Black Sea Grain Deal Focus Continues; WOTUS Rewrite Moving Forward

Are some House Dems going around House Ag ranking member Scott?

Donald Trump has announced that he received a “target letter” from Special Counsel Jack Smith, indicating that he’s a criminal target in the ongoing investigation concerning allegations of attempts to undermine the 2020 election.

Extreme heat is bearing down on the Northern Hemisphere. Parts of Europe and the southern United States are expected to experience record-breaking highs, with consequences for human health and economic activity. As China faces sweltering heat, John Kerry, the U.S. climate envoy, met with the country’s premier to urge cooperation in fighting climate change — perspective on this in the China section.

U.S. retail sales rise less than expected. In June, retail sales in the United States experienced a modest growth of 0.2% on a month-over-month basis. This figure represents the smallest increase seen in the past three months and falls short of predictions, which anticipated a 0.5% rise. Despite the overall modest increase, certain sectors saw a boost in their receipts. These include motor vehicle & parts dealers, furniture stores, electronics & appliance stores, and clothing & clothing accessory stores.

More Americans are getting rejected for loans, while fewer are applying for any kind of credit, as banks tighten credit conditions amid rising borrowing costs. The rejection rate for U.S. credit applicants climbed to 21.8% in the twelve months through June, a Federal Reserve survey showed, marking the highest level since June 2018. Details below.

Goldman drops recession odds. The likelihood of a U.S. recession soon appears to be falling, according to Goldman Sachs. The investment bank cut the probability of an economic contraction in the next 12 months to 20% from 25%.

U.S. banking regulators are planning to unveil an extensive reformation of capital rules next week.

U.S. companies have obtained some degree of relief from a global tax deal via new rules brokered by the Treasury Department.

Russia’s decision to withdraw from the Black Sea grain shipping agreement has sparked concerns regarding global food supply chains. The arrangement, which was initiated a year ago after Russia’s invasion of Ukraine, played a crucial role in stabilizing the flow of key commodities such as wheat, corn, and sunflower oil. Ukrainian exporters were allowed to recommence shipments from three ports near Odesa. The World Food Program utilized this agreement to procure more than 80% of its wheat from Ukraine for this year and chartered ships transporting grains to crisis-ridden countries like Sudan, Somalia, and Afghanistan. However, Russia is now discontinuing the maritime route used for grain shipment and no longer providing safety assurances for vessels in the northwestern Black Sea. Since June 27, all operations in the shipping route have almost come to a halt with no new ships authorized to operate, as per U.N. reports. More on this in Russia & Ukraine section.

Ford is slashing prices for its electric F-150 Lightning pickup up to nearly 17%, amid swelling inventories and softening demand. Meanwhile, Tesla is accelerating its expansion in European electric-vehicle supply chains. More in Energy section.

EPA is facing a regulatory countdown for amendments to the “Revised Definition of ‘Waters of the United States’” (WOTUS) rule. EPA has now submitted a package of amendments to the Office of Management and Budget (OMB) for their review. Details in Energy section.

House Democrats are contemplating how to assertively advance their priorities on the upcoming farm bill. Some outside observers are wondering if this is a Democratic member end-around House Ag ranking member David Scott. More in Policy section.

The Biden administration is reportedly planning to restrict new U.S. investments in China, specifically targeting advanced sectors like semiconductors, quantum computing, and artificial intelligence.

Treasury Secretary Janet Yellen acknowledged that China’s current economic slowdown could negatively impact global economies, including the United States. More in China section.

Japan imposed a temporary ban on poultry imports from the Brazilian state of Santa Catarina due to concerns over highly pathogenic avian influenza (HPAI), found in a backyard chicken.

EU again seeks WTO dispute settlement panel on U.S. olive import duties.

A group of small refiners intends to sue the Environmental Protection Agency (EPA) over its refusal to grant small refinery exemptions (SREs). These SREs pertain to the obligations that the refiners have under the Renewable Fuel Standard (RFS).

