A trucker strike is crippling operations at the ninth-busiest container port in the United States, another stick in the spokes of the already disrupted global supply chain and one with potential to impact importers in the promotional products industry and beyond.
Independent owner-operator truck drivers began protesting at the Port of Oakland on July 19 in opposition to a court ruling that cleared the way for the transport professionals to be subject to Assembly Bill 5 (AB5), a California law the strikers believe could detrimentally affect their livelihoods and way of life.
The protests have made it difficult for dockworkers to get to work and perform their jobs. The demonstrations are also preventing trucks from carrying cargo into and out of the Port of Oakland, the West Coast’s third-busiest container port behind Los Angeles and Long Beach.
The challenges are compelling some cargo ships that were waiting to unload at Oakland to re-route to other ports or to avoid the Northern California dock altogether – a phenomenon that, should it go on, could exacerbate ship congestion at other ports. The truckers have indicated they do not intend to stop protesting.
The end-result of such congestion, from a promo perspective, is that it can take longer for industry companies to get their imported product, thereby delaying restocking and potentially worsening inventory shortfalls as the holiday branded merch selling season nears.
Some analysts are worried the protests could reach other ports, including Los Angeles and Long Beach.
“If this kind of activity spreads to southern California, it is extremely significant from a supply chain standpoint,” Larry Gross, president and founder of Gross Transportation Consulting, told ABC. A continued strike could “break at least the Port of Oakland,” Gross said.
Legislators behind AB5 intended the law to protect workers in the so-called “gig-economy” from exploitation by essentially obligating employers to extend employee status to gig workers unless a three-pronged test could be passed to establish the person is truly an independent contractor.
California intended to begin implementing that law in 2020, but that was delayed in part by a lawsuit filed by the California Trucking Association. On June 30, the U.S. Supreme Court declined to review the case, enabling the Golden State’s government to begin enforcing AB5 as the legal battle continues.
There are about 70,000 independent owner-operator truckers in California, and the law now applies to them. Many are upset about that – hence the protests. They feel the law twists their arms into seeking work as employees, whereas they’d rather remain independent. It also, opponents claim, makes it more difficult to do business and increases the cost of doing business, among other ills.
California Gov. Gavin Newsom has indicated he’s not about to exempt truckers from AB5. “Although it has been the subject of litigation, AB5 was enacted in 2019, so no one should be caught by surprise by the law’s requirements at this time,” a spokesperson for the Governor’s office told The Wall Street Journal.
The trucker protests come as U.S. importers and exporters are also keeping nervous eyes on two contentious union contract negotiations that have potential to greatly affect supply chains should they go awry.
One involves unionized West Coast port workers represented by the International Longshore and Warehouse Union and employers represented by the Pacific Maritime Association. The contract for ILWU workers expired on July 1. Though talks are continuing and both sides have pledged to avoid a work stoppage, the sides are at odds on key points that include automation at ports.
Meanwhile, President Joe Biden recently intervened to prevent a possible strike by railroad workers whose unions are embroiled in difficult negotiations with large freight railroads for a new contract for the workers. On July 17, Biden appointed a special board to help move the stalled negotiations along – a move that, by law, prevents a strike for 60 days. Should no contract be reached and workers want to strike, Congress could potentially intervene.
The International Boundary and Water Commission, United States and Mexico (IBWC), today held a ceremony to announce that IBWC Minute No. 328, “Sanitation Infrastructure Projects in San Diego, California – Tijuana, Baja California for Immediate Implementation and for Future Development,” has entered into force. The agreement outlines sanitation projects to be constructed in San Diego and Tijuana using $330 million dollars from the U.S. government and $144 million dollars from the Mexican government. With this funding, projects are expected to be completed and operational by the end of 2027 that would result in a 50% reduction in the number of days of transboundary wastewater flow in the Tijuana River and an 80% reduction in the volume of untreated wastewater discharged to the Pacific Ocean six miles (10 kilometers) south of the border.
