YCLOAK

The EU is set to fine US internet giant Google several billion euros this week for freezing out rivals of its Android mobile phone system, sources said, in a ruling that risks fresh tensions with Washington.

Competition Commissioner Margrethe Vestager is expected to say on Wednesday that Google abused its dominant position in the market by making tie-ups with phone makers like South Korea’s Samsung and China’s Huawei.

The long-awaited decision comes as fears of a transatlantic trade war mount due to President Donald Trump’s shock decision to impose tariffs on European steel and aluminum exports.

Two European sources told AFP the fine would be “several billion euros” without giving further details. EU rules say Google could be fined up to 10 percent of parent company Alphabet’s annual revenue, which hit $110.9 billion in 2017.

“The fine is based on the length of the infraction, but also on whether anti-trust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not,” said another source close to the matter.

The European Commission, the 28-nation EU’s executive arm, refused to comment.

Denmark’s Vestager has targeted a series of Silicon Valley giants in her four years as the 28-nation European Union’s anti-trust chief, winning praise in Europe but angering Washington.

The case against Android is the most significant of three complaints by the EU against the search titan, which has already been hit with a record-breaking 2.4-billion-euro fine in a Google shopping case.

Brussels has repeatedly targeted Google over the past decade amid concerns about the Silicon Valley giant’s dominance of Internet search across Europe, where it commands about 90 percent of the market.

‘Financial incentives’

In the Android file, the European Commission has accused Google of requiring mobile manufacturers such as Samsung and Huawei to pre-install its search engine and Google Chrome browser on phones, and to set Google Search as the default, as a condition of licensing some Google apps.

Google Search and Chrome are as a result pre-installed on the “significant majority” of devices sold in the EU, the commission says.

The complaint formally lodged in April also accuses Google of preventing manufacturers from selling smartphones that run on rival operating systems based on the Android open source code.

Google also gave “financial incentives” to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

Vestager’s other scalps include Amazon and Apple.

The EU’s biggest ever punishment targeted Apple in 2016 when it ordered the iconic maker of iPhones and iPads to pay Ireland 13 billion euros ($16 billion) in back taxes that it had avoided by a tax deal with Dublin.

The EU has also taken on Facebook over privacy issues after it admitted that millions of users may have had their data hijacked by British consultancy firm Cambridge Analytica, which was working for Trump’s 2016 election campaign.

The Google decision comes just one week before European Commission chief Jean-Claude Juncker is due to travel to the United States for crucial talks with Trump on the tariffs dispute and other issues.

Transatlantic tensions are also high after Trump berated NATO allies over defense spending at a summit last week, over his summit with Russian leader Vladimir Putin, and over the US president’s pull-out from the Iran nuclear agreement and Paris climate deal.

 

 

 
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Amazon is hoping customers don’t see any more dogs, after early problems on Prime Day meant people trying to shop got only images of the cute canines delivering an apologetic message.

Amazon’s website ran into some early snags Monday on its much-hyped Prime Day, an embarrassment for the tech company on the shopping holiday it created.

Shoppers clicking on many Prime Day links after the 3 p.m. ET launch in the U.S. got only images of dogs — some quite abashed-looking — with the words, “Uh-oh. Something went wrong on our end.” People took to social media to complain that they couldn’t order items.

By about 4:30 p.m., many Prime Day links were working, and Amazon said later Monday that it was working to resolve the glitches.

In an email to The Associated Press, it said “many are shopping successfully” and that in the first hour of the 36-hour Prime Day in the U.S., customers ordered more items than in the same time frame last year.

Still, the hiccups could mute sales and send shoppers elsewhere during one of Amazon’s busiest sales periods that’s also a key time for it to sign up new Prime members. Shoppers have lots of options, as many other chains have offered sales and promotions to try to capitalize on the Prime Day spending.

Analyst Sucharita Mulpuru-Kodali at Forrester Research called the glitch a “huge deal.”

“This is supposed to be one of their biggest days of the year,” she wrote in an email. “I am shocked this caught them off guard. But I guess the lesson is to not have a big unveil during the middle of the day when everyone comes to your site all at once.”