China tells U.S. climate envoy to be ‘pragmatic and positive’ towards China. But this from Trivium China: “The U.S. won’t meet its climate financing commitments because the U.S. Congress won’t approve the funds. And the U.S. may very well pull out of Paris (again) if a Republican becomes president in 2025. Politics in the U.S. won’t allow for better relations with China. Chinese leaders know this, and so are preparing for long-term struggle with the U.S., no matter how many nice sentiments Kerry and other U.S. officials express.”

The Wisconsin Dairy Alliance has spearheaded a lawsuit arguing that the state has overstepped the boundaries set by the U.S. Clean Water Act. More in Livestock section.

NYT: Trump and allies forge plans to increase presidential power in 2025. Details in Politics & Elections section.

Three key Democratic members of the Senate Environment and Public Works Committee, Tom Carper (Del.), Ben Cardin (Md.), and Debbie Stabenow (Mich.), will be retiring in 18 months leading to speculation on how their successors might influence future legislation. More in Congress section.

Equities today: Asian and European stock markets were mixed in quieter overnight trading. U.S. Dow opened around 20 points lower but then turned around, increasing over 200 points. In Asia, Japan +0.3%. Hong Kong -2.1%. China -0.4%. India +0.3%. In Europe, at midday, London +0.1%. Paris flat. Frankfurt -0.1%.

U.S. equities yesterday: All three major opened the week with advances, led by a rise in the Nasdaq. The Dow gained 76.32 points, 0.22%, at 34,585.35. The Nasdaq was up 131.25 points, 0.93%, at 14,244.95. The S&P 500 rose 17.37 points, 0.39%, at 4,522.79.

Bank of America posted better-than-expected quarterly results, sending its shares higher in premarket trading.

U.S. banking regulators are planning to unveil an extensive reformation of capital rules next week. The new draft will require large lenders to adhere to more rigorous standards for residential mortgages and certain business loans than currently set by international benchmarks. The intent is to curtail big banks’ competitive edge over smaller institutions. The Federal Reserve is pushing for equivalent treatment of comparable residential loans across banks of different sizes. However, the banking industry is likely to argue against the proposal, viewing it as an unnecessarily burdensome effort to exceed, or “gold plate,” standard global requirements.

Agriculture markets yesterday:

• Corn: December corn fell 7 3/4 cents to $5.06, after trading the highest level since June 30 earlier in the session.
• Soy complex: November soybeans rose 7 1/4 cents to $13.78, the highest close since Feb. 23. August soymeal rallied $10.6 to $434.4. August soyoil fell 29 points before settling at 62.57 cents.
• Wheat: December SRW wheat fell 7 cents to $6.73 3/4. December HRW lost 13 1/2 cents at $8.20. Prices closed near their session lows. December spring wheat futures fell 3 3/4 cents to $8.85 3/4.
• Cotton: December cotton rose 91 points to 82.13 cents and finished above the 100-day moving average.
• Cattle: August live cattle fell 5 cents to $180.125 today and nearer the session low after hitting another contract high early on. August feeder cattle gained $2.60 to $249.25, a fresh contract high close.
• Hogs: August lean hogs closed $1.425 lower at $94.775, nearer the session low. Expiring July futures rallied 37.5 cents to $102.35 before trading ceased.
  

Ag markets today: Corn, soybean and winter wheat futures traded higher overnight. As of 7:30 a.m. ET, corn futures were trading mostly 9 cents higher, soybeans were 10 to 12 cents higher, SRW wheat was 7 to 8 cents higher, HRW wheat was 4 to 5 cents higher and HRS wheat was near unchanged. Front-month crude oil futures were modestly firmer, while the U.S. dollar index was mildly weaker.

Market quotes of note:

• Goldman Sachs Group Inc. has a different message on yield curve inversion and recession: stop worrying about it. “We don’t share the widespread concern about yield curve inversion,” Jan Hatzius, the bank’s chief economist, wrote in a note Monday. Hatzius stands in opposition to most investors who point out that the curve inversion has an almost impeccable track record of foretelling economic downturns — according to Hatzius, as inflation cools, a “plausible path” is opened for the Fed to ease up on interest rates without triggering a recession.
  
