Both constituencies are important to Trump’s 2020 re-election bid and both say they have been damaged by his administration’s policies, but Midwest farmers in particular have been giving Trump political headaches and — separately from the biofuels fight — have sustained economic damage from the year-long trade war with China.

Sound confusing? Well, it is, partly because the President did not offer any details beyond dangling the terms “Ethanol” and “small refineries” in a Tweet.

Trump posted a message on Twitter Thursday that said he is about to deliver a big prize, which he describes as a “giant package” to “the Farmers.” His choice of words suggested that he intends to address the RFS fight — no simple task.

He wrote:

The Farmers are going to be so happy when they see what we are doing for Ethanol, not even including the E-15, year around, which is already done. It will be a giant package, get ready! At the same time I was able to save the small refineries from certain closing. Great for all!

Might sound good to some, perhaps, but it leaves questions.

Whatever the bargain turns out to be, Trump’s moves are limited and may rely on a part of the renewable energy policy that he never discusses and that is not mentioned in the Tweet: biomass-based diesel and renewable diesel.

That is because one of the implements in EPA’s toolbox, should Trump direct the agency to improve the Midwest farm belt’s lot, would be to boost the amount of mandated biofuel blending for 2020 and 2021. “Biofuel” means more than just ethanol; it includes several forms of biodiesel, and allowing growth in that sector could very well be a necessary part of any settlement to the RFS fight. And the biodiesel industry argues it has plenty of capacity for market growth that is not being tapped. 

Because ethanol often gets the lion’s share of attention in hearings and in the news media, the corn derivative seems to have become the shorthand for biofuel, much like “Coke” stands in for the entire range of carbonated beverages for people of many cultures, a kind of universal term for “soft drink.” It is unclear whether biodiesel was part of any White House discussions underlying Trump’s informal announcement about an “Ethanol” deal. 

“We feel many times we are one of the forgotten pieces of the RFS,” National Biodiesel Board (NBB) CEO Donnell Rehagen said Thursday. 

Rehagen said in during a call with reporters Thursday that flat growth in the biodiesel volumes under the RFS and the recent small refinery exemptions (31 given in August by EPA to refiners, adding an estimated $1.43 billion in compliance credits — RINs — back into open trading) “represents a rollback for our market” at a time when the biodiesel industry believes government should be allowing for growth. The Iowa Soybean Association said Aug. 21 that market prices for soybeans, a biodiesel feedstock, are at multi-year lows.

The biodiesel industry has argued repeatedly, and has even sued in federal court over the issue, that it can handle growth and EPA is not giving it the market share under the RFS that the industry has proved it can absorb. On Thursday’s press call, responding to a reporter’s question about growth capacity, NBB’s Vice President of Federal Affairs Kurt Kovarik said, “Biodiesel is uniquely situated in that we’ve always produced above the volume that EPA has set; we do not have infrastructure constraints and we have no feedstock botttlenecks, so capacity to produce well beyond what the government sets” have been consistently demonstrated over the past several years. 

In an Aug. 23 letter to Trump, a group of soybean producer associations from 10 Midwestern states wrote, “Your EPA recently proposed a rule for the 2020 RFS standards that sends a chilling signal that the market for biodiesel and renewable diesel will be capped. And then the agency topped that off by further rolling back those volumes through additional small refinery exemptions. More than that, EPA has proposed to ignore a Court order to restore gallons to the RFS program that it unlawfully reduced in 2016.”

Underlying all of the controversy over volumes, however, is a surfeit of small refinery exemptions under the RFS, and no discussion of the mandated volumes is complete without taking into account these waivers because, farmers and biofuel producers argue, they cancel out much, if not all, of the increased blending volumes that Congress intended to help develop biofuel markets. 

For the 2018 compliance year, EPA handed out an estimated 1.43 billion gallons worth of blending waivers, and in so doing, returned $1.43 billion in RINs to refiners and other obligated parties who bought the RINs during 2018 to comply with the minimums pending the outcome of their petitions for exemptions, through 31 small refinery exemptions.

If EPA continues to hand out small refinery exemptions at the same rate as the past two years, it will reduce biodiesel demand by 2.54 billion gallons and cause a $7.7 billion loss for the industry, according to University of Illinois economist Scott Irwin.

Soybean farmers are not the only group pointing out that the federal government is ignoring potential growth in the use of biodiesel. A bipartisan group of 39 U.S. senators, many of them (but not all) from the Midwest,  wrote that they thought EPA did not raise the mandated 2020 volume for biomass-based diesel enough after the agency released a proposal for modest increases last summer.

“While these proposed increases are encouraging, these volumes continue to underestimate the existing potential of the biodiesel and renewable diesel industries in our states,” the senators wrote. “We believe the biodiesel industry can do more and that EPA should demonstrate more confidence in the RFS program’s ability to drive growth. Increasing biomass-based diesel and advanced biofuel volumes would encourage investment in capacity and new fuel development.” EPA did not heed their advice.