Amazon, which recently announced that Prime membership would be getting more expensive, was hoping to lure in shoppers by focusing on new products and having Whole Foods be part of the process. It was also hoping parents would use the deals event to jump start back-to-school shopping.

Jason Goldberg, senior vice president of commerce at Publicis.Sapient, noted that the problems could turn off shoppers for a while, particularly those who planned to sign up for Prime membership.

“If you were planning to find Prime deals to lower the cost of back-to-school [purchases], you’re almost certainly going back to your traditional venue of choice,” he said.

Goldberg noted that it’s easy for Amazon to extend deals on its own devices and brands, but trickier for it to extend deals for its third-party sellers because they signed up for different promotional slots.

While Amazon doesn’t disclose sales figures for Prime Day, Deborah Weinswig, CEO of Coresight Research, had estimated that it will generate $3.4 billion in sales worldwide, up from an estimated $2.4 billion last year. Prime Day also lasts six hours longer than last year.

In Europe, Amazon employees were using Prime Day to draw attention to their complaints against the company. Unions in Spain said most of the company’s 2,000 permanent staff there were on a three-day strike on Tuesday.

Meanwhile, other retailers like Macy’s, Nordstrom, Best Buy, Walmart and Target have rolled out their own promotions, said Charlie O’Shea, lead retail analyst at Moody’s.

“Brick-and-mortar retailers know that they have little choice but to continue offering their own deep discounts, which is evident in the proliferation of Black Friday in July' deals that are being launched earlier each year, as well as variousprice match’ offers,” he said in a note earlier Monday.

Amazon created Prime Day in 2015 to mark its 20th anniversary, and its success has inspired other e-commerce companies to invent shopping holidays. Online furniture seller Wayfair introduced Way Day in April, becoming its biggest revenue day ever.

Prime Day also usually helps boost the number of Prime memberships. Amazon disclosed for the first time this year that it had more than 100 million paid Prime members worldwide. It’s hoping to keep Prime attractive for current and would-be subscribers after raising the U.S. annual membership fee by 20 percent to $119 and to $12.99 for the month-to-month option.

“It has been one of the best vehicles” for signing up members, said Goldberg.

 
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The head of Cambodia’s tax department, Kong Vibol, could face jail for lying to the Australian Securities and Investments Commission (ASIC) if sanctioned, the corporate regulator has told VOA.

A number of questions were raised about the shadowy business dealings of Kong and other powerful, politically connected Cambodians in an investigation aired by Al Jazeera’s program 101 East last week.

Kong, who as director-general of the General Department of Taxation clearly lives in Cambodia, falsely claimed to reside at a house in Melbourne in ASIC records seen by VOA.

ASIC Communication Manager Angela Friend told VOA in an emailed response that it was an offense to provide false information to the Australian corporate watchdog under the Corporations Act.

“A breach of this provision is punishable with 100 penalty units or imprisonment for 2 years, or both. The current value of a penalty unit is $210,” she wrote in the response.

She confirmed that under the same law the director of such a company must ordinarily reside in Australia but said ASIC “does not generally comment on whether it is investigating a particular matter”.

VOA has tried to contact Kong for days but has not been able to reach him. Kong falsely claimed in records for his company Panhariddh Pty. Ltd. to live in Noble Park, a suburb in Melbourne.

Dy Vichea, the deputy National Police chief and son-in-law of Prime Minister Hun Sen who Al Jazeera also alleged had lied about his residential address to ASIC, also could not be reached.

When grilled by Al Jazeera in an on camera interview about why he appeared to have lied to ASIC, Kong first claimed the business predated his working life in Cambodia.

After he was flatly told that was not true Kong then said he had transferred ownership of the company before finally declaring the firm had closed down “a long time ago”.

“I got nothing to do in Australia,” he said.

Kong was also grilled about a major petroleum company owned by his family that Cambodian government records showed failed to register for tax until 2017.