• In its mid-year outlook, Scope Ratings has revised its 2023 global economic growth forecast up slightly to 2.9% from 2.6%, as announced in December 2022. However, the agency curbed its growth projection for 2024 to 3.0% from 3.3%. Positive growth elements have materialized, including resilient demand and employment, the end of China’s zero-Covid-19 policies, and a less severe winter energy crisis in Europe. These are partially balanced by pressures from inflation, hikes in central bank rate, and adjustments in the real-estate market. Meanwhile, the agency has increased its growth expectations for the U.S. to 1.9% from 1.1%, for China to 5.0% from 4.3%, for the European Union to 1.0% from 0.7%, and for the U.K., it now forecasts stagnation rather than a contraction of 0.6%.
  
• Confidence among U.K. business finance chiefs has declined due to inflation and anticipated interest rate hikes, as revealed by a survey. Deloitte’s latest quarterly CFO Survey, which included responses from 69 Chief Financial Officers, showed that CFOs’ confidence declined from a net positive 25% in the first quarter to a minus reading of -10% in the second quarter. Tight monetary policy has surpassed geopolitical issues and energy prices as the primary concern among these financial executives. Deloitte’s chief economist, Ian Stewart, pointed out that businesses have navigated through major difficulties in recent years, such as Brexit, the Covid-19 pandemic, and supply shortages. However, the residual effects of these challenges, particularly inflation and high interest rates, are now at the forefront.
  
• The price of carbon permits is set to tumble as Europe weans itself off dirty fuels, hedge fund manager Per Lekander — once one of the market’s biggest bulls — tells the Financial Times (link/paywall).
  

The most recent quarterly report released by the Federal Reserve shows a significant climb in loan application rejections. Over the past year until June, the rejection rate rose to 21.8%, which marks the greatest increase in five years. Additionally, the total number of credit applications fell to its lowest level since October 2020. When compared to the Federal Reserve’s February report, it demonstrates an increase from the then-rejection rate of 17.3%.

Particularly noticeable was the surge in auto loan rejections, which are now at 14.2%, a large leap from the earlier 9.1% rate. This is significant as it’s the first time since the survey’s initiation in 2013 that the rejection rate has outpaced the application rate.

Evidence from this report suggests that rising interest rates and stricter credit standards by lenders are adversely impacting potential borrowers’ ability to secure credit. This suggests potential challenges for consumer spending and the economy if this trend continues.

U.S. companies have obtained some degree of relief from a global tax deal via new rules brokered by the Treasury Department. These rules extend the timeline for companies, allowing them until 2026 before other nations can begin levying new taxes on corporations considered as having underpaid taxes in the U.S. This revised agreement ensures increased certainty for businesses. However, the Biden administration is grappling with aligning domestic tax regulations with the stipulations of the agreement to avert potential tax losses.

Ford announced a significant price reduction for its electric F-150 Lightning truck, slashing almost $10,000 off its original price, bringing it down to $49,995. The company attributes this to lower costs for materials and increased factory productivity. This development hints at a softening market for electric vehicles (EVs) due to increased inventory and intensifying price competition. Furthermore, this decision comes in the wake of Tesla’s initiation of its Cybertruck production and its plans to escalate EV production. In line with these plans, Tesla recently sought approval to double its Berlin factory’s size with the aim of producing up to one million electric cars annually.

Market perspectives:

• Outside markets: The U.S. dollar index was slightly weaker, with the euro and British pound slightly higher against the greenback. The yield on the 10-year U.S. Treasury note was lower ahead of economic reports, trading around 3.76%, with a mostly lower tone in global government bond yields. Crude oil futures were in positive territory, with U.S. crude around $74.40 per barrel and Brent around $78.75 per barrel. Gold and silver futures were higher, with gold around $1,966 per troy ounce and silver around $25.10 per troy ounce.

• Gold edged higher as Treasury yields fell, with investors weighing the impact of a sluggish Chinese recovery on global growth and signs the US Federal Reserve is nearing the end of its monetary-tightening cycle.

• Russia’s seaborne crude flows sank to a six-month low in the latest four-week period as Moscow finally appears to be making good on its pledge to cut supply. Shipments dropped to 3.1 million barrels a day, according to vessel-tracking data. Link for details.