U.S. Commissioner Maria-Elena Giner and Mexican Commissioner Adriana Resendez announced the Minute’s entry into force at a ceremony at the Tijuana River National Estuarine Research Reserve in Imperial Beach, California. They were joined by U.S. Environmental Protection Agency (EPA) Deputy Assistant Administrator for the Office of Water Bruno Pigott, EPA Pacific Southwest Regional Administrator Martha Guzman, and Director of Engineering and Binational Water Issues for Mexico’s National Water Commission (CONAGUA) Jose Gutierrez, who marked the signing of a Statement of Intent between their two agencies to advance priority wastewater projects in the San Diego-Tijuana Region.
The Minute highlights a list of projects for implementation, including doubling the capacity of the South Bay International Wastewater Treatment Plant (SBIWTP) in the United States and constructing a new treatment plant in Mexico at San Antonio de los Buenos. With these two projects, the amount of Mexican sewage undergoing treatment in the region will increase by 43 million gallons per day (2,991 liters per second), reducing sewage in both the Tijuana River and the Pacific Ocean. Other projects include rehabilitation or replacement of deteriorated sewer lines and pump stations in Tijuana to reduce line breaks and pump failures that result in sewage spills.
“Minute 328 marks a key milestone in our effort to improve conditions in the Tijuana River Valley in partnership with EPA,” said Commissioner Giner. “Their Statement of Intent coupled with this Minute will provide continuity over time. Once these projects are completed, residents on both sides of the border will have a healthier, cleaner environment for years to come.”
Mexican Commissioner Adriana Resendez noted, “These efforts are expected to address a need that has prevailed for many years in the communities of San Diego-Tijuana, to solve the problem of transboundary wastewater that impacts the water quality of the region’s beaches and that also constitutes a threat to the public health of residents in the area.” She emphasized the IBWC’s efforts over the years to address this problem in accordance with the provisions of the 1944 Water Treaty.
“We have more urgency than ever to upgrade the infrastructure needed to stop the cross-border pollution that burdens communities in the region,” said EPA Regional Administrator Guzman. “Today’s commitments finalize the binational agreement to fund the comprehensive set of projects that will thwart the pollution harming these communities and Tijuana River Valley ecosystems.”
CONAGUA’s Director of Engineering and Binational Water Issues, Jose Gutierrez, expressed that these efforts reflect the Government of Mexico’s interest in addressing problems that have afflicted the region for many years, such as sanitation and comprehensive water management in the Tijuana River Basin. “These projects will undoubtedly improve the quality of life of residents on both sides of the border.” He added that they will also contribute to compliance with IBWC Minute 320, whose fundamental objective is to achieve binational cooperation on border issues in this important basin.
The IBWC is responsible for applying the boundary and water treaties between the two countries and settling differences that arise in the application of the treaties. The U.S. Section of the IBWC operates the SBIWTP.
In a recent interview with Bloomberg, the executive vice president of UPS asserted that “regionalization” of the supply chain is critical to economic stability as geopolitcal conflicts expand. The word “regionalization” is basically a code word to describe decentralization, a concept which the UPS representative obviously did not want to dive into directly. Almost every trade expert and industry insider is admitting that supply chain problems are going to persist into the foreseeable future, and some are starting to also admit (in a roundabout way) that localized production and trade models are the key to survival.
This is something that I and many other alternative economists have been talking about for a decade or more. The globalist dynamic of interdependency is a disaster waiting to happen, and now it’s happening. Without decentralized mining of raw materials, local manufacturing, locally sourced goods, local food production and locally integrated trade networks there can be no true stability. All it takes for the system to implode is one or two crisis events and the economy’s ability to meet public demand stagnates. The system doesn’t completely stop, but it does slowly shrivel and degrade.
The war in Ukraine has been the go-to scapegoat the past few months for supply chain disruptions, but these issues started long before that. Years of central bank stimulus and fiat money creation have triggered the inevitable landslide of inflation/stagflation that alternative economists have been warning about.
Price inflation is a direct contributor to production declines and supply chain disruptions because costs continually rise for manufacturers. Also, wages of workers cannot keep up with rising prices, inspiring many employees to quit and look for work elsewhere, or attempt to live off of government welfare. All of this leads to less supply, or slower production and thus, even higher prices.