Repeatedly he asked how such records had been obtained and claimed both the ASIC register and the official Cambodian company registry were wrong, including the listed address for Bright Victory Mekong Petroleum Import Export Co., Ltd., which is Kong’s own house.

“We sold a long time ago. I think maybe they use my address before but they never been and I don’t know when they sold,” he told Al Jazeera.

Kong, the program said, owned millions of dollars worth of property in Australia as well and multiple businesses, despite earning a salary of less than $1,000 a month.

He also set up investment companies and trusts with an Australian couple who were soon after convicted of defrauding the Australian Tax Office of more than $1.8 million, the program said.

An affidavit believed to have been signed at the Australian embassy in Phnom Penh revealed that at one point he transfered $1.2 million to one of the same couple’s trusts.

The program also featured a former Cambodian government advisor, Kalyan Ky, who said she had warned the Australian Embassy in Phnom Penh and the government that senior Cambodian officials were laundering proceeds of criminal activity through Australia.

A spokesperson for Australia Department of Foreign Affairs and Trade who declined to be named said in an emailed response that the department referred any information about potential criminal conduct under Australian laws to relevant law enforcement bodies.

“We strongly refute any claims that the Australian Government enables or condones illicit activities, or does not take allegations of corruption and other criminal conduct seriously,” the spokesperson said.

A man answering the phone of Cambodia’s Anti-Corruption Unit chief Om Yentieng said the number was incorrect.

The office of Kelly O’Dwyer, Australia’s Minister for Revenue and Financial Services, and the Australian Federal Police did not respond to VOA inquiries.

Preap Kol, Executive Director of Transparency International Cambodia, told VOA in an email that no one in Cambodia would dare question any wrongdoing by such high level officials

“Integrity among many public officials here in Cambodia are questionable. So they get used to being perceived that way. People here are powerless, so they would not even dare to ask such a question,” he said.

Kong’s claim that the Cambodia’s business registry was wrong was “hard to believe” he said, stressing though that he did not know the reality behind that situation.

“Cambodia does not have strict laws or regulations on conflict of interest like in many other countries. So it this is quite a normal practice here,” he said, adding it was inconceivable such practices would change under the current administration.

Hong Lim, a Cambodian/Australian MP in the parliament of the Australian State of Victoria, said some individuals exposed in the Al Jazeera report had spread fear of repercussions in Melbourne communities.

“These are the types of characters we are dealing with now in Melbourne,” he said.

Leng Len contributed to this report

 
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A former official at a Venezuelan state-run electric company pleaded guilty on Monday to U.S. charges that he participated in a scheme to solicit bribes in exchange for helping vendors win favorable treatment from state oil company PDVSA.

Luis Carlos De Leon Perez, 42, pleaded guilty in federal court in Houston to conspiring to violate the Foreign Corrupt Practices Act and to conspiring to commit money laundering, the U.S. Justice Department said.

He became the 12th person to plead guilty as part of a larger investigation by the Justice Department into bribery at Petroleos de Venezuela SA that became public with the arrest of two Venezuelan businessmen in December 2015.

The two men were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos. Both pleaded guilty in 2016 to conspiring to pay bribes to secure energy contracts.

De Leon is scheduled to be sentenced on Sept. 24. His lawyers did not respond to requests for comment.

De Leon was arrested in October 2017 in Spain and was extradited to the United States after being indicted along with four other former Venezuelan officials on charges they solicited bribes to help vendors win favorable treatment from

PDVSA.

An indictment said that from 2011 to 2013 the five Venezuelans sought bribes and kickbacks from vendors to help them secure PDVSA contracts and gain priority over other vendors for outstanding invoices during its liquidity crisis.

Prosecutors said De Leon was among a group of PDVSA officials and people outside the company with influence at it who solicited bribes from Rincon and Shiera. De Leon worked with those men to then launder the bribe money, prosecutors said.

De Leon also sought bribes from the owners of other energy companies and directed some of that money to PDVSA officials in order help those businesses out, prosecutors said.

Among the people indicted with De Leon was Cesar David Rincon Godoy, a former general manager at PDVSA’s procurement unit Bariven. He pleaded guilty in April to one count of conspiracy to commit money laundering.

