US, China trade war deepens; Esper on missiles in the Pacific; Taliban violence continues; WH escalates in Venezuela; And a bit more.

America sharply escalated its trade war with China on Monday when the U.S. Treasury formally labeled Beijing “a currency manipulator after the Chinese central bank let the yuan depreciate,” a move that “sparked a global fall in financial markets,” the Wall Street Journal and the New York Times report this morning. The label prompted Beijing to accuse the U.S. of “deliberately destroying the rules-based international order” on what turned out to be the worst single day for Wall Street all year. 

How big was the fall? “The back-and-forth between the world’s two largest economies sent global financial markets reeling, with the Dow Jones Industrial Average falling 767 points, or 2.9%, to 25,717.74 and the S&P 500 index falling 3% to 2,844.74,” the Journal writes. 

Worth noting: “The move will finally fulfill Mr. Trump’s campaign pledge to designate China a currency manipulator,” the Times reports. “As a presidential candidate, Mr. Trump was sharply critical of China’s currency practices and promised to label China a manipulator if elected.”

Background: “President Donald Trump rattled investors with last week’s surprise announcement of punitive tariffs on an additional $300 billion of Chinese imports, effective Sept. 1,” the Associated Press reports from Beijing. “That came after a round of talks on resolving their tariff war ended in Shanghai with no indication of a deal.”

Why this matters: “A weaker currency can make goods cheaper to sell abroad, allowing businesses and consumers to help offset the additional tariffs Mr. Trump plans to impose on Sept. 1,” the Times writes. “It also harms American exporters that are trying to compete with China.”

However, “Other emerging markets are also tanking,” one analyst told the Journal, adding, “If China is going to allow market forces to determine the exchange rate, this is what will happen with the yuan.” Other markets tanking “can lead to higher inflation, pinched household spending and disruptive shifts of money across borders,” the Times reports. “It could also hurt companies that depend on commodities, such as oil, that are priced in dollars, and it could spur wealthy Chinese to take their money out of the country.”

For Washington’s part, “The Fed did cut [interest] rates last week for the first time in a decade,” according to the Times, “a move taken in part to help the American economy weather the impact of Mr. Trump’s trade war. But Mr. Trump’s trade policies are counteracting some of the Fed’s efforts to stimulate the economy.” As well, “the Fed’s recent move to drop its benchmark rate comes as economies from Japan and Australia to Europe shift toward easing monetary policy, potentially by cutting their own interest rates.”

So far today, China has let its currency fall a bit further and accused the U.S. of “deliberately destroying the rules-based international order,” AP writes, citing the ruling Communist Party’s main newspaper, People’s Daily.

Otherwise this morning, Asian stocks “gained back ground through the day, and European equity indexes were mainly higher,” the Times reports. 

China also warned the U.S. today against plans to put INF-range missiles in “this part of the world,” AP reports separately this morning from Beijing. The warning official was Fu Cong, director of the foreign ministry’s Arms Control Department. 

“China will not stand idly by and be forced to take countermeasures should the U.S. deploy intermediate-range ground-based missiles this part of the world,” Fu said. South Korea, Japan and Australia should also “exercise prudence” in keeping U.S. missiles off their territory, he warned, saying those missiles would “not serve the national security interests of these countries.”

But don’t worry, U.S. Defense Secretary Mark Esper told reporters today on his travels to Tokyo, it will be “a few years” before those new U.S. missiles are even ready, AP writes. 

Furthermore, said Esper, “I have never asked anybody about the deployment of missiles in Asia… I never asked, they never declined. We are quite some ways away from that.”

One more warning from China: Don’t try to put a cap on our nuclear arsenal, Fu said, calling that change “unreasonable” and “unfair” given the size of Russia and America’s nuclear arsenals (290 deployed nuclear warheads for China versus 1,600 warheads for Russia and 1,750 for the United States).

Wanna better understand the core goals of “Great Power Competition” between the U.S. and China? Ali Wyne of RAND Corporation devoted an hour explaining and questioning those goals in our newest episode of Defense One Radio, which just posted this morning. 

Download that episode or catch up on our previous ones over at Apple Podcasts, Google Podcasts, Stitcher or Spotify.


From Defense One

How Dissidents Are Using Shortwave Radio to Broadcast News Into China // Patrick Tucker: Pro-democracy forces are locked in a cat-and-mouse game with the Chinese government, playing out on the airwaves, the internet and across the globe.

With China, Russia in Mind, Pentagon Adding Stealthy Cruise Missiles // Marcus Weisgerber: Lockheed Martin is building a new factory to accommodate the military’s demand.

Consider a National-Team Approach to the Next ICBM // Rick Berger: Boeing’s decision not to bid on the Air Force’s replacement program doesn’t have to be a disaster.

The American Exception // David Frum: The United States is not the only nation to suffer from white supremacism, but in America, it has proved uniquely deadly.

Iran Has Hundreds of Naval Mines. The US Has a Handful of Old Minesweepers // Robert Faturechi, Megan Rose and T. Christian Miller of ProPublica: The Navy’s minesweeping fleet may once again be called into action, but their sailors say the ships are too old and broken to do the job.

Welcome to this Tuesday edition of The D Brief from Ben Watson with Marcus Weisgerber. If you’re not a D Brief subscriber, sign up here. On this day in 1945, the U.S. dropped an atomic bomb on Hiroshima, Japan, immediately killing 80,000 people and wiping out 90 percent of the city. 