• Shale drilling in the U.S. is experiencing a rapid decline in rig utilization, reminiscent of the Covid-19 pandemic’s peak phase, despite favorable oil prices, the WSJ reports (link). The situation reveals a stark division between private and public operators. Private companies accelerated their rig installations as the pandemic subsided, but have exhausted many of their prime wells, necessitating a slowdown. On the other hand, the larger public enterprises continue unchanged, benefiting from extensive stocks of premier, untapped wells. This decline in drilling activity suggests a moderate growth forecast for U.S. crude oil production for the remainder of the year.

• MFP impacted grain marketing. The $23 billion in trade-war payments, issued through the Market Facilitation Program (MFP), gave farmers a cash cushion that allowed some to look for better corn, wheat, sorghum, and soybean prices rather than sell immediately after harvest. Link to FarmDoc item.

• Ag trade: Iran tendered to buy up to 180,000 MT of corn that can be sourced from Brazil, Europe, the Black Sea region, Russia or Ukraine. Japan is seeking 106,366 MT of milling wheat in its weekly tender.

• India has received average monsoon rains since the start of the season on June 1, despite concerns that an El Niño weather pattern could lead to lower rainfall this year. While average monsoon rains are ordinarily good for Indian farmers, uneven distribution this year has created new worries.

• NWS weather outlook: Lengthy & dangerous heat wave to continue in the Southwest, South Central U.S., and South Florida... ...Flash flooding & severe weather in portions of the Nation’s Heartland and the East, headlined by a Moderate Risk for Excessive Rainfall in the parts of the Lower Ohio & Tennessee Valleys... ...Tropical Storm Calvin weakening on approach to Hawaii, but heavy rains and tropical storm force wind gusts still expected... ...Canadian wildfires/smoke responsible for Air Quality alerts over parts of the Northern High Plains, Midwest, Great Lakes, and Northeast.

Items in Pro Farmer’s First Thing Today include:

• Grains firmer overnight
• Cordonnier keeps U.S. yields unchanged
• Corn, soybean and spring wheat CCI ratings improve
• Firm raises Russian grain production, export forecasts
• Packer beef margins turn red
• Pork margins in the black

— The U.S. State Department condemned Russia’s decision to suspend its participation in the Black Sea Grain Initiative, accusing the Russian government of “continued weaponization of food,” which adversely impacts millions of vulnerable people globally. Russia justified its withdrawal, arguing that measures to strengthen its agricultural and fertilizer exports had not been implemented. However, the State Department countered this claim, stating that the United Nations has facilitated record exports of Russian food, in collaboration with the private sector, the U.S., EU, and U.K., to address Russia’s concerns. The State Dept. clarified that there are no G7 sanctions on Russian food and fertilizer exports. Link for data.

The statement further criticized Russia for not contributing to the World Food Program and primarily exporting to higher-income countries rather than poorer ones. The U.S. is urging Russia to reverse its decision, return to negotiations, and fully execute the grain deal.

In remarks to reporters, State Dept. Secretary Antony Blinken said the U.S. would look at whether there are “other options” to move Ukrainian agricultural products onto the world market. But he cautioned that if Russia is indicating that no agricultural products can exit Ukraine, “it will likely have a profound chilling effect on the ability to pursue them as other countries, companies, shippers, et cetera will be very concerned about what happens to their ships and to their personnel if Russia is opposing the… any export of food products from Ukraine.” He also cautioned that it is “hard to replace what’s now being lost as a result of Russia weaponizing food.”

John Kirby, spokesperson for the National Security Council, also criticized Russia’s recent military actions, asserting that these could effectively lead to a blockade of Ukrainian ports, thus impeding the transport of grain to various global markets. Kirby warned that this move would drastically affect individuals worldwide and emphasized Russia’s sole responsibility for the consequences of their military aggression. According to Kirby, despite the geopolitical tensions, the U.S. is committed to facilitating the export of Russian and Ukrainian grain. This is aimed not only at ensuring that the U.S. sanctions do not impact Russian food and fertilizer, contrary to what Russian propaganda might suggest, but also to accommodate markets that are desperately in need of grain supplies. Among other measures, Kirby confirmed the U.S.’ continued support for Ukraine’s efforts to explore alternate routes for grain exports, should their primary channels be hindered by Russia’s actions.