We were right, the mainstream media was wrong (or they lied).
New York Times contributor Paul Krugman claimed that “no one saw this coming” when he was recently forced to admit that he was wrong on inflation. This is the same thing MSM economists said after the credit crash of 2008. It was a lie back then and it’s a lie now. Plenty of people saw it coming; we’ve been repeating our warnings for years, but they didn’t want to listen or they did not want us to be heard.
Krugman is perhaps the worst and most arrogant economist/propagandist in the US, and though he belatedly acknowledged the inflation and supply chain threat after arguing for the past two years that it was “transitory,” he now claims that the traditionally accepted indicators of recession “don’t matter” anymore and that there is no downturn. How many times can this guy be proven ignorant and still keep his job?
It’s this kind of disinformation that keeps the public in the dark on what is about to happen. Maybe it’s because of stupidity and ego, or maybe it’s a deliberate attempt to keep the population docile (I say it is deliberate), but in either case the American people are being put in great danger when it comes to the false narrative on inflation and the supply chain. The longer they are led to believe the disaster will simply go away on its own, the less time they have to prepare.
The bottom line is this: Things are only going to get worse from here on. Maybe slowly, or maybe quickly depending on a handful of factors.
Most of the world right now is focused on Taiwan and China’s persistent threats to invade. Nancy Pelosi’s widely publicized plan to visit the island nation (yes, CCP, it is a nation) is a bizarre act of non-discretion that is clearly meant to instigate wider tensions between the US and China. Why would Pelosi do this now? Well, she’s not doing it on her own and it’s certainly not the dementia addled Joe Biden’s idea. There are clearly other hands and other interests involved.
The US sources around 20% of its retail goods from China as well as a large portion of it’s medical supplies. More concerning though is China’s near monopoly on Rare Earth metals which are integral to numerous electronic components. Furthermore, there is a pinnacle threat, which is China dumping trillions in US treasuries and dollar holding and virtually ending the dollar’s world reserve status.
This is not to say China is in a great position financially – They are on the verge of debt crisis as well, which indicates to me that they will indeed invade Taiwan (and possibly other regions) as a means to expand their borders and consolidate resources. With billions of people to feed and control, the temptation for the CCP to seek military conquest is high. If they do, it will be soon – within the next couple of months when the weather in the Taiwan Strait is optimal for naval operations.
The supply chain crisis is going to accelerate into winter as stagflation persists. Price inflation will remain high. The US is indeed officially in a recession today. Two consecutive negative GDP prints IS a recession, this is a fact that no one can change, including Joe Biden, Paul Krugman or Wikipedia. Reality does not answer to these people. The system is breaking, and certain people greatly benefit.
A regional conflict with China on top of the Ukraine war could be the perfect smokescreen for a financial and supply chain collapse that was going to happen anyway. But when the mainstream media talks about the triggers and culprits, they’ll never mention central banks and political corruption, they will only talk about Russia and China.
As I have noted in the past, the “Great Reset” agenda of the WEF, IMF, the BIS and other globalist organizations requires an extensive destabilization of the existing order. In other words, they need a controlled demolition of certain pillars of the economy. To frighten the public into accepting new collectivist and authoritarian models like the “Shared Economy” (where you will own nothing and like it), they will need a large and semi-chaotic disaster. People would have to be threatened with the loss of supply certainty and they would have to be unsure every day of where they will be able to get the necessities they need when they need them.
This level of uncertainty drives calls for solutions, and the globalists will be there to offer their pre-planned objectives and “save the day.”
Generally, inflation and shortages lead to price controls, government rationing, government “aid” with strings attached (Universal Basic Income), and eventually nationalization of all production as well as the attempted confiscation of supplies from people that prepared ahead of time. Redistribution will be the name of the game. Maybe not this year, maybe not next year, but soon enough.
The limited corporate calls for “regionalization” are too little too late, just as the Federal Reserve’s interest rate hikes are too little too late. They all know it, and they don’t care. These actions are only designed to make it appear as if they tried to save the system so they have deniability of their involvement in the crisis.
