Details of Beijing Reversal Surface – China Said: ‘trust us’ – USTR Lighthizer said: ‘go spit’…

USTR Robert Lighthizer has filed the official notification with the federal register for the increase in Section 301 tariffs from 10% to 25% effective Friday (full pdf below).  Additionally Reuters has exclusive details of the collapse in U.S-China trade talks.

As most CTH readers are aware, Lighthizer has focused heavily on the enforcement mechanisms within the trade talks. [Previous Bookmark] Apparently, when the 150 page draft agreement was presented to the Chinese politburo, Beijing balked at allowing the U.S. to hold controlling enforcement over the trade agreement terms.

The fallback presentation from Vice-Chairman Liu was: we cannot put the binding enforcement mechanisms in writing, you’ll have to ‘trust us’ to honor the agreement; at which time Lighthizer said no-way.

WASHINGTON/BEIJING (Reuters) – The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.

The document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters.

In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: Theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation.

[…] The stripping of binding legal language from the draft struck directly at the highest priority of U.S. Trade Representative Robert Lighthizer – who views changes to Chinese laws as essential to verifying compliance after years of what U.S. officials have called empty reform promises.

[…] Lighthizer and U.S. Treasury Secretary Steven Mnuchin were taken aback at the extent of the changes in the draft. The two cabinet officials on Monday told reporters that Chinese backtracking had prompted Trump’s tariff order but did not provide details on the depth and breadth of the revisions.

Liu last week told Lighthizer and Mnuchin that they needed to trust China to fulfill its pledges through administrative and regulatory changes, two of the sources said. Both Mnuchin and Lighthizer considered that unacceptable, given China’s history of failing to fulfill reform pledges.  (read more)

Vice-Chairman Liu is coming back to DC tomorrow for discussions; he will likely try to salvage the agreement, but without enforcement mechanisms previously agreed-to it’s highly unlikely any progress can be made.

Here’s where it gets interesting.  Ambassador Lighthizer has filed the Section 301 update raising the tariffs from 10% to 25% effective Friday.


The likely response from China will be additional tariffs on U.S. goods and/or refusal to purchase U.S. agriculture products.  Their strategy will be to get key BIG AG senators, and the U.S. Chamber of Commerce, to target fire toward President Trump over diminished farm prices.

CTH anticipated this dynamic in 2016.  Any Chinese pull-back from U.S. farm purchases hits the Wall Street multinational corporations hardest.

Multinational corporations, BIG AG, are now invested in controlling the outputs of U.S. agricultural industry and farmers. This process is why food prices have risen exponentially in the past decade.

The free market is not determining price; there is no “supply and demand” influence within this modern agricultural dynamic. Food commodities are now a controlled market just like durable goods. The raw material (harvests writ large) are exploited by the financial interests of massive multinational corporations.

Because the domestic supply-side agricultural market is based on perishable goods; this predictable Chinese response has a rapid downstream impact.  The wholesale price of domestic food drops rapidly inside the U.S. as the supply now exceeds the market.  The multinational mega-food conglomerates will be apoplectic.

The prices of imported durable goods (stuff from China) will increase, slowly over time; depending on the supply chain for the specific product sector.  However, if China retaliates by stopping import of U.S. agriculture products, the prices for U.S. domestic highly-consumable goods drops quickly.

In this scenario Wall Street is hardest hit.  Other than the AG sector, Main Street -and the U.S. consumer therein- actually benefits.

The Big Club will go bananas.

This entry was posted in ASEAN, Auto Sector, Big Government, Big Stupid Government, China, Communist, Decepticons, Deep State, Dem Hypocrisy, Donald Trump, Economy, Legislation, media bias, NAFTA, President Trump, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA, USMCA. Bookmark the permalink.

182 Responses to Details of Beijing Reversal Surface – China Said: ‘trust us’ – USTR Lighthizer said: ‘go spit’…

  1. Monadnock says:

    Gotta say it: I love this man

    Liked by 4 people

  2. CM-TX says:

    Saw a “prediction” in the wild, last week. Only mentioning b/c it sounded straight out of Fortune Cookie. 😁 It’s also their usual pattern.

    🥠: Expect China to make a concession mid-week, allowing them to save face.

    Well… they got the timing for potential right anyhow.😏

    Liked by 1 person

    • linda4298 says:

      Marco Rubio

      Verified account

      Follow Follow @marcorubio
      More Marco Rubio Retweeted Donald J. Trump
      Thank you for staying strong.

      However I do believe it’s just as likely that they are coming to manage how to end the negotiations.

      No deal is better than a bad deal.Marco Rubio added,
      Donald J. Trump
      Verified account

      ….Guess what, that’s not going to happen! China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal. We’ll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers…great for U.S., not good for China!
      Show this thread

      Liked by 2 people

  3. porkyspen says:

    Why can’t the assholes in charge of the CoC attempted coup just switch gears and embrace MAGA? They will still make their precious money, but they would have the support of all real Americans… which is going to be a priceless commodity if things keep going they way they are…..

    Liked by 4 people

  4. trapper says:

    This is bad faith on China’s part. There is no cultural difference in this.