U.S. national intelligence officer and Russia expert Fiona Hill said: “This is very deliberate on Putin’s part,” she said Monday, during a Council on Foreign Relations event on Ukraine. “He is weaponizing food, no question.”

Bottom line: Analysts think the deal could still be renewed, as Russia has threatened to exit the agreement many times in the past. Russia said it would consider rejoining the pact if it saw “concrete results” on its demands.

— Ukraine port damaged. Ukraine said its infrastructure at the Black Sea port of Odesa, a significant hub for Ukrainian agricultural exports under the Black Sea grain deal, has been damaged due to missile and drone strikes from Russia in the southern and eastern parts of the country. Ukrainian authorities have reportedly shot down six Kalibr missiles and 31 out of 36 drones involved in these strikes. Andriy Yermak, the head of Ukraine’s presidential staff, said that Moscow was endangering “the lives of 400 million people in various countries that depend on Ukrainian food exports.” The attacks on Ukraine’s ports followed a pledge by Russia to retaliate for blasts on its bridge to the occupied Crimean Peninsula, knocked out by what Moscow said were strikes by Ukrainian seaborne drones.

— USAID will provide an additional $250 million in agriculture funding for Ukraine, the agency says on its website. The agency’s head, Samantha Power, was in Odesa, Ukraine, today to announce the new funding. This brings US government’s total investment in the AGRI-Ukraine initiative to $350 million. AGRI-Ukraine has reached more than 30% of Ukraine’s farmers with seeds, fertilizer, agricultural and financial services, storage, according to the agency.

— The Emergency Relief Program (ERP) is seeing its Phase 2 payments increase, with total disbursements reaching $2.38 million for 1,377 beneficiaries so far. A significant portion of this amount, $2.03 million, has been allocated for revenues for other crops, while $0.93 million has been earmarked for special and high-value crops. The total amount given out under the ERP, combining both Phase 1 and Phase 2, amounts to $7.44 billion.

— EPA is facing a regulatory countdown for amendments to the “Revised Definition of ‘Waters of the United States’” (WOTUS) rule. EPA has now submitted a package of amendments to the Office of Management and Budget (OMB) for their review, although the specifics of these changes have not been disclosed. This action follows a restriction placed on EPA’s power to regulate wetlands by the U.S. Supreme Court.

Additionally, the EPA has won a reprieve to postpone its appeal against an injunction that stopped the enforcement of the WOTUS rule in 24 states, as guided by a verdict from the Eight Circuit Court of Appeals. The rule’s enforcement has also been halted in Texas and Idaho. Through a court filing, the EPA has proposed that their amended rule could focus the issues of the case more effectively, enabling those involved in the lawsuit to respond to the revised rule without engaging in unwarranted litigation.

EPA is expected to release the new rule by Sept. 1, with a deadline from the court to offer a progress report on the matter by Sept. 15.

— House Democrats are contemplating how to assertively advance their priorities on the upcoming farm bill. Such issues include food stamp regulations, climate change measures, and other key matters. Rep. Bennie Thompson (D-Miss.), Chair of the House Agriculture and Nutrition Task Force, advocates for a comprehensive and cooperative approach to the bill that sets agricultural policy. He mentioned that Democrats would not support a punitive farm bill that overlooks underserved communities.

Rep. Jim McGovern (D-Mass.) echoed Thompson’s urgency for Democrats to be proactive and uncompromising in their stances. The task force aims to deliver recommendations by the August recess, bracing for Republicans’ potential alterations to a significant nutrition program and their stance against climate change initiatives.

Perspective: A veteran farm bill watcher writes: “This looks like [House Minority Leader] Jeffries is operating a shadow Ag Committee right under the nose of Ranking Member Scott. How does this not completely undermine David Scott? A separate Democrat task force on the farm bill? What’s the point of the committee?”

