National Economic Council Chairman Larry Kudlow appeared on Fox Business earlier Thursday to talk about the ongoing U.S. China trade negotiations. Those who follow the Dragon -vs- Panda strategies of China saw earlier yesterday how Chairman Xi Jinping was positioning N-Korea as leverage for the current trade negotiations.
The DPRK dragon-play didn’t work because President Trump knows the dragon’s moves, and predicted their approach from the outset. Remember, POTUS Trump began executing a geopolitical economic strategy toward both North Korea and China well over a year ago. [During the first meeting with Chairman Xi Jinping in Mar-a-Lago (Feb, 2017)]
After over a year of discussions and structured way-points, China came into the current round of U.S. trade talks with outstretched steel fists. The line-up they sent to the negotiating table are some of the most loyal and die-hard communist leadership within their economic team.
It is obvious China is in dragon-mode knowing they are dealing with an entirely different administration than they faced before.
According to Reuters China presented an initial offer of $200 billion year-one trade deficit reduction. That’s just flat out narrative nonsense. Apparently the Chinese have spent too much time interpreting Trump through Western media who always focus on “deficit reduction” aspects. That type of approach pitches into Larry Kudlow’s wheelhouse but misses the actual substantive sector-based focus of Trump, Ross, Mnuchin and Lighthizer.
POTUS Trump uses the point of “deficits” because it has a familiar catch with the U.S. audience; however, President Trump knows the real issue is the amount of domestic production -vs- the amount of imported foreign goods. If the Chinese team frame their analytic offers from deficit reduction pitches, the actual deals will never materialize.
President Trump, Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin, U.S. Trade Rep. Robert Lighthizer, and Trade Adviser Peter Navarro are looking at sector by sector trade issues. It is not simply an import-export equation; it’s about a longer outlook and more balanced and stable manufacturing base.
President Trump is not focused on enhancing interdependency models (deficits), he is looking at expanding independence models sector by sector. Can this sector thrive independent of a need for imported material (raw good, part, service or intellectual property)?
The U.S. goal is for each individual sector (goods or services) not to be necessarily dependent or co-dependent on international import. This America-first approach reduces risk exposure and enhances investment perspectives favorably toward the U.S. by creating long-term economic stability.
Meanwhile, in front of the White House, U.S. Chamber of Commerce President Tom Donohue is riding his bicycle in slow circles and glaring in the windows…