The Finance 202: Trump allies tout breakthrough trade deals. The gains have been modest at best.

The experience of Maine’s lobstermen isn’t unique. Businesses caught in the crosshairs of the president’s fights with key trading partners have been squeezed by tit-for-tat tariffs. And the upshot for most has been a return to the status quo.

Trump’s record on the matter presents a challenge for his campaign as he seeks to tout largely cosmetic agreements as breakthroughs that testify to his dealmaking prowess. But convention speakers are demonstrating how the campaign will deal with the distance between their claims and the record — by acting as if the discrepancies don’t exist.

Trump’s top economic advisor falsely claimed he came into the presidency facing a “stagnant economy on the front end of recession.” In reality, Trump took office amid a long economic expansion that was continuing at a healthy clip.

“The United States added more than 250,000 jobs each month in 2014 and 227,000 a month in 2015,” Glenn Kessler notes. “It added 193,000 a month in 2016, as Trump barnstormed the country saying the economy was in crisis.”

Under Trump, job growth largely continued apace until the coronavirus sent the economy into a tailspin earlier this year. “In 2017, Trump’s first year in office, monthly job growth slowed to 179,000 per month,” per Kessler. “It jumped to 223,000 a month in 2018 — lower than under President Barack Obama in 2014 and 2015 — and fell back to 175,000 a month in 2019.”

Kudlow discussed the economic shock precipitated by pandemic shutdowns in the past tense. “It was awful,” he said. “Hardship and heartbreak were everywhere.” But the crisis is far from over for millions of Americans still out of work and now struggling to feed their families and cover mortgage payments and other expenses.

Trump on Tuesday promoted an agreement his administration struck with the European Union last week to lower tariffs on lobster exports from Maine:

But Trump is largely responsible for the industry’s problems with key foreign buyers. The European Union has increasingly favored Canadian offerings since those two economies signed a free trade agreement in 2016. The deal made Maine lobsters, fished from the same waters, 8 percent more expensive to European buyers.

The deal the U.S. and E.U. announced last week rolls back European duties on lobsters in exchange for the U.S. dropping tariffs on a range of goods. Maine lobstermen could have enjoyed the benefit of that truce much earlier if the Trump team hadn’t abandoned a broader trade agreement with the E.U. the Obama administration had begun negotiating.

Meanwhile, the trade offensive Trump launched against China prompted Beijing to impose retaliatory tariffs on Maine lobsters. The duties decimated a top foreign market: Lobster exports to the country fell 48 percent last year.

Several convention speakers on Tuesday raised Trump’s confrontation with China as a feather in the president’s cap. Eric Trump, for example, said his father “has ended ridiculously unfair trade deals with China that punched a hole in our economy.”

But the deal — which Trump inked in January and heralded as “one of the greatest trade deals ever made!” — did not address structural reforms the administration has demanded of Beijing, including its theft of intellectual property and anticompetitive support for favored industries.

Instead, the Chinese committed to boost their purchases of American products by $200 billion this year and next. Even on that score, it is delivering less than promised. So far this year, Beijing’s pace puts it less than halfway toward meeting its target, as the Peterson Institute’s Chad Bown illustrates:

Trump “campaigned on imposing tariffs on China,” Bown says. “He’s definitely done that. But we’re in a truce period of the trade war, a middle point. This is not a fix. It was troubled before he came in, and I would argue he’s made it worse. And he hasn’t resolved any of the underlying challenges that preceded him.”

Tensions between the superpowers have been rising again lately, including over administration moves to crack down on Chinese tech giant Huawei, ban video-sharing app TikTok from operating in the U.S., and sanction Chinese companies for allegedly facilitating human rights abuses in the Xinjiang region. But envoys from both governments talked Monday to reaffirm their commitment to the trade agreement’s goals.

The president ran to the Democrats’ left on trade in 2016, in part by excoriating the North American Free Trade Agreement that President Clinton signed as a disaster for American workers. Now he is touting the deal his team forged in its stead — the United States-Mexico-Canada Agreement — as a game-changer for the U.S.

John Peterson, owner of a metal fabrication business in Wisconsin, testified to that in a Tuesday speech to the convention. He credited Trump with “getting rid of the job-killing NAFTA” in exchange for a deal that “ensured a more competitive playing field for American companies like ours.”

Studies have projected limited aggregate benefit from the deal to the U.S.: The International Trade Commission found the agreement would boost GDP by 0.35 percent after six years; and the International Monetary Fund said its broad effects would be “negligible.”