Others charged included Nervis Villalobos, a former Venezuelan vice minister of energy; Rafael Reiter, who worked as PDVSA’s head of security and loss prevention; and Alejandro Isturiz Chiesa, who was an assistant to Bariven’s president.

Villalobos and Reiter were, like De Leon, arrested in Spain, where they remain pending extradition, the Justice Department said. Isturiz remains at large.
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The United States launched five separate World Trade Organization dispute actions on Monday challenging retaliatory tariffs imposed by China, the European Union, Canada, Mexico and Turkey following U.S. duties on steel and aluminum.

The retaliatory tariffs on up to a combined $28.5 billion worth of U.S. exports are illegal under WTO rules, U.S. Trade Representative Robert Lighthizer said in a statement.

“These tariffs appear to breach each WTO member’s commitments under the WTO Agreement,” he said. “The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminum sectors.”

Lighthizer’s office has maintained that the tariffs the United States has imposed on imports of steel and aluminum are acceptable under WTO rules because they were imposed on the grounds of a national security exception.

Mexico said it would defend its retaliatory measures, saying the imposition of U.S. tariffs was “unjustified.”

“The purchases the United States makes of steel and aluminum from Mexico do not represent a threat to the national security,” Mexico’s Economy Ministry said in a statement.

“On the contrary, the solid trade relationship between Mexico and the U.S. has created an integrated regional market where steel and aluminum products contribute to the competitiveness of the region in various strategic sectors, such as automotive, aerospace, electrical and electronic,” the ministry added.

Lighthizer said last month that retaliation had no legal basis because the EU and other trading partners were making false assertions that the U.S. steel and aluminum tariffs are illegal “safeguard” actions intended to protect U.S. producers.
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Democratic Republic of Congo’s plan to drill for oil in national parks could leave thousands of farmers and fishermen who rely on the land in a struggle to survive, rights groups said Monday.

The central African country announced last month that it was taking steps toward declassifying parts of Virunga and Salonga national parks, both recognized as world heritage sites by the United Nations, to allow for oil exploration.

The parks, which together cover an area about the size of Switzerland, are among the world’s largest tropical rainforest reserves and home to rare species including forest elephants.

Allowing drilling in the parks would cause a loss of biodiversity, release huge amounts of carbon dioxide into the atmosphere and pollute water that thousands of local people use for fishing and farming, according to several rights groups.

Congolese state spokesman Lambert Mende told Reuters that the government will study the potential impact of oil drilling on local communities before they proceed.

The government has previously defended its right to authorize drilling anywhere in the country and said it is mindful of environmental considerations, such as protecting animals and plants, in the two national parks.

“There are lake-shore communities, especially in Virunga, that are very dependent on fishing and on the park’s integrity,” said Pete Jones of environmental advocacy group Global Witness.

“That really needs to be taken into account and doesn’t seem to be part of the debate that’s happening, which is a shame,” he told Reuters.

Conservation group World Wildlife Fund (WWF) also said it is concerned about the impact of oil drilling on at least 50,000 people who benefit from the fishing industry in Virunga, and tens of thousands more who farm on the outskirts of the parks.

“The risks of pollution are clear and present. The fishing industry would suffer considerably if it gets to that point,” said Juan Seve, WWF country director in Congo.

The oil industry would be unlikely to create local jobs since specialists would be brought in from abroad, he added.

The U.N.’s cultural agency UNESCO has previously said that oil exploration should not be conducted at world heritage sites.
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The U.N. envoy for Libya said Monday he fears the recent agreement to resume oil production in the conflict-torn country will not hold unless two issues are speedily tackled — distribution of wealth and “endemic plundering of resources.”

Ghassan Salame told the Security Council in a video briefing that unless the issues are addressed it will also “be difficult to advance the political process.”

Libya descended into chaos following the 2011 uprising that toppled longtime dictator Moammar Gadhafi, who was later killed. The country is now split between rival governments in the east and west, each supported by an array of militias.