Stagflation and supply chain shortages are going to become the all encompassing issues of our era. They will be terms that are spoken about daily at every dinner table in America and probably through most of the world. These are dangers that were predicted extensively by the liberty media well ahead of time. They are NOT a surprise. And, there are plenty of institutions, corporate and government, that could have done something about them, but they chose not to. It’s important for people to accept the fact that this crisis is not a product of stupidity; it is a product of malicious motives and intent.
MONTERREY, Mexico, June 20 (Reuters) - Her elderly neighbor is hard of hearing so Maria Luisa Robles, a convenience store worker in the northern Mexican city of Monterrey, shouted the question a second time: Have you run out of water?
She had - and it wasn't just her. The taps across this working-class neighborhood of Sierra Ventana dried up over a week ago amid a historic shortage that's gripped the most important industrial city in Mexico.
"We're all struggling because there's no running water," said Robles, 60.
Desperate, Robles and her neighbors have resorted to climbing atop a nearby municipal water tank, filling up jugs, and lugging them back to their homes in order to drink, cook, clean, and wash bedsheets and school uniforms.
More than half of Mexico is currently facing moderate to severe drought conditions, according to the federal water commission CONAGUA, amid extreme heat that scientists blame on climate change.
In the sprawling metropolitan area of Monterrey, home to some 5.3 million people, the drought and years of below-average rainfall have led to citywide water shortages.
"We're in an extreme climate crisis," Nuevo Leon Governor Samuel Garcia said at a news conference last week. "Today, we're all living it and suffering."
The city in June began limiting water access to six hours a day, forcing schools to adjust class schedules and sparking panic buying of bottled water that emptied supermarket shelves.
Protests and public anger are also growing against soda and beer companies whose federal concessions have allowed them to continue to extract water even as residents go without.
The state government says it is conserving water by repairing pipe leaks and installing pressure valves, while cracking down on farms, companies, and slaughterhouses caught pilfering water from rivers or clandestine wells.
With the hottest months ahead, the crisis is expected to continue. The hope is that summer brings some consistent rainfall to this arid climate.
As early as Tuesday, two of the main dams that supply the metropolitan area, Cerro Prieto and La Boca, could be empty, according to the head of the water and sewage agency, Juan Ignacio Barragan. A third dam, El Cuchillo, stands at 45% capacity.
Running water has stopped flowing in a few neighborhoods, Barragan acknowledged in a news conference last week.
One of them is Sierra Ventana, where Robles lives with her elderly mother, two siblings with disabilities, and a niece with a motor impairment.
Caring for them requires plenty of water, so multiple times a day, in termperatures approaching 40 degrees Celsius (104 Fahrenheit), Robles trods back and forth from the water tank, alongside fellow residents hauling buckets or pushing baby strollers filled with jugs.
One afternoon last week she'd just finished her last trip when she remembered her hard-of-hearing neighbor.
"What else can we do?" she asked, before heading to the tank a final time. "We need water to live."
MEXICO CITY (Reuters) - Mexico said it would prohibit subcontracting of day laborers in the avocado and berry industries, partly to ensure companies complied with requirements under the country's trade agreement with the United States and Canada.
Labor Minister Luisa Maria Alcalde said on Monday her ministry would publish a guideline preventing the industries from using subcontract labor for certain activities.
It would specifically prohibit subcontracting for pickers of avocados and berries, billions of dollars of which are exported to the United States annually.
Alcalde announced the policy in a meeting in Uruapan, Michoacan, the top avocado-producing state in Mexico.
Michoacan Governor Alfredo Ramirez, also present at the meeting, said ensuring formal employment was necessary for companies to comply with the United States-Mexico-Canada trade agreement, as well as to settle a "historic debt" owed to day laborers.
Avocado farming in Mexico has recently suffered from gang violence, particularly in Michoacan. The United States temporarily suspended avocado imports from the state this year after a U.S. regulator there received threats.
Alcalde said the labor ministry would work with companies "to start a regularization process, so there is a level playing field, to eliminate unfair competition and promote respect for individual and collective rights."
