Secretary Wilbur Ross Highlights Likelihood of Additional December 15th China Tariffs…

Commerce Secretary Wilbur Ross appeared on CNBC earlier today to discuss the status of U.S-China trade discussions, the latest issues with tariffs on French goods, and the bigger picture issues within the EU that we previously discussed.

Ross highlights the additional tariffs on China scheduled for December 15th are currently still planned to take effect unless something substantial changes in the position of China.  Additionally, and interestingly on the French and EU tariffs, Secretary Ross reminds the financial pundits of the $7.5 billion WTO authorized award against the EU that would be in addition to the $2.4 billion in tariffs now scheduled for French products.

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Pay attention to what Ross says in that interview; the administration is being remarkably open and consistent.  Given the adversarial position exhibited by French President Emmanuel Macron today; and against the backdrop of continual EU intransigence on trade reciprocity; I suspect once the USMCA is passed we are going to see a *severe* shift in tone within the U.S. trade position toward both China and the EU.

Germany will be hit hard on their export auto sector, and France will be hit hard on exported luxury goods.  Then, depending on the outcome of Brexit and the unpredictable stupidity of U.K. political leadership, the U.K. could gain trade position – or the U.K. could join the group of designated EU losers who *will* see years of economic contraction.

The U.S. economy is strong; all the fundamentals are solid. However, the multinationals on Wall Street -invested overseas- are more exposed. There is nothing that China and the EU can do to stop the de-globalization process; and efforts to stimulate their economy, more quantitative easing (pumping money) while the global supply chains are being shifted, are futile… they need “structural reform.” The multinationals are holding cash, waiting to see how it plays out.

The more a nations’ economy is dependent on exports, the more exposure they have to the inherent downsides of de-globalization. U.S. companies that are invested in these nations will naturally see diminishing returns on investment over time; some rapidly. President Trump’s trade policy is controlling the speed of that investment contraction.

The exposure of the multinationals keeps the stock market twitchy, yet the Main Street USA economy is thriving.

China’s economy is dependent on selling products to the U.S. in order to receive dollars. China takes those dollars and then purchases industrial goods from Europe. If China gets less dollars they purchase less from Europe. In essence both China and the EU are dependent on receiving dollars from a maintained trade imbalance. President Trump has begun resetting that imbalance… that is the current status of the global economic flux.

So what is the “structural reform”?  This is where the EU needs to accept their economic model will no longer work if the global economy is changed.

Specifically:

♦The EU has benefited from their one-way tariff system against U.S. industrial goods.  They have also used non-tariff barriers to keep their position.  Now they need to change their perspective and embrace reciprocity in new trade agreements; or else Trump will use the strength of the U.S. market to pummel them with tariffs.

♦The EU has used their one-sided tariff and trade system as a key part of their overly generous social and worker benefits.  If they don’t change the level of social payments and begin to ‘structurally’ change their social benefits, again they will suffer when the one-sided financial benefits are removed.  They won’t be able to afford their social system without the one-sided trade benefit.

♦The EU has over-regulated their industrial base and attached themselves to burdensome regulatory standards; specifically worsened by their Paris climate treaty and changes within their energy programs.  The compliance standards in combination with the increased costs and less global income is a perfect storm for contracting economic growth.

These are the types of EU reforms that are needed in an era where President Trump has purposefully stalled the process of globalization and is resetting global supply chains.  The Trump policies that bring massive amounts of wealth back into the United States has created the dynamic where the EU must adapt or contract.

In essence Titan Trump is engaged in a process of: (a) repatriating wealth (trade policy); (b) blocking exfiltration (main street policy); (c) creating new and modern economic alliances based on reciprocity (bilateral deals); and (d) dismantling the post WWII Marshal plan of global trade and one-way tariffs (de-globalization).

There are trillions at stake…

This entry was posted in Auto Sector, China, Decepticons, Donald Trump, Economy, Election 2020, Environmentalism, European Union, France, Hong Kong, media bias, NAFTA, New York, President Trump, Trade Deal, Uncategorized, United Kingdom (UK) and Great Britain, US dept of agriculture, US Treasury, USA, USMCA. Bookmark the permalink.

49 Responses to Secretary Wilbur Ross Highlights Likelihood of Additional December 15th China Tariffs…

  1. willthesuevi says:

    Sundance said, “I suspect once the USMCA is passed we are going to see a *severe* shift in tone within the U.S. trade position toward both China and the EU.”

    I agree and am certain this is one of the reasons Nancy Pelosi and other Democrats are stalling this vote and subsequent ratification.

    Liked by 10 people

  2. Ray says:

    I think this is one of the major underlying reasons they are after him.

    Liked by 7 people

    • Dutchman says:

      Ray, THIS, the reset on TRADE, is THE reason they are after him. Not major underlieng, it is THE reason.

      ALL those who have benefitted off the exfiltration of wealth out of the U.S., for 30+ years at least, are the ones who are against him.

      And, they DID see him coming. There op-research would have clearly picked up what DJT has been saying, about CHINA and trade deals, for 20+ years.