The Security Council has backed the holding of presidential and parliamentary elections in Libya this year but Salame warned that “without the right conditions, it would be unwise to conduct elections.”

He said national political consultations over the last 14 weeks that included more than 75 meetings in Libya and abroad and over 7,000 participants showed that “the Libyan people want clear and effective leadership by legitimate bodies, formed through elections.”

“However, a handful of people defy this popular desire,” Salame said. “The few who benefit from the status quo will, if left unchecked, do whatever they can to hinder elections. Unfortunately, they can do much, especially as they hold crucial, and too often lucrative, official positions.”

“Without clear and strong messaging to those who would attempt to stall or disrupt these elections, the conditions will not be met,” he warned.

In a statement after closed consultations following the open briefing, the Security Council “underlined support for the U.N.-facilitated, Libyan-owned political process, including the preparations for credible and inclusive elections.”

But the U.N.’s most powerful body made no mention of “spoilers” trying to thwart the elections.

The Security Council did welcome the National Oil Corp.’s announcement last Wednesday that it was in charge of the oil ports and would resume exports. The firm is controlled by the U.N.-backed government in Tripoli, which is in the west.

The self-styled Libyan National Army allied with the east’s interim government and led by Field Marshal Khalifa Hifter seized the ports earlier this year from another militia led by Ibrahim Jadhran, a rebel commander opposed to Hifter who took part in the 2011 uprising that toppled Gadhafi.

The seizure prompted the National Oil Corp., with international support, to issue a “force majeure” to halt exports, which are Libya’s main source of income.

The LNA said it agreed to return the ports for a commitment by the Tripoli-based government in the west to investigate allegations that oil and gas revenues had been used to fund terrorist organizations.

The Security Council condemned attacks by Jadhran’s militia against the country’s oil infrastructure and said it now expects the National Oil Corp. “to continue its work unimpeded.”

Salame told council members the U.N. “will redouble its efforts to push for economic reforms, as the very stability and unity of the country are at stake.”

Libya is “in decline,” he said. “The crisis in the oil crescent gave us a glimpse of what is in store if tangible progress is not made now — economic collapse, the breakdown of public services, and more frequent and intense outbreaks of violence.”

“In a country where terrorists lurk, where criminals are waiting to traffic migrants, where foreign mercenaries are increasing in number, where the oil industry hangs in the balance, this should be of concern to all,” Salame said. 

He urged Libya’s rival leaders to stand by their commitment at a May 29 international meeting in Paris “to engage constructively to enable elections to take place by the end of the year.”
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China is saddling poor nations with unsustainable debt through large-scale infrastructure projects that are not economically viable, the head of the U.S. Overseas Private Investment Corporation (OPIC) said on Monday.

The criticism of Beijing — targeted by President Donald Trump in a trade war that has sent ripples through economies around the world — comes as Washington seeks to ramp up development finance in the face of China’s global ambitions.

Unveiled in 2013, President Xi Jinping’s “Belt and Road” initiative aims to build an infrastructure network connecting China by land and sea to Southeast Asia, Central Asia, the Middle East, Europe and Africa.

China has pledged $126 billion for the plan, which has been praised by its supporters as a source of vital financing for infrastructure-starved partners in the developing world.

But in an interview with Reuters in Johannesburg, OPIC CEO Ray Washburne warned that the Chinese strategy created a debt trap for many poor nations.

“Just look at any project in these countries and they’re overbuilding the size,” he said. “We try to have countries realize that they’re indebting themselves to the Chinese.”

Washburne is not the first to warn of growing debt linked to Chinese infrastructure projects.

International Monetary Fund Managing Director Christine Lagarde in April cautioned China’s Belt and Road partners against considering the financing as “a free lunch.”

Sri Lanka formally handed over commercial activities in its main southern port in the town of Hambantota to a Chinese company in December as part of a plan to convert $6 billion of loans that Sri Lanka owes China into equity.

U.S. officials have warned that a strategic port in the tiny Horn of Africa nation of Djibouti could be next, a prospect the government there has denied.