    China sells its goods all over the world. They know how contracts work. Deals. When they contract for the sale of Chines goods they NEVER permit the buyer to refuse to put an obligation to pay in the contract, relying on a buyer’s plea to “just trust me.” To come back and take this position now is justification for the Trump team to walk out.

    Let China live with the 25% tariffs for a few months, then bump them up to 50%. And let the multinationals scream their heads off about supply chain disruptions. They put themselves in this situation. It’s their own damn fault. No sympathy.

    Liked by 10 people

    • James Carpenter says:

      No sympathy is warranted, no quarter deserved.
      But let’s not cut off noses to spite faces.
      Either China comes to an equitable (and enforceable) agreement or America undertakes the serious and disruptive process of decoupling our economies.
      Establishing new supply chains, new suppliers, restoring American manufacturing will take time. Let us proceed with our best interest in mind.

      Liked by 2 people

    • sharon goodson says:

      India desperately wants our business – I say they look like a good trading partner with stable economy. Bet we could give them a real good deal on wheat and soybeans.


  5. Brian L says:

    Time to start buying products from India.

    Or, you know, bring some of that manufacturing back home.

    Liked by 2 people

    • Rhoda R says:

      Might also want to look at what S.Korea, Taiwan, Japan, Vietnam etc. are making.


      • sharon goodson says:

        we have done business with Vietnam for years. The factories we deal with are actually owned by Taiwanese who find labor etc. cheap. Our former Chinese vendors are pissed.


  6. WhereEaglesDare says:

    We definitely cannot trust China. I’m sick and tired of the Chinese! Go Lighthizer.

    Liked by 5 people

  7. Pew-Anon says:

    Wonder how much money China saved by brown-nosing an extra three months at 10%. That was probably their intent all along.

    Liked by 2 people

  8. Beau Geste says:

    My (limited) experience in negotiating with asians is that “we” tend to try to identify all issues, then negotiate issue-by-issue, with the expectation that negotiated/agreed-upon issues stay resolved. “Western” contracts and arrangements tend to be long and extensive. Asians tend to feel free to go back to change previously-resolved issues, and to tend toward short agreements which they expect will change with changing factors in the future, and the changing power relationship between parties in the future.

    Liked by 1 person

    • James Carpenter says:

      Are you describing the difference between folks who perceive everything in zero sum versus those who strive towards mutual benefit?

      Liked by 1 person

  9. Ilcon says:

    The other countries that will need to cut off imports or face serious repercussions include China, India, Turkey, Japan and South Korea. As of now, China and India are the largest importers of Iranian oil, and if they don’t swiftly act to cut down on their imports, bilateral relations with the US could suffer.


  10. emet says:

    CTPAT. It means the Customs Trade Partnership Against Terrorism. It seems like an unimportant piece in the trade war with China, but as things play out, keep it in mind. This agreement is one of those bad ones (of the type POTUS mentions) that is basically fluff and of no value to the security of our nation. If the members (the list is not available to nonmembers) agree to take steps to dafeguard their supply chain, Customs then exempts their import shipments from inspection. That means carte blanche to load ocean containers with anything they please, and it can’t be inspected by Customs. Oh sure, on paper it can theoretically be done, but in reality it is exceedingly rare. Think the Chinese would agree to something like this for containers inbound to their country? Not likely I would say, because that would be STUPID. Why our Nation thst suffers from Chinese opioids, counterfeits, lead paint on toys, etc etc etc would agree to this is beyond my comprehension.


    • emet says:

      And btw, while I’m on this topic. Customs has employees (account managers) whose job it is to help major importers (Chinese products are well represented) comply with law and regulation, and basically represent large companies when they are having compliance problems. In other words, taxpayers pay some Customs employees to represent the interests of large companies against other Customs employees who are enforcing law and regulation.

      Liked by 2 people

  11. China could be out of Most Favored Nation and possibly the World Trade Organization due to this.



    • Tariff Hikes REDUCE Imports from China … GOOSING GDP!
    • China delays Ag purchases, as Sundance anticipates and as China has done before.
    • Domestic Food Prices PLUMMET.

    • Mainstreet voters CHEER!
    • POTUS Approval JUMPS.

    • Inflation DROPS … Big-Time.
    • Fed has to CUT RATES.

    • Rate Cuts ACCELERATE Investment in Manufacturing Renaissance.
    • Investment GOOSES GDP … again!

    Liked by 1 person

  13. Rynn69 says:

    If I was casting a Hollywood movie and needed a smooth villain, Donohue fits the bill exactly.


  14. spoogels says:


    Liked by 1 person

  15. dallasdan says:

    SD has clearly described the Chinese mindset since the trade negotiations started in earnest. We should not be surprised by the current situation.

    The number and substantive nature of the China reversals on already agreed upon issues causes me to believe they were never genuinely serious about making a broad and deep trade agreement with us. Moreover, I am sufficiently cynical to believe the Chinese were negotiating with hopes that the President would be impeached, thereby facilitating a reset of all trade provisions to which they had agreed.

