Here are the main events that occurred in Politics this week:
1. President Trump Announces Deal With Mexico to Forestall Planned Tariff Increases
President Donald Trump backed off his plan to impose tariffs on all Mexican goods and announced through Twitter on June 7 that the US had reached an agreement with Mexico to reduce the flow of migrants to the Southwestern border. President Trump tweeted the announcement only hours after returning from Europe and following several days of intense and sometimes difficult negotiations between American and Mexican officials. Trump’s threat that he would impose potentially crippling tariffs on the US’ largest trading partner and one of its closest allies brought both countries to the brink of an economic and diplomatic crisis, only to be yanked back from the precipice nine days later. The threat had rattled companies across North America, including automakers and agricultural firms, which have built supply chains across Mexico, the US, and Canada.
Business leaders in the US, Mexico, and Canada had warned that the Trump Administration’s proposed tariffs would increase costs for American consumers, who import a whole host of goods ranging from automobiles to appliances from Mexico, and prompt retaliation from the Mexican government in the form of new trade barriers that would damage the US economy. But the trade war ended before it began, forestalling that economic reckoning and an intraparty war that President Donald Trump had created by threatening tariffs to leverage immigration policy changes. Trump’s tactic had drawn protests from Republicans, including many Senators who have long opposed tariffs and worried the measure would hurt American companies and consumers. In an unusual show of force against their own party’s President, Republican Senators had threatened to block the tariffs if President Trump moved ahead with them, and had demanded a face-to-face meeting with Trump before any action. For Mexico, Trump’s threat was a replay of past episodes in which he ranted about the country’s lack of immigration enforcement. This year, he threatened to shut down the entire Southwestern border, backing off only after aides showed him evidence that Mexican authorities were taking aggressive action to stop migrants.
According to a US-Mexico Joint Declaration distributed late on June 7, Mexico agreed to, “take unprecedented steps to increase enforcement to curb irregular migration,” including the deployment of its national guard throughout the country to stop migrants from reaching the US. The declaration, distributed by the State Department, said Mexico had also agreed to accept an expansion of a Trump administration program that makes some migrants wait in Mexico while their asylum claims are heard in the US. “The United States looks forward to working alongside Mexico to fulfill these commitments so that we can stem the tide of illegal migration across our southern border and to make our border strong and secure,” Secretary of State Mike Pompeo said in a statement. But the declaration by the two countries included an ominous warning, as well, stating that if Mexico’s actions “do not have the expected results,” additional measures could be taken. The declaration said the two countries would continue talking about other steps that could be announced within 90 days to increase enforcement to curb irregular migration,” including the deployment of its national guard throughout the country to stop migrants from reaching the US.
2. House of Representatives Votes to Hold AG Barr, White House Counsel McGahn in Contempt of Congress.
The House of Representatives voted on June 11 to allow a congressional committee to enforce subpoenas by taking uncooperative executive-branch officials to court using a civil-contempt resolution. A civil-contempt resolution is different from criminal contempt of Congress, which can result in lofty fines and even jail time. The move comes after the House Judiciary Committee advanced contempt of Congress resolutions for both Attorney General William Barr and former White House counsel Don McGahn, marking the most severe congressional action against President Donald Trump’s administration since Democrats gained a majority in the House of Representatives.
The 229-191 vote fell straight along party lines. The resolution required only a simple majority and needed to be passed in only one chamber of Congress. It came after the House Judiciary Committee hammered out the details of the contempt resolution in a marathon hearing. Democrats on the committee had issued a subpoena for Attorney General Barr to hand over a full, unredacted copy of the special counsel report detailing the investigation into Russian interference in the 2016 election, as well as the underlying evidence. But Barr refused to comply with the committee’s demands. In McGahn’s case, President Donald Trump instructed him to not testify before the committee, angering Democrats clamoring to haul in the central figure in Mueller’s obstruction case and the one official named more times than anyone else in Mueller’s report.
Being held in contempt of Congress is a rare but severe penalty, which has happened fewer than 30 times throughout US history. The most recent case of an Attorney General being found in contempt was when Republicans went after Eric Holder during the tail end of President Barack Obama’s first term in 2012. Attorney General Holder had refused to turn over documents relating to the Bureau of Alcohol, Tobacco, Firearms, and Explosives’ gun-walking scandal known as “Fast and Furious.” A federal judge ultimately tossed out the case in 2014. In William Barr’s case, he could face a lengthy legal battle as Holder did. Whether he will or not is up to the US attorneys, who could very well not pursue the criminal contempt of Congress.
