump is planning to roll back a rule that requires companies to disclose whether their products contain “conflict minerals” from a war-torn part of Africa, according to Sarah N. Lynch and Emily Stepherson’s article for Reuters this week.
Trump is reportedly planning a directive that would target the rule, which is part of the larger Dodd-Frank package of regulations. Reuters had not seen the final version of the directive, but had seen a leaked draft that was floated around Washington.
The Dodd-Frank law gives the president authority to order the U.S. Securities and Exchange Commission to temporarily suspend or revise the rule for two years, as long as it is in the national security interests of the U.S.
The memo seen by Reuters attempts to justify suspending the rule, saying that discouraging American companies from purchasing materials in the region has led to “some job loss.”
But human rights groups have expressed concerns about the proposal.
“This law helps stop U.S. companies funding conflict and human rights abuses in the Democratic Republic of Congo and surrounding countries. Suspending it will benefit secretive and corrupt business practices. Responsible business practices are starting to spread in eastern Congo. This action could reverse that progress,” Carly Oboth, a policy adviser at human rights group Global Witness said in a statement.
Tipped Workers Get Stiffed
When the minimum wage is raised, the lives of low income workers are supposed to improve. But in many states, tipped workers–or workers who derive a high percentage of their income from tips–find they are still earning the same amount of money as before, Kathryn Casteel writes for FiveThirtyEight.
A number of states in the U.S. have raised the minimum wage, but in many of those states, tipped workers are still earning $2 or $3 an hour. Last year Nebraska raised its minimum wage to $9 an hour, but left the tipped wage minimum at $2.13. In Massachusetts the gap is even wider: minimum wage is $11 and the tipped wage is $3.75.
Federal labor law allows tipped workers to receive a lower wage as long as their total earnings, including tips, add up to the minimum wage. If they don’t, employers are supposed to make up the difference. But in practice, that doesn’t always happen.
Activists who originally targeted better wages for fast food workers are now turning their attention to tipped workers. However, the new administration is expected to block any progress.
“I don’t think there’s any hope of it changing it anywhere in the near future when you have a restaurant CEO that’s going to head the Department of Labor,” said Sylvia Allegretto, a labor economist at University of California, Berkeley’s Institute for Research on Labor and Employment. “Why would he move the wages in an industry that he’s made a ton of money in?
Wrong Snap Shares Spike
Snap Inc., the company behind messaging app Snapchat, announced last week that it was aiming to raise $3 billion from an IPO set for March. Eager investors, keen to get a piece of the action, sent shares in a similarly-named company surging this week, when they apparently backed the wrong tech company.
Snap Interactive, an online dating app company based in New York, has enjoyed a boost of as much as 164% this week. That surge cannot be a coincidence given Snap Inc.’s announcement the week before.
Snap Interactive is valued at around $54 million, while Snap Inc. is hoping for a valuation close to $25 billion after its IPO.
This isn’t the first time a case of mistaken identity has favored the shares of technology stocks. In 2013, shares in the once-bankrupt retailer Tweeter Home Entertainment Group jumped 685% after Twitter filed for its IPO. Oculus VisionTech Inc. also rallied 155% after Facebook announced it was buying Oculus VR Inc.
This Week’s Top Headlines
Twitter Posts Anemic Revenue Growth Despite Political Stir – Deepa Seetharaman, Ezequiel Minaya, The Wall Street Journal
The unanswered question in Trump’s announcement of a $7 billion Intel investment– Ana Swanson, The Washington Post
Trump vows to make a ‘phenomenal’ announcement about taxes – Nolan McCaskill, Politico
After Two Megadeals Blocked, Health Insurers Plot Next Moves – Zachary Tracer, David McLaughlin, Andrew Harris, Bloomberg News
Yum Brands posts weak sales as Pizza Hut continues to struggle – Sarah Whitten, CNBC
Mexico’s Jose Cuervo raises more than $900 million in IPO – Dave Graham, Reuters
Boeing wins $13.8 billion order from Singapore Airlines – Ben Mutzabaugh, USA Today
Snap to spend $1 billion on Amazon cloud services – Richa Naidu, Reuters
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