Washburne also voiced concern over a $360 million expansion of the airport in Zambia’s capital Lusaka currently being carried out with financing from the Exim Bank of China.

“The local economy isn’t benefiting from that. It’s a much too large airport. They’ll have too much debt on it. At some point, someone’s got to pay. Pay or the Chinese take control,” he said.

Keeping pace

Lawmakers in the United States are advancing a new law — the BUILD Act – through Congress that Washburne says should bolster private U.S. investment in developing nations by doubling OPIC’s access to U.S. Treasury credit to $60 billion.

About a quarter of the active portfolio of OPIC, a government agency that helps U.S. businesses invest in emerging markets, is currently focused on Africa and it typically invests around $1 billion annually on the continent.

“With the right quality projects, it could double here,” Washburne said, adding that many investments would focus on the kinds of infrastructure projects Chinese firms are currently dominating.

“The Chinese are in with ports and railroads and highways, things that we need to be in as a competitor.”

OPIC this month launched an Africa-focused initiative that will earmark more than $1 billion over the next three years for projects supporting transportation, information and communications technology and value chains.

“Instead of giving them a fish, we want to teach them how to fish,” Washburne said. “They’ll have to stand on their own two feet. So we’re not in making loans or doing projects that don’t make economic sense.”
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China’s economic growth slowed in the quarter ending in June, adding to challenges for Beijing amid a mounting tariff battle with Washington.

The world’s second-largest economy expanded by 6.7 percent, down from the previous quarter’s 6.8 percent, the government reported Monday.

Even before the dispute with Washington erupted, forecasters expected growth to cool after Beijing started tightening controls on bank lending last year to rein in surging debt.

Economic activity is expected to decline further as global demand for Chinese exports weakens and lending controls weigh on construction and investment, major contributors to growth.

Beijing has responded to previous downturns by flooding the state-dominated economy with credit. But that has swelled debt so high that global rating agencies have cut China’s government credit rating.

Chinese leaders are in the midst of a marathon effort to encourage self-sustaining growth driven by domestic consumption and reduce reliance on exports and investment. 

Consumer spending is rising more slowly than planned, leaving economic growth dependent on debt-supported investment.
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U.S. President Donald Trump advised British Prime Minister Theresa May to sue the European Union instead of negotiating with the bloc, as part of her Brexit strategy.

 

“He told me I should sue the EU,” May told BBC television. “Sue the EU. Not go into negotiations — sue them.”

Her revelation about how Trump advised her ended several days of speculation about what advice the U.S. leader had offered the prime minister.

Trump said last week in an interview with The Sun newspaper that he had given May advice, but she did not follow it. The president told the newspaper ahead of his meeting with May that she “didn’t listen” to him.

“I would have done it much differently. I actually told Theresa May how to do it but she didn’t agree, she didn’t listen to me. She wanted to go a different route,” Trump said.

Trump did not reveal what advice he offered May in a press conference with her Friday. Instead, he said, “I think she found it too brutal.”

He added, “I could fully understand why she thought it was tough. And maybe someday she’ll do that. If they don’t make the right deal, she may do what I suggested, but it’s not an easy thing.”

May also told the BBC that the president had advised her not to walk away from the negotiations “because then you’re stuck.”

For the past few months, British politics have been obscured by squabbling, irritability and bravado about how, when and on what terms Britain will exit the European Union, and what the country’s relationship will be with its largest trading partner after Brexit.

Britons narrowly voted to leave the EU in a referendum in June 2016.

 

 
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U.S. President Donald Trump advised British Prime Minister Theresa May to sue the European Union instead of negotiating with the bloc, as part of her Brexit strategy.

 

“He told me I should sue the EU,” May told BBC television. “Sue the EU. Not go into negotiations — sue them.”

Her revelation about how Trump advised her ended several days of speculation about what advice the U.S. leader had offered the prime minister.

Trump said last week in an interview with The Sun newspaper that he had given May advice, but she did not follow it. The president told the newspaper ahead of his meeting with May that she “didn’t listen” to him.