It’s not a good time for American companies relying on goods to be shipped from overseas. Parts of China remain in and out of lockdown, causing buyers to reevaluate their sourcing. Fuel prices are out of control, which has been a contributing factor for air and sea carriers to raise their rates by 5 to 10 times. Ports are straining to move goods through in a timely manner, largely due to labor shortages. And suppliers of low-value goods are pulling from the market, unable to make money because transportation costs are so high.
One potential bright spot, however, is Mexico. It has replaced China as a source of supplies for many American companies for several reasons: same (or similar) time zone, similar work cultures as well as lower language barriers and general proximity with the nimbleness and speed that allows. These structural factors underpin this trade relationship and could ensure that the U.S.-Mexico trade route remains strong.
Not only is moving goods between the U.S. and Mexico easier, but goods can also be moved at more competitive prices. Yes, fuel prices have led to increases in transportation costs, but the increase in over-the-road transportation is currently hovering at about 30%, versus roughly 500% for some air or ocean cargo transport. And over-the-road transport is much faster than ocean (which just last year was taking up to 75 days, factoring in port delays, which are currently longer than average).
There are also fewer geopolitical risks with Mexico. The U.S. and Mexico have long-standing agreements in place (originally NAFTA, now USMCA) that govern trade and inter-country transportation, as well as long-established border crossing procedures that are well understood on both sides. In general, the U.S. and Mexico economies depend heavily on each other, fostering a much closer collaboration ecosystem.
On top of that, there are three important trends that are likely to strengthen this trade route even further:
• Standardizing and digitizing trade data: Today, most cross-border trade communications happen the old-fashioned way by phone and paper. While digitization has begun, going one step further to structure and standardize data would help make data exchange easier. Mexico’s Customs Technology Integration Project (PITA), launched in 2021, was the first step toward complete digitization. PITA leverages QR codes to clear trucks in/out of Mexico in a paperless environment.
• Regulations such as Complemento Carta Porte: Otherwise known as the Bill of Lading Supplement, this new tax regulation imposes new record-keeping requirements: Paperwork verifying origin and ownership must accompany each shipment. Its aim is to reduce contraband and smuggling, in addition to taxing cargo properly. While it may be initially onerous to shippers and carriers (enforcement has begun, but fines are waived until September 2022), it has forced market participants to clean up their record-keeping, and many are using it as an opportunity to digitize their records, which will ultimately speed up cross-border trade.
• Focus from startups and venture capitalists: A whole Latin American startup ecosystem has emerged, and it’s growing quickly. In 2021, venture capitalists poured $19.5 billion into Latin American startups, and it’s helping spur innovation in the region. These investments are leading to real change in the pivotal U.S.-Mexico trade corridor, enabling much-needed digitization that will lead to a more seamless and cohesive experience for all parties involved.
Although favorable trends abound and opportunity is undeniable, there are a few things business leaders should keep in mind when looking to move supply chains to Mexico:
• Partner or hire for local expertise. When it comes to cross-border trade, local expertise is key. Logistics comes with a number of hurdles. With new regulations or legal constraints changing often, plus any infrastructure, security or logistic mishaps, it can be hard to keep up and be on top of everything that is happening. Shipping partners or hires with local expertise can keep an eye on all these factors, while helping you keep compliant and build up your reputation. (Full disclosure: My company offers this type of partnership, as do others.)
• Leverage technology to gain logistics transparency. Technology is key to making cross-border trade as seamless and transparent as possible. Digitization allows for greater visibility and control and makes operations more efficient. With changing regulations, this is particularly important in order to create more systematic processes and ensure compliance.
• Build a strong carrier network to manage capacity shortages. In Mexico, shipping capacity is tight; it’s unlikely you’ll find one carrier that can meet all your needs. Consider vetting and working with multiple shipping partners, both large and small. This gives businesses flexibility and the upper hand on risk management around shipping placement and keeping the supply chain moving.