— The Biden administration is reportedly planning to restrict new U.S. investments in China, specifically targeting advanced sectors like semiconductors, quantum computing, and artificial intelligence. However, this initiative is likely not to be enforced until next year, due to bureaucratic procedures. U.S. officials are planning to finalize the proposal for this program, which has faced considerable delays, by the end of August. In an interview with Bloomberg TV, Treasury Secretary Janet Yellen mentioned that these investment restrictions will have a narrow focus.

— Treasury Secretary Janet Yellen acknowledged that China’s current economic slowdown could negatively impact global economies, including the United States. She stressed this while expressing her concerns during a Bloomberg Television interview. The slowdown in China’s economy, she explained, could especially affect countries that rely on robust Chinese growth to bolster their own economies, mostly countries in Asia. Nevertheless, Yellen does not anticipate a U.S. recession amid these developments. She observes that despite slower growth, the U.S. labor market remains robust, highlighting resilience in the face of potential fallout from China’s slowdown.

Addressing the issue of inflation, Yellen asserted that the U.S. economy is on a “good path” to manage inflation without significantly undermining the labor market. These statements reflect her efforts to de-escalate tensions with China during her tenure.

— China urges cotton growers to mitigate drought impacts. China’s ag ministry urged cotton growers to irrigate and fertilize more to cope with scorching temperatures that have hit major growing areas during the critical flowering period. Recent temps broke records in parts of Xinjiang, which produces about 90% of China’s cotton. Acreage in the region already declined around 8% this year due partly to cold, rainy weather during spring, a China-based trader told Reuters.

— China’s pork imports slowed a little in June but still well ahead of year-ago. China imported 130,000 MT of pork in June. While that was down 7.1% from May, it was up 4.5% from June 2022. Through the first half of 2023, China imported 940,000 MT of pork, up 16.5% from the same period last year.

— Japan imposed a temporary ban on poultry imports from the Brazilian state of Santa Catarina due to concerns over highly pathogenic avian influenza (HPAI), found in a backyard chicken, as reported by Brazil’s meat lobby, ABPA. This follows a similar suspension previously applied to Espirto Santo after an HPAI outbreak on a non-commercial farm. In response, Brazil’s Agri Minister, Carlos Favaro, plans to negotiate poultry import requirements with Japanese authorities during an upcoming visit. The occurrence in Santa Catarina is only a minor blow to Brazil’s overall exports as markets there contribute a mere 3% to the country’s total chicken exports, despite it being Brazil’s second-largest meat processor.

— EU again seeks WTO dispute settlement panel on U.S. olive import duties. The European Union (EU) has made a request to the World Trade Organization (WTO) for the initiation of a dispute settlement panel in relation to the U.S. import duties on olive imports. The EU’s contention is that the U.S. has not implemented provisions from a previous WTO dispute settlement ruling in the matter despite agreeing to do so and has not taken the issue to the currently non-functional appeals body. The request from the EU comes after discussions held in Geneva on May 24 failed to resolve the issue. The dispute revolves around the U.S. imposing duties on ripe olives imported from Spain, an action the EU argues does not align with the initial WTO ruling.

The dispute panel, once set up, will have 90 days to release a final ruling. If the U.S. fails to comply with the ruling, or opts not to appeal the decision, the EU could potentially take retaliatory steps.

The U.S. argues that it achieved compliance with the initial WTO ruling by revising the duties it imposes on olives shipped from Spain. The EU’s potential retaliatory measures, depending on the products it targets, could be significant if the dispute escalates further.

— USTR extends comment period on USMCA Competitiveness Committee efforts. The U.S. Trade Representative (USTR) Office has extended the deadline for public comments on the work scope of the North American Competitiveness Committee until Aug. 17. This committee, established under the U.S.-Mexico-Canada Agreement (USMCA), concentrates on workforce development and creating strategies for collaboration during trade-related emergencies. Its goals include forming a joint understanding of the essential infrastructure priorities of North America. The USTR began seeking comments on these topics and other potential areas of work in June. The original cutoff was July 17, but the USTR has now added an additional 30 days for comment submissions. Link for details.

— World Bank President Ajay Banga unveiled plans to stretch the bank’s balance sheet and help countries tackle climate change, but said a capital increase would still eventually be needed. Banga announced the proposals to “make our balance sheet work harder” during the G20 finance chiefs meeting in India.

