Japan tops China as largest holder of U.S. Treasury debt
Kyodo, AP Dec 16, 2016 The Japane Times
WASHINGTON – Japan surpassed China as the largest holder of U.S. Treasury securities in October for the first time in a year and eight months, according to U.S. government data released Thursday.
Japan’s holdings of U.S. Treasury debt totaled $1.1319 trillion as of the end of October, down $4.5 billion from a month earlier. The tally compared to China’s $1.1157 trillion, down $41.3 billion, the Treasury Department said.
The large reduction by China appears to reflect the country’s dollar-selling, yuan-buying interventions to shore up the value of the Chinese currency, also known as the renminbi, according to financial experts.
Meanwhile, Chinese central bank data earlier this month showed the country’s foreign exchange reserves shrank $69.1 billion in November from October to $3.0515 trillion, suggesting that Beijing may have further cut its U.S. bond holdings.
The reduction in November has sent China’s foreign currency reserves to their lowest level in five years and eight months.
The dollar has risen against other currencies since Republican business mogul Donald Trump won the U.S. presidential election Nov. 8. In Asian trading Thursday, the yuan was at its lowest level against the dollar in 8½ years.
Trump, who will take office Jan. 20, has pledged to stimulate the U.S. economy with tax cuts, deregulation and increased spending on infrastructure.
China had been the largest U.S. debt holder since Japan overtook it in February 2015 for the first time since August 2008.
In October, Ireland was in the third spot in terms of total holdings with $271 billion in Treasury debt followed by the Cayman Islands, a Caribbean banking center, with $262 billion in Treasury debt.
Total federal government debt now stands at $19.8 trillion and is projected by the Congressional Budget Office to increase by $8.6 trillion over the next decade, underscoring America’s need to keep attracting foreign investors.
Trump threatens to tax Toyota if it builds U.S.-bound Corollas in Mexico
Reuters Jan 6, 2017
WASHINGTON – U.S. President-elect Donald Trump on Thursday targeted Toyota Motor Corp., threatening to impose a hefty fee on the Japanese automaker it if builds its Corolla cars for the U.S. market at a plant in Mexico.
“Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax,” Trump said in a post on Twitter.
Toyota, which announced its plan to build the Mexican facility in April 2015, had no immediate comment.
Following Trump’s tweet, the automaker’s American Depositary Receipts, its stock traded on the U.S. market, fell 0.5 percent to $120.45 on the New York Stock Exchange.
This was Trump’s latest broadside against automakers building cars in Mexico.
Toyota President Akio Toyoda said in Japan on Thursday that the automaker has no immediate plans to curb production in Mexico, preferring to wait until after Trump’s Jan. 20 inauguration before deciding whether to make any changes.
Automakers in the United States have been slammed by Trump for building cars in lower-cost factories south of the border, which he said costs American jobs. Pressure to curb that production intensified this week after Ford Motor Co. scrapped plans to build a $1.6 billion assembly plant in Mexico after Trump harshly criticized the investment.
Ford, however, still plans to shift production of small cars to Mexico from Michigan.
“We will consider our option as we see what policies the incoming president adopts,” Toyoda said at an industry gathering in Tokyo on Thursday, when asked whether his company was considering any changes to a production plant the automaker was building in Mexico.
Trump has also said General Motors Co. could become subject to tariffs on Mexico-made cars for the U.S. market, and that he would like to renegotiate terms of the North American Free Trade Agreement (NAFTA) signed with Canada and Mexico, or scrap it altogether.
Wonkblog
Donald Trump just threatened Toyota ― but it looks like he got the facts wrong
By Ylan Q. Mui January 5 at 4:37 PM
President-elect Donald Trump threatened to impose a hefty tax on Toyota Motor it if builds its Corolla cars for the U.S. market at a plant in Mexico. (Reuters)
President-elect Donald Trump continued his Twitter tirade against the auto industry on Thursday, slamming Toyota for investing in Mexico but appearing to misstate key details of the company’s operations.
Trump warned the Japanese carmaker over Twitter that it could face hefty fines for building a plant in Baja, Mexico, to sell the popular Corolla sedan to American consumers. But Trump’s tweet looks to be incorrect: Toyota’s factory in Baja assembles Tacoma trucks, according to the automaker. A new plant in Guanajuato, Mexico, will manufacture Corollas.
That factory broke ground in November, and production is expected to begin in 2019. The work is being shifted to the plant from a facility in Canada. In a statement Thursday, Toyota said that there is no change in employment and production in the United States as a result of the new operations.
“Toyota has been part of the cultural fabric in the U.S. for nearly 60 years,” the company said. “Toyota looks forward to collaborating with the Trump administration to serve in the best interests of consumers and the automotive industry.”
Trump has repeatedly threatened to slap American manufacturers with a border tax if they move jobs and production out of the country and then sell goods back to the United States. But this appears to be the first time that Trump has warned that a foreign company could face similar repercussions, and his tax proposal does not lay out a framework for how a border tax might be implemented.
Trade experts said it is unlikely that the White House has the power to punish individual companies through a border tax, though there is debate over whether Trump could unilaterally fulfill his campaign promises to levy blanket double-digit tariffs on imports from Mexico and China. Generally, that authority lies with Congress, and House Speaker Paul D. Ryan (R-Wis.) voiced staunch opposition to such measures earlier this week.
“No, we’re not going to be raising tariffs,” he told conservative talk show host Hugh Hewitt on Wednesday. “We think tax reform is the better way of addressing imbalances, leveling the playing field without starting trade wars, without having the adverse effects that you get with protectionism or trade wars.”
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Trump’s tweet came shortly after Toyota Motor President Akio Toyoda told reporters that his company is “oriented in the same direction” as the United States, according to the Wall Street Journal. Toyota said it has invested nearly $22 billion into its operations here and employs about 136,000 workers.
Earlier this week, Trump lashed out at General Motors on Twitter for assembling some of its Chevrolet Cruzes in Mexico. The company said that nearly all of the 190,000 Cruze models sold in the United States last year were made at a factory in Lordstown, Ohio. GM makes Cruze hatchbacks at a factory in Mexico and shipped 4,500 across the border.
On Twitter this week, Trump also celebrated a decision by Ford to cancel a new $1.6 billion plant in Mexico to build the Focus ― a business move that he had frequently criticized on the campaign trail. But Ford said the work will move instead to an existing factory in Mexico, a decision driven by declining demand for small cars in the United States. The company said it would use roughly half the money saved to create 700 U.S. jobs and invest in its factories in Michigan and Illinois.
“If American companies stay in the United States and continue to hire American workers to grow our manufacturing base, then there is no tariff,” Trump spokesman Sean Spicer said Thursday.
Trump’s protectionist stance runs counter to Republicans’ historic embrace of free trade, and even Trump’s top advisers appear to be conflicted over the merits of globalization. His choice to lead the National Economic Council, Gary Cohn, is a Wall Street veteran with extensive international experience. But the head of the newly established National Trade Council, Peter Navarro, has been an outspoken critic of China. Robert Lighthizer, Trump’s pick to lead U.S. trade negotiations, has also been skeptical of free trade’s benefits.
In a statement following Lighthizer’s nomination this week, Sen. Ron Wyden (D-Ore.), ranking member of the finance committee, called for clarity on the new White House’s policies.
“It is well past time for the incoming administration to explain its approach toward international trade beyond 140 characters,” he said.
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