The residual effects of the pandemic have brought the long-ignored issue of supply chains to the forefront, as congestion and price surges cause havoc not only to the companies involved in trade but to the end consumers. Bringing manufacturers closer to users will not solve all problems, but I believe it will bring some relief. Near-shoring is attractive right now for myriad reasons. With investments flowing in and increased attention from all sides, there is also an opportunity for digitally native disruptors in this sector to help spur a new chapter for U.S.-Mexico economic integration. If that happens, it could bring massive benefits to companies and consumers on both sides of the border and beyond.
A maquiladora is a mode of manufacturing in Mexico that is established by a foreign company, involving the export of the manufactured goods to the company’s country of origin. The factories benefit from duty-free and tariff-free imports of raw materials, machinery, and equipment to be used in the manufacturing process. The manufactured goods are exported to other countries, mainly the United States and Canada.
Maquiladoras capitalize on the cheap labor force in Mexico while transferring manufacturing knowledge to the Mexican labor force. Such an arrangement also allows manufacturing companies to enjoy the benefits of free trade agreements while maintaining a domestic administration facility.
Factories operating under the maquiladora are most often located near the U.S.-Mexico border for easier importation of raw materials and export of finished products. For a company to be considered a maquiladora, it must obtain approval from Mexico’s Secretary of the Economy.
The designation allows factories to enjoy the benefits of the free trade agreement that exists among the three partner countries. Examples of such benefits include access to foreign capital investments, duty-free import of raw materials, equipment, and machinery, and other benefits.
Maquiladoras are established under the Twin Plant Agreement, which allows the company to establish a manufacturing operation in Mexico and an administration facility in the United States. The factory may be located along the U.S.-Mexico border or in any other location in the country except Mexico City, Monterrey, or Guadalajara urban areas where industries are already concentrated.
Most of the time, maquiladoras are located in strategic locations, such as near airports, railroads, and ports for easier importation and exportation of goods.
The concept of maquiladora started in the 1960s when the Bracero program ended. The Bracero program lasted from 1942 to 1964, and it allowed skilled farm workers to work on U.S. farms seasonally.
The Mexican government established the maquiladora program in 1964 in response to increased unemployment after the Bracero program ended. The maquiladora program aimed to strengthen the Mexican economy and boost industrial growth by allowing foreign-owned companies to establish factories in Mexico. Foreign factories would also benefit from a vast supply of cheap labor from skilled Mexican workers while also earning foreign exchange for Mexico’s developing economy.
The maquiladora program is considered one of the largest foreign exchange earners in Mexico. When the North American Free Trade Agreement (NAFTA) was ratified in 1994, it gave the maquiladora program a boost with multiple incentives and tax benefits.
NAFTA classified Northern Mexico as an export processing zone, thereby allowing foreign corporations to manufacture goods in Mexico at lower production and labor costs. The number of factories also doubled from 564 in 1989 to 1460 in 1994.
The maquiladora program does not place limitations on the products that can be assembled, packaged, processed, or manufactured. However, companies that assemble firearms and products with radioactive content must get consent from the Secretary of Defense and the Mexican Nuclear Regulatory Authority, respectively.
Also, manufacturing operations in Mexico depend on the parent company’s direction, opportunities available in the market, and duties charged on imports into such markets. Some of the top industries using maquiladoras include medical devices, consumer products, electronics, and the automotive sector. The industries are set up mostly in Rosarito, Tijuana, and Aguascalientes.
The Secretariat of Economy classifies the maquiladoras program, also known as the IMMEX program, into five main categories based on the manufactured products or exported services. The categories include:
A company designated as a holding company holds IMMEX registration that includes the manufacturing operation in Mexico and one or more subsidiaries.
The industrial category encompasses a manufacturer that is involved in converting raw materials into finished goods for export.
The services program covers companies that support the exportation of goods across manufacturers within Mexico.
The shelter category includes registered Mexican companies that agree to take legal risks and any arising liabilities from manufacturers operating under its IMMEX registration. The program allows foreign companies that provide production materials and manufacturing technologies to do business in Mexico without registering with IMMEX.
This program allows companies without the capacity to carry out their production processes to manufacture goods through a third party.