— Small refiners to challenge EPA denials of SREs. A group of small refiners intends to sue the Environmental Protection Agency (EPA) over its refusal to grant small refinery exemptions (SREs). These SREs pertain to the obligations that the refiners have under the Renewable Fuel Standard (RFS). Ashimi Patel, from Par Pacific, a company whose SRE request was rejected, has criticized the EPA’s decision as being unfounded and unlawful, according to Reuters. The firm said financial reports reveal the significant financial obligations that these refineries face in relation to Renewable Identification Numbers (RINs) and environmental credits. Par Pacific reported such obligations totaling $347 million at the end of Q1, while CVR Energy has disclosed an outstanding liability of $582 million.

Background: On July 14, EPA announced that it had rejected 26 SREs from 15 refiners, asserting that they were not faced with excessive harm in fulfilling their obligations. Furthermore, the Biden administration has not approved any SREs since they came into power.

— China tells U.S. climate envoy to be ‘pragmatic and positive’ towards China. U.S. climate envoy John Kerry has been advised by China’s foreign policy chief Wang Yi to approach Sino/U.S. relations “pragmatically and positively,” especially in their joint efforts to combat climate change. This guidance came during Kerry’s visit to China amidst extreme heatwaves that both nations are currently experiencing.

Kerry’s visit signals a possible de-escalation in tension between the two countries; Wang expressed China’s readiness for enhanced dialogue with the United States and their eagerness to address global climate change together. Importantly, Wang noted that the climate change collaboration between the two countries has significant future potential, but it could not be detached from the broader Sino/U.S. relations.

Echoing these sentiments, Kerry expressed the US’ commitment to the one-China policy and expressed hopefulness in strengthened cooperation on shared global challenges such as climate change. He further stated that President Joe Biden is committed to stabilizing U.S./China relations and looking for ways to improve the dynamism between the two countries.

During his visit, Kerry pushed China, the world’s largest carbon producer, to cut down on emissions, particularly from coal and methane. He applauded China’s renewable energy initiatives while pressing it to halt the construction of coal power plants.

China is aiming to become carbon neutral by 2060 and is increasing its solar and wind power programs to reach this objective. However, it also wants the U.S. to take on greater responsibilities regarding climate change and not inhibit China’s endeavors by imposing sanctions on its solar panels.

Perspective from Trivium China: “The U.S. won’t meet its climate financing commitments because the U.S. Congress won’t approve the funds. And the U.S. may very well pull out of Paris (again) if a Republican becomes president in 2025. Politics in the U.S. won’t allow for better relations with China. Chinese leaders know this, and so are preparing for long-term struggle with the U.S., no matter how many nice sentiments Kerry and other U.S. officials express.”

— Tesla is ramping up its efforts to expand its presence in Europe’s electric vehicle (EV) supply chains. The automaker is seeking approval to double the size of its Berlin factory, which has been functional for just 15 months. If approved, the expansion could make this site Germany’s biggest auto manufacturing facility, with the capacity to produce up to one million EVs annually. The demand for such growth highlights the swift expansion in EV supply chains, encompassing everything from mineral mining to assembly lines. Tesla’s Model Y electric SUV, produced at this Berlin plant which opened early last year, was Europe’s top-selling vehicle in the first quarter. Despite Tesla only holding 2.6% of the overall European car market in the first five months of this year, the planned factory expansion indicates its intent to rapidly scale up.

— Lawsuit attacks CAFO permits. The Wisconsin Dairy Alliance has spearheaded a lawsuit arguing that the state has overstepped the boundaries set by the U.S. Clean Water Act. The contention lies in the state’s requirement for larger dairy farms to acquire special permits, the objective of which is to prevent manure pollution in waterways. The Dairy Alliance maintains that the stipulations extend beyond the mandates of the federal act. Link for details.