Trade experts say that’s because the deal did not in fact make many meaningful changes to NAFTA. A couple of exceptions: It allowed for more exports of certain American agricultural products to Canada, including dairy; and it mandated higher pay and more use of North American parts in the auto industry.

But the dairy provision had already been hashed out by Obama administration negotiators and included in the Trans Pacific Partnership that Trump pulled out of at the beginning of his presidency. “From when the Trump administration started, the net gains for farmers and fishermen have been zero,” Alden said.

Fed watchers await Chair Jay Powell’s Thursday address from Wyoming: “Powell is expected to open the Kansas City Fed’s annual economic policy conference with an update on the U.S. central bank’s plans to refit its monetary policy approach to a world where persistently low inflation and low interest rates numb the effects of the Fed’s recession-fighting stimulus measures,” Reuters’s Ann Saphir reports.

“In remarks that echoed the minutes from the Fed’s most recent policy-setting meeting, [Richmond Fed President Thomas] Barkin said the biggest drivers of uncertainty are the course of the virus and whether the U.S. government will deliver a new rescue package to cushion the pandemic’s economic fallout. Lawmakers have deadlocked in their talks over another stimulus package. Powell could use his speech this week to lay out a clearer path for what he and his colleagues do control: monetary policy.”

The news overshadows strength in the housing market: “The ebb in confidence followed the expiration of a $600 weekly unemployment benefit supplement on July 31 and a flare-up in new coronavirus infections across the country, which forced some jurisdictions to shut down businesses again or pause reopenings. Though new cases have subsided, hot spots remain,” Reuters’s Lucia Mutikani reports.

“The Conference Board said its consumer confidence index dropped to a reading of 84.8 this month, the lowest since May 2014, from 91.7 in July. Economists polled by Reuters had forecast the index edging up to a reading of 93 in August.”

Trump’s payroll tax deferral on hold pending IRS guidance: “The U.S. Treasury Department still has yet to tell companies how to handle [Trump’s] order delaying the due date for employee payroll taxes, leaving major employers like Walmart Inc. in the lurch,” Bloomberg News’s  Laura Davison and Allyson Versprille report.

“Some companies have already shied away from the payroll tax deferral, which Trump touted as a boost for workers as the economy reels from the coronavirus pandemic, because the taxes would ultimately have to be paid unless Congress acts to forgive the liability.”

Nation’s biggest business lobby is behind GOP’s push for liability shield: “The U.S. Chamber of Commerce’s Institute for Legal Reform wrote draft legislation designed to shield companies from liability related to the pandemic and distributed it to state and federal lawmakers, according to a top executive. It found a welcome audience on Capitol Hill,” Aaron Gregg and Douglas MacMillan report.

“Senate Republicans have since proposed and ardently defended liability provisions that appeared in the Chamber’s draft legislation, although the final proposed version, called the Safe to Work Act, contained numerous provisions the organization hadn’t flagged.”

• At least 5,744,000 cases have been reported; at least 175,000 have died.
• CDC quietly changes testing guidelines: The new guidance says “that close contacts who have been exposed to the coronavirus but are not exhibiting symptoms “do not necessarily need a test. The change is alarming experts who point out that a large share of transmissions occur before individuals develop symptoms,” Antonia Farzan reports.
• Cities, states fear they may lose critical FEMA dollars: “The trouble stems from the Federal Emergency Management Agency, which typically provides funds for disaster relief and has played a central role in the pandemic. In calls throughout August, FEMA signaled that it may soon seek to rethink the criteria by which it doles out those dollars …,” Tony Romm and Erica Werner report.
• Universities sound alarm as coronavirus cases surge on campuses: “More than 500 cases at the University of Alabama in Tuscaloosa. Nearly 160 at the University of Missouri in Columbia. Dozens at the University of Southern California. Colleges and universities that brought students back to campus are expressing alarm about infections emerging as classes have barely started, raising the possibility everyone could be sent home,” Hannah Knowles reports.