    Based upon SD’s legitimate and comprehensive research and commentary, I have no sympathy for the CoC and “BIG AG” cartel. Unfortunately, it appears the negative economic impact on the farmers may be immediate and significant, and the resistance will seek to spin it to their political advantage.

    It is a big, gnarly problem, and I trust the President to have gamed it to our ultimate advantage, considering both the economic and political elements.


  16. Majik says:

    Drove 11 hr today, couldn’t keep up with news. But caught something somewhere about CN being forced to sell their interest CA port today??? LA?


  17. Pyrthroes says:

    “Big Ag” indeed! With Americans’ domestic consumer interests at heart, this Trump Administration accepts short-term agriculture-market turbulence for substantial long-term gain. As reported, Hsi’s Politburo refusal to enter binding legal commitments concerning U.S. intellectual and other property most certainly means that Kipling’s “Wily Oriental Gentlemen” have learned nothing, forgotten nothing [Tallyrand] despite lengthy negotiations with Lighthizer et al.

    As tariffs boom to 25% from 10% at noon tomorrow (Friday, May 10th), Chairman Hsi’s consiglieres will find themselves holding a short stick. As for Wall Street– mid-May through June is classical retrenchment territory, typically a 7 – 10%+ drop preparatory to a 6 – 8 week Summer Rally. Given S&P 500 Spyders’ mild (+/- 2%) 50-day MA fluctuations since Dec-2017, traders’ response to this will likely prove cyclically pro forma.


  18. Greg says:

    This letter is from Todd at Rapture Ready, China has overspent themselves Militarily and there may be no coming back from that without world domination.
    China Is Running Out of Dollars

    The People’s Republic of China has had a trade surplus with the US for decades. In 2018, its surplus with America rose to a record $323.32 billion. China’s total foreign exchange reserves stand at $3.073 trillion. This massive horde of dollar wealth has quickly become an illusion. In real terms, China is actually running out of dollars.

    The renminbi is the official currency of China. We have easily posted dozens of stories in RR news about how China has signed numerous deals with countries to trade with them in the Renminbi. All that global travel by President Xi was a huge waste of time and jet fuel.

    In terms of global reserve currency, the renminbi has a share of only 1.9%, in fifth place, and barely ahead of the Canadian dollar, but miles behind the US dollar (61.7%) and the euro (20.7%). Over the past two years, the renminbi has gone nowhere as a reserve currency. In March, the Renminbi had a minuscule share of merely 1.22% of international cross-border payments.

    Anyone who has a basic understanding of how economics works knows: when you print too much of your currency, its value should go down. The Chinese government has somehow managed to print a massive amount of renminbi without triggering hyper-inflation. Since 1952, the money supply has grown by a staggering 18,000-fold.

    The US has a huge national debt, but it is small compared to China’s debt load. The US economy is roughly $20 trillion. Theirs is roughly $13 trillion. China’s banking system is north of $50 trillion. Ours is currently at $22 trillion.

    Because China is a resource-poor nation, it has to import vast amounts of raw materials. No other nation on earth has imported more goods. In the past 20 years, China has consumed more cement than America has used in the past 100 years. From just 2004, its oil imports have increased four times. China imports 68% of the world’s supply of iron ore.

    China’s massive imports have resulted in a huge dollar-shortage for the Chinese banking system. That’s because Chinese businesses still owe over $2.25 trillion in dollar-denominated debts that are maturing over the next couple years (by year-end 2021).

    For instance – The Bank of China only just four years ago had more dollar-assets than all of the other big banks. But by the end of 2018 – they now have over $72 billion in dollar-liabilities. (That’s a net-change of -$128 billion in only four years.)

    The Chinese government has been spending huge amounts of money on its military. In 2009, it spent 400 billion renminbi on its military. By the end of this year, it will spend 1,200 billion renminbi, which is a threefold increase in a decade.

    With the Chinese economy now hopelessly addicted to Middle East oil and raw materials from Africa, some economists are starting to wonder if China will turn to the military option once its supply of dollars runs out. Hitler made a mad grab for resources before he turned to blitzkrieg to wipe out his foreign debts.

    When John the Revelator wrote about an army of 200,000 million, generations of people were mystified by the prediction. There weren’t 200 million people on earth at the time. Now that we have 7.7 billion people on earth, and China has a population of 1.4 billion people, it is possible to outfit such a vast army.

    It is a China-explosive economic growth that is the clearest indication that the Kings of the East are about to move out. A decade ago, China had no ability to project military power on the international stage. In the past few years, China’s wild spending has suddenly transformed it into a global giant. Because China only has a limited amount of time and money to maintain such a massive military force, the tribulation hour must be very near.

    “And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared” (Revelation 16:12).

    “Saying to the sixth angel which had the trumpet, Loose the four angels which are bound in the great river Euphrates. And the four angels were loosed, which were prepared for an hour, and a day, and a month, and a year, for to slay the third part of men. And the number of the army of the horsemen were two hundred thousand thousand: and I heard the number of them” (Revelation 9:14-16).



  19. Robert W says:

    Raise the 25% tariff to match what they’ve stole from the US each year. They equalled like 350 billion a year for the past 10 years almost. Forget a deal. Just keep a higher tariff that equals as much and us Americans are happy…..


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