— FDA has granted approval to an antibody created to protect infants from Respiratory Syncytial Virus (RSV), a virus known to attack the lungs and is the primary reason for hospitalizations in infants younger than one year old in the United States. Rather than being a vaccine, which stimulates the body to produce its own antibodies, this new development is an antibody, named Beyfortus, that is readily available to block the virus directly. Administered as a single injection, Beyfortus can prevent the virus from infecting healthy cells. According to data from the FDA, the clinical trials showed the therapy to be around 70% effective in reducing the likelihood of a baby requiring a doctor’s visit due to RSV. Additionally, the analysis recorded that Beyfortus was about 78% effective in preventing hospitalizations due to RSV, when compared to a placebo.

— NYT: Trump and allies forge plans to increase presidential power in 2025. Former President Donald Trump and his allies are planning a significant expansion of presidential authority over governmental operations should he return to the White House in 2025. Their plans include restructuring the executive branch to allow for greater presidential authority. While their intentions go beyond Trump’s recent comments about launching a criminal investigation into his political adversary, President Biden, they also indicate his aspiration to break from the post-Watergate standard, which keeps the Justice Department independent from White House political control. The larger objective is to rebalance power, giving the president more control over parts of the federal government currently maintained, by law or tradition, with some independence from political interference by the White House. This insight is based on a New York Times review (link) of Trump’s campaign policy proposals and interviews with individuals close to him.

Trump’s intentions also entail bringing independent agencies, such as the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) — which oversee television and internet rules, as well as enforce various anti-trust and consumer protection regulations against businesses — under direct presidential control.

— Republican presidential candidates seek to make the cut for the season’s first GOP primary debate. Twelve candidates have entered the race to date, though some are unlikely to meet criteria set by the Republican National Committee to participate. As of Monday, six candidates have met the fundraising and polling requirements needed to earn a spot on the Aug. 23 debate stage, including former President Donald Trump and Florida Gov. Ron DeSantis.

— Key retirements impact EPW panel. Three key Democratic members of the Senate Environment and Public Works Committee, Tom Carper (Del.), Ben Cardin (Md.), and Debbie Stabenow (Mich.), will be retiring in 18 months leading to speculation on how their successors might influence future legislation. Together, the three senators have nearly a century’s worth of combined House and Senate service, with contributions notable in energy and environment matters. Speculation suggests that their replacements might push for a more progressive focus on these issues. Carper is known for finding compromises on climate issues, while Cardin and Stabenow focused on environment issues crucial to their respective states.

Sen. Sheldon Whitehouse (D-R.I.), known for his determination on climate change issues, is in line to chair the committee. Progressives Jeff Merkley (D-Ore.) and Ed Markey (D-Mass.) may step into senior positions, potentially joining forces with Whitehouse for comprehensive environmental action. They were early Senate supporters of the Green New Deal, a comprehensive plan aimed at tackling climate change.

However, if the Republicans take control of the Senate, EPW’s current ranking member Shelley Moore Capito (R-W.Va.), who supports coal and natural gas interests, could possibly chair the committee.

For now, Carper, Cardin, and Stabenow have a significant to-do list, including the 2024 Water Resources Development Act, oversight of the bipartisan infrastructure law, the Democrats’ 2022 tax-health-climate law, protection of the Chesapeake Bay ecosystem, and the provision of safe drinking water access.

— A new report suggests that some Texas troopers at the U.S./Mexico border were instructed to push migrants back into the Rio Grande River and to refrain from giving them water, despite escalating temperatures. The source of the accusations is an email from a trooper-medic working at the border, who labeled the treatment of migrants as cruel. The trooper shared their dismay about being told to force migrants back into the river and denying them water while they were seeming to suffer from heat exhaustion. There were also calls for modifications to the policies of “Operation Lone Star,” a program introduced by Texas Governor Greg Abbott, which assigned thousands of personnel to manage the border. The governor responded by placing blame on President Biden for creating an unmanageable border situation, insisting that Texas had a constitutional duty to confront this crisis.

— Donald Trump has announced that he received a “target letter” from Special Counsel Jack Smith, indicating that he’s a criminal target in the ongoing investigation concerning allegations of attempts to undermine the 2020 election. In a post on Truth Social, Trump revealed this letter was received on Sunday night and it invites him to address the grand jury in Washington D.C. later this week. This development represents the most explicit indication thus far that Smith may be on the brink of pursuing an indictment against Trump, although the exact crimes under consideration remain undisclosed.

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