The main federal tax laws that maquiladoras are required to comply with include the Income Tax law and Assets Tax Law. The income tax law evaluates the company’s profits and employee withholding, and the company must submit payments to the tax authorities by the eleventh day of each month. Since maquiladoras get their raw materials, equipment, and machinery from their parent companies on loan, the profits remaining to be taxed are marginal.
On the other hand, the Assets Tax Law charges a tax on the assets owned by the maquiladora, and the factories must submit provisional payments every month. However, the tax on assets can be offset by the income tax paid to the government.
‘In closing, we note that the tariffs are not a driver of today’s inflation. Not only do the tariffs predate the current inflation by over three years, but Chinese imports make up only 2 percent of goods included in the Consumer Price Index (CPI) and would not materially reduce inflation.’
That’s how a bipartisan group of nine U.S. senators wrapped up a letter sent Wednesday to President Joe Biden, as they asked him to “substantially maintain” tariffs on Chinese imports that were imposed by his predecessor, Donald Trump.
The senators noted that “much of the inflation we are seeing relates to fuel RB00, -0.91% and food PBJ, -0.03% — sectors that are unrelated to imports from China.”
“Rolling back the tariffs on China would undermine the U.S. position in negotiations, expose many U.S. companies and workers to a sudden flood of imports, and signal to China that waiting out the United States is preferable to changing their non-market behavior or complying with the Phase One Agreement,” they also wrote in their missive, referring to a deal that Trump made with Beijing.
Among the nine senators who signed the letter to Biden were three Democrats — Sherrod Brown of Ohio, Bob Casey of Pennsylvania and Elizabeth Warren of Massachusetts — and six Republicans: Mike Braun of Indiana, Kevin Cramer of North Dakota, Jim Inhofe of Oklahoma, Rob Portman of Ohio, Mitt Romney of Utah and Rick Scott of Florida.
During his recent trip to Asia, Biden said he’s weighing cutting tariffs on Chinese goods, adding that they “were imposed by the last administration, and they’re under consideration.”
The Biden administration has eased some Trump-era tariffs on other countries’ goods, but economists have said more could be done and it would help with high U.S. inflation. Economists have long said that tariffs are a tax on consumers.
One analyst told MarketWatch in February that the White House hopes to “get to fairly widespread tariff rollbacks sometime this year,” but the constraints include not wanting to announce those rollbacks until negotiating for some changes in China’s industrial policies.
U.S. stocks SPX, +0.59% DJIA, +0.28% COMP, +0.99% were on track Friday for big weekly gains, helped in part by Federal Reserve minutes out Wednesday that suggested the American central bank remains open to rethinking its aggressive plans to raise interest rates to tame inflation.
California will raise its minimum wage to $15.50 per hour for all workers beginning next year as inflation soars across the nation, Gov. Gavin Newsom announced Thursday.
Newsom, a Democrat, noted that the increase was needed due to a provision in the state’s existing minimum wage law, signed by former Gov. Jerry Brown in 2016, which mandates a minimum wage increase to $15.50 when inflation exceeds 7 percent.
California’s Department of Finance forecasts that will happen by the end of June.
“The COVID-19 pandemic has resulted in persistent supply chain disruptions and labor market frictions have driven inflation to its highest rate in 40 years,” said Newsom in a statement. “These conditions have further been exacerbated by Russia’s war in Ukraine.”
Newsom’s office said the wage increase will benefit millions of California households who are currently struggling with the skyrocketing rate of inflation as the price of everything from food and gas has increased.
For years, California’s minimum wage has increased steadily while inflation numbers remained modest, Newsom’s office noted. The state has a higher minimum wage than the federal minimum wage, which has stayed at $7.25 an hour since 2009.
There are currently two types of minimum pay: $15 an hour for employers with 26 or more employees, and $14 an hour for employers with 25 or fewer.
Prior to Newsom’s announcement, the minimum wage was set to increase to $15 an hour for all employers in January 2023, but this will now rise to $15.50 for all employers.
The announcement regarding a boost in wages was praised by labor groups, including SEIU California.