• American Airlines to cut 19,000 jobs when federal aid expires in October: “American said its fourth-quarter capacity will be half of the year-ago level and that international long-haul flights will be just 25 percent of its 2019 schedule,” CNBC’s Leslie Josephs reports. The carrier said ”it expects to have 40,000 fewer employees in October compared with when the pandemic began.”
• J. Crew expects to emerge from bankruptcy early next month: “The plan, approved by a Virginia federal court, will equitize over $1.6 billion of secured debt, and provide for $400 million in asset-based loan as well as $400 million of fresh financial aid,” Reuters’s Nivedita Balu reports.
• Best Buy’s growth is impeded by product shortages: “Consumers have reported shortages or delays trying to order everything from Google’s Chromebooks to Maytag freezers. A search Tuesday on Best Buy’s website showed many chest freezers are sold out or unavailable in its Northeast stores,” the Wall Street Journal’s Dave Sebastian reports.

Polls have shown the president’s edge slipping on the topic: “Even as voters cope with the ongoing blows from Covid-19, the group is betting that most Americans will still vote their pocketbooks this November — supporting the candidate they believe is best equipped to rebuild an economy that has been devastated by coronavirus-related shutdowns and faltering consumer confidence,” Politico’s Gabby Orr reports.

“Next week, the PAC will launch an $18.6 million ad buy across North Carolina, Florida, Wisconsin and Pennsylvania questioning Democratic presidential nominee Joe Biden’s plan to fix the economy… Brian Walsh, president of the Trump-aligned super PAC, said the group’s internal polling has shown an uptick in voter concerns about the economy as the election has drawn nearer and Americans have tuned in to both party’s conventions.”

The company could go public as soon as this fall: “Ant Group Co., the Chinese financial-technology giant controlled by billionaire Jack Ma, revealed how highly profitable its business has been as it gears up for what is likely to be a record-breaking initial public offering,” WSJ’s Stella Yifan Xie and Jing Yang report.

“Ant said it made 21.2 billion yuan ($3 billion) in net profit for the six months to June 2020, on revenue of 72.5 billion yuan ($10.5 billion). That implied a net profit margin of around 30 percent, fairly high for a relatively young company that is growing rapidly.” The company has implied that it could raise more than $20 billion.

• Such a sum of money would put Ant on par with more established companies: “In the vicinity of PayPal Holdings Inc. and Mastercard Inc., which recently had market capitalizations of $233 billion and $344 billion respectively.”

Teva poised to face charges in drug-pricing probe: “The Justice Department is planning to charge Teva as soon as [today] after the company rebuffed a settlement that would have required paying a criminal penalty and admitting wrongdoing …,” Bloomberg News’s David McLaughlin reports.

“Charges against Teva, the world’s largest generic-drug maker by market value, would mark the most significant case to come out of the Justice Department’s years-long investigation into allegations that companies conspired with one another to prop up the prices of certain widely used medications. Nine of every 10 prescription drugs dispensed in the U.S. are generics.”

Secret papers on Ghosn pay to be aired at trial: “The trial to settle whether Carlos Ghosn illegally hid millions of dollars in compensation starts in Tokyo next month—but Ghosn won’t be there to defend himself. Instead, the man in the dock will be an American executive accused of helping him,” WSJ’s Sean McLain reports.

“The trial’s opening day, Sept. 15, is also the 64th birthday of Greg Kelly, who long worked by Mr. Ghosn’s side at Nissan Motor Co. Kelly is stuck living in a small Tokyo apartment awaiting trial, while Ghosn, having escaped to Lebanon in a box smuggled aboard a private jet, enjoys his freedom.”

The federal regulator’s decision followed major blowback. “Many homeowners who refinance their mortgages in the next three months will avoid paying an additional fee averaging $1,400, a federal regulator said Tuesday,” WSJ’s Andrew Ackerman reports. “Mortgage-finance giants Fannie Mae and Freddie Mac will delay a 0.5% surcharge on refinanced home loans until Dec. 1, said the Federal Housing Finance Agency, which regulates them.

“The decision came after an outcry from industry groups, lawmakers and the White House, saying the fee was inappropriate in the middle of the coronavirus pandemic and would hurt consumers… Record-low interest rates are spurring a refinancing boom that is helping Americans cope with the recession by lowering their monthly mortgage payments. The fee will add an estimated $1,400 to the average mortgage guaranteed by Fannie and Freddie, though that amount could be spread over the life of the loan, so borrowers would only see a modest increase in monthly costs.”

• Fed Chair Jerome Powell virtually headlines the Kansas City Fed’s annual Jackson Hole Economic Policy Symposium
• The Labor Department releases the latest weekly jobless claims
• Dollar General, HP, Abercrombie & Fitch, Ulta Beauty and Dollar Tree are among the notable companies reporting their earnings