The U.S. and the Taliban could be on the brink of signing an agreement soon, according to Pakistan’s ambassador to Afghanistan, Zahid Nasrullah Khan. He told Voice of America today that the signing date could be as close as a week away — 13 August. The Pakistan embassy in Kabul then called VOA to say that might not be the signing date, but it’s a date Zahid saw in press reports. So stay tuned…
Meanwhile, the Taliban vow to work hard as hell to discourage Afghans from voting in next month’s “sham” election, Reuters reports from Kabul, where the presidential election is scheduled for September 28. 
“This election process is nothing more than a ploy to deceive the common people … for satisfying the ego of a limited number of sham politicians,” the Taliban announced in a statement today. 
About that vow of violence, the group warned Afghans “To prevent losses … from being incurred by our fellow compatriots, they must stay away from gatherings and rallies that could become potential targets.”
Said the office of Afghan President Ashraf Ghani: “They should show peace through their actions and not threaten people.”
Tweeted Zalmay Khalilzad, who is negotiating peace talks with the Taliban on the U.S. behalf, on Monday (emphasis added): “Building on excellent progress in Kabul last week, I’ve spent the last few days in Doha, focused on the remaining issues in completing a potential deal with the Taliban that would allow for a conditions-based troop withdrawal. We have made excellent progress… My team & Taliban representatives will continue to discuss technical details as well as steps and mechanisms required for a succesful [sic] implementation of the four-part agreement we’ve been working toward since my appointment. Agreement on these details is essential.”
Worth noting: “Despite the talks, there has been no let-up in violence,” Reuters writes. And that violence involved a “a bomb attack on a government vehicle in Kabul” just this morning. That attack killed two and wounded seven others. And on Monday, “Four people were killed and 25 wounded in a bomb blast in the western city of Herat.” ISIS claimed that attack. A bit more, here

Angry about planned U.S. and South Korea military exercises set to commence next week, North Korea fired what are believed to be two short-range ballistic missiles into the sea on Tuesday. AP: “North Korea’s fourth round of weapons launches in less than two weeks came amid a standstill in nuclear negotiations and after President Donald Trump repeatedly dismissed the significance of the country’s recent tests despite the threat the weapons pose to allies South Korea and Japan and to U.S. bases there. Experts say Trump’s downplaying of the North’s weapons display has allowed the country more room to advance its military capabilities as it attempts to build leverage ahead of negotiations, which could possibly resume sometime after the end of the allies’ drills later this month.” More here.
Despite the recent flurry in missile launches, North Korea still says it is committed to diplomacy, but that will have to wait until later this year. “But if Washington and Seoul disregard North Korea’s repeated warnings, ‘we will make them pay (a) heavy price,’ a North Korean foreign ministry spokesman said in a statement released through state news agency KCNA,” Reuters reports.
Meanwhile, the United Nations says that North Korea has used cyberattacks to net $2 billion. That money has been put toward Pyongyang’s missile program. The unpublished report, which was reviewed by news organizations, including Reuters and CBS, said North Korea “used cyberspace to launch increasingly sophisticated attacks to steal funds from financial institutions and cryptocurrency exchanges to generate income.”
CBS: “The expert panel that drafted the report said it investigated North Korea’s ‘widespread and increasingly sophisticated use of cyber means to illegally force the transfer of funds from financial institutions and cryptocurrency exchanges, launder stolen proceeds and generate income in evasion of financial sanctions.’”

The U.S. military just rebranded its anti-Iran naval coalition “in an effort to attract more participation,” Politico reported Monday. 
The old name, “Operation Sentinel,” is “falling by the wayside, according to a British official who was not authorized to discuss the matter on the record,” Politico writes. “The rebranding, I’ll be frank, is to make this as open to as many nations as possible,” the official told Politico. “Some of the nations may have regional qualms or concerns or they may have economic qualms or concerns about badging any particular mission in a certain way.”
The Brits announced their own Hormuz Strait escort operation on Monday, where they will be “working alongside the U.S. Navy… to build the broadest international support to uphold freedom of navigation in the region, as protected under international law,” according to British Foreign Secretary Dominic Raab. “Our approach to Iran hasn’t changed. We remain committed to working with Iran and our international partners to de-escalate the situation and maintain the nuclear deal.” A bit more, here

Today in tough talking world leaders: “Peace with Iran is the mother of all peace, war with Iran is the mother of all wars,” Iranian President Hassan Rouhani said today on state TV, Reuters reports

President Trump “dramatically” escalated tensions with Venezuela with a new executive order on Monday, “impos[ing] a freeze on all Venezuelan government assets in the United States” in a continuation of its efforts “aimed at removing socialist President Nicolas Maduro from power,” AP and Reuters reported.
The decision “is the first of its kind in the Western Hemisphere in more than three decades,” AP writes, “following an asset freeze against Gen. Manuel Noriega’s government in Panama and a trade embargo on the Sandinista leadership in Nicaragua in the 1980s.”
It also “not only bans U.S. companies from dealings with the Venezuela government,” Reuters reports, “but also appears to open the door to possible sanctions against foreign firms or individuals that assist it.”
Consequences could include “escalat[ing] tensions with China, already inflamed by a tit-for-tat trade war,” an analyst told Reuters. But businesses from Russia, Cuba, Iran and Turkey could also be pinched, another analyst told AP. A Russian official called the decision “international banditry” and “open meddling into Venezuela’s internal affairs.”
For what it’s worth, Trump’s National Security Adviser John Bolton is in Lima, Peru, today for talks on democracy in Venezuela. Catch his remarks live (or archived for later viewing) on Facebook, here

And finally today, “Amazon Is Coaching Cops on How to Obtain Surveillance Footage Without a Warrant,” Vice Motherboard reported Monday. 
The quick read: “Emails obtained from police department in Maywood, NJ—and emails from the police department of Bloomfield, NJ, which were also posted by Wired—show that Ring coaches police on how to obtain footage. The company provides cops with templates for requesting footage, which they do not need a court warrant to do.” Read on, here.

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