“For nine years, fast food workers like me have been organizing, going on strike and speaking out to make $15 an hour both a reality for workers and a starting point for tackling poverty across California,” said McDonald’s worker and labor activist Guillermina Blancas in a statement provided by SEIU California to The Sacramento Bee.
“Today’s wage increase gives families like mine a lifeline as it becomes harder each day to keep up with the rent and keep food on the table,” Blancas added, while also calling for California to do more to address other issues in the state such as worker exploitation, wage theft, and discrimination.
However, California Department of Finance Director Keely Martin Bosler said the rise in wages could see prices jump in restaurants, which have low profit margins. Overall, though, Bosler said the increase in the minimum wage is “expected to have a very minimal impact on overall inflation in the state’s economy.”
Skyrocketing inflation across the U.S reached 8.5 percent in March and left Americans paying more at the pump.
According to data from the automotive group AAA, the national gas average as of May 13 is $4.432 up from $4.083 a month ago and $3.028 this time last year. California has the highest rate in the nation at $5.872.
Newsom has previously proposed a $400 gas tax rebate for each motorist as opposed to lifting the gas tax in the state. In recent months, the states of Connecticut, Georgia, Maryland, and New York have either suspended or plan to suspend their respective gas taxes.
Elsewhere on Thursday, Newsom proposed spending $2.7 billion on the state’s Emergency Rental Assistance program, $1.2 billion on a fund to help people pay their electricity bills, and $200 million for water bills. The Democrat also proposed spending $439 million to temporarily pause the tax on diesel fuel and $157 million to waive childcare fees for low-income families.
In a live address on Tuesday, President Joe Biden said that addressing inflation is his “top domestic priority” and that “I want every American to know that I’m taking inflation very seriously.
After 25 years of export bans, all of Mexico is now open for U.S. potatoes.
The first shipments of U.S. potatoes under a new trade agreement crossed from Idado into Mexico through Nogales, Arizona, on May 11. It signaled the start of Mexico’s process to restore full market access to U.S. potato growers after years of disputes.
“This is an important moment for the U.S. potato industry and our partners in the federal government who have fought for decades to restore access to this vital market,” Jared Balcom, a potato grower and president of the National Potato Council (NPC), said in a release.
Previously, U.S. growers were only allowed to sell potatoes within a 16-mile zone across the U.S.-Mexico border. For decades, the Mexican government had barred U.S. potato farmers and exporters from selling potatoes across all of the country due to restrictions, citing pest control concerns.
NPC did not specify which part of Mexico the shipment of potatoes was destined for under the new trade agreement. NPC did not immediately respond to a request for comment.
The FreightWaves TRAC spot rate from Boise, Idaho, to Nogales has continued along a mostly downward trend since a high of $3.90 the week of Jan. 14. The TRAC spot rate is currently $1.92 for that lane.
The agreement between the U.S. potato industry and the Mexican government was reached in December and allows shipments to go to any municipality in Mexico with populations of more than 100,000 people. There are no restrictions regarding the time of year that shipments can occur.
As part of the agreement, fresh potatoes from the U.S. will first be permitted through the U.S.-Mexico ports of entry in El Paso, Texas; Otay Mesa and Calexico East, California; and Nogales.
In 2023, the ports of entry in Laredo and Pharr, Texas, will become operational for fresh potato exports to Mexico.
Despite the previous 16-mile border restriction zone, Mexico was the second-largest market for U.S. fresh potato exports in 2021, accounting for 124,449 metric tons valued at $60 million, according to NPC.
Exports of potatoes to Mexico could expand up to $250 million annually, with potato-growing states such as Washington, Colorado, Oregon, Minnesota, Michigan and Idaho standing to benefit the most, NPC said.
Exports of U.S. potatoes around the world were up 10% in volume from July 2021 through March 2022, compared to the same period in 2020 to 2021, according to data from the U.S. Potato Board.
“Some markets did see a drop in U.S. fresh potato shipments, including a 90% decrease in Vietnam and a 43% decrease in Thailand,” according to the U.S. Potato Board.