“I would have done it much differently. I actually told Theresa May how to do it but she didn’t agree, she didn’t listen to me. She wanted to go a different route,” Trump said.

Trump did not reveal what advice he offered May in a press conference with her Friday. Instead, he said, “I think she found it too brutal.”

He added, “I could fully understand why she thought it was tough. And maybe someday she’ll do that. If they don’t make the right deal, she may do what I suggested, but it’s not an easy thing.”

May also told the BBC that the president had advised her not to walk away from the negotiations “because then you’re stuck.”

For the past few months, British politics have been obscured by squabbling, irritability and bravado about how, when and on what terms Britain will exit the European Union, and what the country’s relationship will be with its largest trading partner after Brexit.

Britons narrowly voted to leave the EU in a referendum in June 2016.

 

 
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Liang Liang is feeling a lot of stress lately. He owns an import wholesale business in Los Angeles.

“I have been watching the news every day — when will the tariffs be put in place? When are my goods arriving; it’s a fight against time. I’m trying to order all my products for the rest of the year,” he said. His goods, such as toys and T-shirts, come from China through the largest port complex in the United States, the twin ports of Los Angeles and Long Beach.

He expects a 10 to 20 percent increase in shipping costs because of the trade war between the United States and China.

Shipping costs likely to rise

China is the largest trading partner for both ports. As tariffs from both countries increase the cost of goods, manufacturers and retailers may order fewer products, which will cause a decrease in trade volume between the two countries, according to Stephen Cheung, president of the World Trade Center Los Angeles.

“Once that happens, you’re going to see an increase in the rates for shipping because then you don’t have the volume to justify the goods going back and forth,” he said.

Cheung explained that shipping costs will affect all goods between the U.S. and China, not just the ones on the list to be taxed. He said the trade and logistics sector, which includes the ports and the supply chain of trucks and warehouses, will be the first to feel the effects of the trade war.

Liang said he will absorb the cost and live with smaller profits, up to a point.

“If the tariffs increase by another 20 percent, we’ll have to raise our prices,” he said.

“The consumers are going to feel it in their wallets very quickly,” Cheung said.

​Supply chain may be less reliable

The U.S. as a manufacturing center depends on parts from China, but that supply may become less reliable as the trade war continues. Cheung said there may be uncertainty about whether the products will be produced or “whether they will be in the same price, so this potentially can have a huge aspect in terms of our exporting capability not only to China but to the rest of the world, Cheung said. “And there are a lot of jobs that are tied to this,” he added.

Officials at the ports of Long Beach and Los Angeles said it is too early to tell the impact of the trade tariffs.

“We’ll have to wait and see how various businesses restructure their supply networks and adjust to the tariff environment,” said Duane Kenagy, the Port of Long Beach’s interim deputy executive director.

He said so far, the port has seen record container volumes this year, but there is concern.

“The impacts of a sustained long-term trade war could be devastating to both economies,” Kenagy said.

Political theater?

Liang said he has hope, saying he thinks the trade war is actually political theater for the U.S. and China.

“China also has its position on trade. The Chinese government also has to be accountable to the 1.4 billion people of China. I think China and the U.S. will disagree over trade on the surface. (For Trump), it’s a show for the November midterm elections, so he can be accountable to the electorate,” Liang said.

Washington has been critical of China’s unfair trade practices and concerned with a trade imbalance. The U.S. imported more than $500 billion of Chinese goods last year compared to $130 billion of U.S. products exported to China.

These concerns and issues of American intellectual property are reasons the Trump administration announced tariffs on an additional $200 billion in Chinese imports.

“If you’re utilizing this as a tactic, that’s fine. What are the steps that you’re going to use to mitigate some of these damages that will be happening to the local community? These are huge issues that have not been addressed yet,” Cheung said.
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As the Trump administration announces tariffs on an additional $200 billion in Chinese imports, the largest port complex in the United States is bracing for its impact. For the twin ports of Los Angeles and Long Beach, China is the largest trader, and what happens at these ports can ripple through the rest of the U.S. economy. VOA’s Elizabeth Lee reports.
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