3. Amid Increasing Political Tensions With US, China Boosts Relationship with Russia in Recent Summit Meeting
China and Russia have signed more than US$20 billion of deals to boost economic ties in areas such as technology and energy following Xi Jinping’s summit with Russian President Vladimir Putin. The June 5 meeting between the two leaders, who have spoken of their desire to boost practical cooperation in the face of increasing rivalry with the US, marked the start of Xi Jinping’s three-day visit to Russia to commemorate the 70th anniversary of the establishment of diplomatic relations between both countries.
On June 6, the Chinese Commerce Ministry said that the two sides aimed to increase the volume of trade between the two countries to US$200 billion a year following last year’s 24.5 percent rise to a record level of US$108 billion. Gao Feng, a spokesman for the ministry, said the deals covered areas such as nuclear power, natural gas, automobiles, hi-tech development, e-commerce, and 5G communications. The deals were the first concrete results of the warm words exchanged between the leaders, who agreed to deepen their “unprecedented” strategic partnership for “mutual advantage.” “We discussed the current state of, and prospects for, bilateral cooperation in a businesslike and constructive manner, and reviewed, in substance, important international issues while paying close attention to Russia-China cooperation in areas that are truly important for both countries,” Putin said in a joint press statement with Xi.
Xi Jinping, who had previously told Russian media that he “treasured” the relationship with Putin, whom he described as “my best friend”, said the two countries would work to “build mutual support and assistance in issues that concern our key interests in the spirit of innovation, cooperation for the sake of mutual advantage, and promote our relations in the new era for the benefit of our two nations and the peoples of the world”. Putin also highlighted the energy cooperation between the two countries, adding that Russia was China’s leading oil exporter and the Eastern route of a gas pipeline between Russia and China will enter service later this year.
Steve Tsang, director of the SOAS China Institute at the University of London, said China’s efforts to edge closer to Russia underlined changes in their relations with the US. “The context has changed. The restart of the trade war, the US measures against Huawei as well as China’s responses suggest that China and the US are entering a process of decoupling, not only in the economic relationship but more generally,” Tsang said. “This implies a structural change in the global strategic line-up. As this progresses, China under Xi will need to strengthen its capacity to face the US and its allies. Putin’s Russia comes in handy in this context.”
4. Newest Jobs Report Shows US Job, Wage Growth Declining Dramatically, Sparking Fears of Recession
Job growth in the US declined dramatically in May, with nonfarm payrolls up by just 75,000 even as the unemployment rate remained at a 50-year low, according to a Labor Department Report issued on June 7. The decline was the second in four months that payrolls increased by less than 100,000 as the labor market continues to show signs of weakening. In addition to the weak total for May, the previous two months’ reports saw substantial downward revisions. March’s count fell from 189,000 to 153,000 and the April total was taken down to 224,000 from 263,000, for a total reduction of 75,000 jobs.
The unemployment rate remained at 3.6%, in line with forecasts and the lowest since early 1957. A broader measure that encompasses discouraged workers and the underemployed holding part-time jobs for economic reasons, sometimes called the real unemployment rate, fell further, from 7.3% to 7.1%, its lowest reading since December 2000. That decline came to a sharp drop of 299,000 in the part-time for economic reasons category. Among individual groups, the rate for African Americans fell sharply, from 6.7% to 6.2%, while Asian Americans saw a gain from historically low levels, up from 2.2% to 2.5%. Wages gains also slowed a bit. Average hourly earnings year over year were up 3.1%, one-tenth of a point lower than expectations. The average work week held steady at 34.4 hours.
The weak May jobs report comes at a time in which the US economy is at a critical crossroad point for the first time in nearly a decade. Investors have been worried about slowing growth amid an escalating trade war between the US and its biggest global partners, China and Mexico. Global growth is slowing as well, with the World Bank earlier this week revising its forecasts lower. Federal Reserve officials have been watching the data closely. In recent days, comments from several central bank leaders seem to have opened the door for rate cuts, though the timing remains uncertain. Markets are now pricing in a summer reduction, likely in July, followed by another cut in September or October followed by a third in early 2020. Economic data points, though, have remained positive if slowing a bit. The Atlanta Fed expects second-quarter GDP to be up 1.5% after the 3.1% growth in the first quarter.