Republican Sens. Chuck Grassley and Joni Ernst of Iowa, were among the signers.

All-important Iowa — electorally speaking — sits at the heart of the debate. Not only is it a big biofuel producer and agricultural jugarnaut, it has in Grassley and Ernst two renewable energy champions in the Senate. The renewable fuels industry there accounts for nearly $5 billion of Iowa’s gross domestic product, generates more than $2.4 billion of income for Iowa households and supports almost 47,000 jobs throughout the entire Iowa economy, Gov. Kim Reynolds told EPA last year in a hearing.

Iowa’s interests encompass both the ethanol and biodiesel components of the RFS. 

NBB’s Rehagen concluded, “My original point — it seems that there’s always an emphasis or connection to ethanol in the RFS. Biodiesel and renewable diesel are never thought of as much, even though we have a huge impact. We hope the President understands that biodiesel must be considered in that list, and moreover, restoring the demand under the RFS is the only thing that can help the biodiesel industry.” 

As of publication of this article, there was is no word on when or how the White House may roll out the announcement of an RFS deal. 

— Dan Macy

Morgan Stanley reports that the project aims to invest up to $1.2 trillion in roads, railways, power grids and ports along the centuries-old Silk Road in the next decade. But 62% of the countries along the road have sovereign debt rated as below investment grade or not rated at all. It also passes through several conflict zones and countries recognized as among the most corrupt in the world.

But the project may have some non-monetary benefits.

Michael Every, head of financial markets research at Rabobank Group in Hong Kong, tells Bloomberg that it’s perhaps best to think of Belt and Road as a “vast geopolitical project aimed at cementing China’s political and trade role over that of the U.S., not an economic one in the sense that each project will generate a return.”

Data gathered by Bloomberg suggests China has so far committed more than $500 billion for the road. The money comes from multiple sources including institutions like the Silk Road Fund, which has invested $40 billion. In the first nine months of 2017, domestic companies have invested $9.6 billion in 57 countries along the route. The National Pension Fund will also deliver a chunk to this project.

But Michael Taylor, Moody’s chief credit officer for APAC tells Bloomberg this initiative could reap great returns if done right. “These countries have high growth and growth potential, and often what is holding them back from achieving that potential is a lack of infrastructure.” Cao Yuanzheng, chairman of BOCI Research Limited in Beijing adds, “Even in the poorest countries, projects like public water system, electricity grid and railway are all commercially viable as long as there is income generated from user fees.”

The fivefold tax increase applies specifically to Chinese-made cold-rolled flat steel, the material used in car manufacturing, shipping containers, and construction.

Resentment over China’s trade methods are not confined to U.S. political leaders, rather the rancor is felt internationally as well; U.S. and European steel traders claim, for instance, that China is distorting the global market and undercutting them by “dumping its excess supply abroad.”

The U.S. Commerce Department also established anti-dumping duties of 71% on Japanese-made cold-rolled steel.

Asia business correspondent for BBC News Karishma Vaswani discusses the politics behind the Commerce Department’s ruling. “The ruling itself is only directed at what is a small amount of steel from China and Japan and won’t have much of an impact – but it is the politics of the ruling that’s worth noting,” she explains.

Ms. Vaswani continues, “U.S. steel makers say that the Chinese government unfairly subsidizes its steel exports. Meanwhile China has been under pressure to save its steel sector, which is suffering from over-capacity issues because of slowing demand at home.”

China’s Ministry of Finance has not directly responded to the U.S.’s ruling though its website announced this morning that China will maintain its current tax rebate policy for steel exports “as part of its efforts to help the bloated steel sector recover.”

A separate filing was made to the International Trade Commission by major American steelmakers imploring them to completely ban all Chinese steel imports.

The U.S. steel industry contends that approximately 12,000 workers have been laid off this past year alone due to China’s skewed competition. However, China claims that a weak economy is to be blamed for the industry’s problems and not their own practices. Furthermore, China asserts that it has taken steps to reduce its steel production.

Last year, China’s exports of cold-rolled steel flat materials to the U.S. were valued an estimated $272.3 million. A 522% tax on that is quite that stack of cash.

According to the report released On October 13, the middle class in China has been growing faster than its U.S. counterpart.

Since 2000, China has added 43.4 million adults to its middle class while the U.S. has lagged behind with just 22 million.

“The middle class will continue to expand in emerging economies overall, with a lion’s share of that growth to occur in Asia,” said Credit Suisse CEO Tidjane Thiam. “As a result, we will see changing consumption patterns as well as societal changes as, historically, the middle class have acted as an agent of stability and prosperity.”

Middle class wealth grew faster this year in Asia than it did in North America and Europe.

The report defines the middle class “in terms of a wealth band rather than an income range” and benchmarks it against the U.S. because it traditionally has had the world’s largest middle class. The lower level of the band is defined as having wealth “double the medium income,” or $50,000 at mid-2015 prices. The upper level is defined as ten times that amount..