      THIS is why NONE of the other Republicon candidates was targeted as extensively as DJT.

      NONE of the other candidates was talking about TRADE and China.

      Liked by 2 people

  3. bearsgrrr says:

    I can’t wait to see Europe get what it deserves. Good and hard.The next 5 years will be fun to watch.

    Liked by 4 people

    • Has everyone De-Globalized their Investment Portfolio?

      Liked by 1 person

      • Alleycats says:

        I did.
        Quite some time ago, Sundance wrote a post essentially urging treepers to look at their financial affairs and adjust accordingly based on the coming de-couplings.

        Easy research found the 401k fund that I’ve contributed to for years that was doing decently well was heavy on globalization and the facebook/google/twitter, among others, stocks.

        I took every dime out of that fund and chose a different one from the available ones on their list. A mid cap fund with a lot of companies that actually make stuff and provide actual things, and provide actual services up and down Main St.

        Let’s just say the last 2 years have been extremely good for my retirement nest.

        MAGA in action.

        Liked by 7 people

    • John Bosley says:

      Yes, it will be interesting to watch.
      It’s after the 5 years I am worried about.
      What will the European Union ( specifically German ) backlash be.
      Remember, Germany caused 2 WW wars and the death of countless millions.
      They are capable of starting another one.
      Germans have a hard head , my father always told me, it would be wise to watch them very carefully.

      Liked by 1 person

      • Dutchman says:

        ECONOMIC Security is NATIONAL Security.
        5 words, more impactful than Reagans 10 words.
        When you enter a trade war with another country (as the United States) they can not respond with bullets, its actually COUNTER productive.

        THEY want to sell into the LARGEST Consumer market in the,World.

        In fact, because they have foolishly ASSUMED that no U.S.Leader would ‘call them out’, and end the thievery, they have established a structure absolutely DEPENDANT on the theivery continueing.

        Germany has no army, but it wouldn’t matter, if they DID. And, because of the trade imbalance being so skewed in their favor, like China they have no ammunition, with which to retaliate.

        What are any of them going to do, say “Buy our stuff, or we will SHOOT you!”?

        Xi, Merkel, Macron, etc are all dead men walking, and more importantly the political power,structures they lead are doomed.

        In the,EU, imagine the government here saying “We can no longer afford Social security, or any of its programs.
        Medicare, …GONE.
        Food stamps,Medicaid, Government Pensions,..gone.

        THATS what the EU countries are looking at. They have VERY generous pension programs, social programs, great infrastructure, ALL paid for by A) trade imbalance and B) underfunding NATO.

        The structural reforms they will have to make,are going to be politically impossible. And there IS no other way to pay for them, once the U.S. (PDJT) refuses to continue to.

        Conmunism stops working, when they run out of other people money

        Liked by 5 people

  4. TheWanderingStar says:

    Here we are at the CNBC 3-on-1 tournament. Oh my! Wilburine takes it to the hoop and first dunks on David and crosses up Purple tie Carl on his way to the basket for an easy layup and then to finish it off, steps back on the plump plum and hits a 3 pointer! Too easy.

    Liked by 12 people

  5. bearsgrrr says:

    During the whole interview with Wilbur they had the split screen with only negative market returns. I bet if it was a “up” day they wouldn’t have the split screen the whole interview.

    Liked by 3 people

    • hokkoda says:

      lol, dow over 27,500 drops 280 points. I remember I dropped a $1 bill on the ground once too.
      Anybody who panic-sold last summer when the media fabricated a looming recession lost money. The people who bought those shares…made a killing. Down markets only scare stupid people who probably shouldn’t be trusted with money anyway.

      Liked by 4 people

  6. hokkoda says:

    Y (GDP) = C + I + G + NX

    That “I” – investment (18% of GDP) – stands to swing bigly in the direction of domestic investment as this trade war plays out. C – consumption (69% of GDP) – is rocking. I believe the “post Thanksgiving” consumption is up 15-20% this year. People have more money in their pockets. The G – government (17% of GDP) – remains unfortunately large. Net exports (-5% of GDP) probably won’t change all that much except on the margins.

    But that “I”? Lots and lots of money waiting on the sidelines that used to be allocated for investment in China…is now up in the air. Where will it land? Once USMCA passes, a lot of it will wind up in the USA. Some in Mexico, but that still benefits us much more than China since investment in Mexico gives Mexicans a reason to stay in Mexico. But a lot of it winds up getting repatriated on US soil.

    Liked by 4 people

    • Arrest Soros says:

      That equation Hokkoda, is the reason why so many economists and central bankers get it so wrong.
      That G in Y = C + I + G + NX must come out of I and C.
      But it is I and C which generate wealth. When G takes out of I and C, it not only reduces wealth generating investment and spending, it actively works to suppress wealth generation by applying restrictive rules and regulations (red tape, green tape etc).

      Yet the morons at the Fed and other morons like Paul Krugman advocate more G to stimulate the economy.
      One couldn’t be more backassward if one tried.

      Liked by 4 people

      • Just a note to this. President Trump will likely hold out for a very long time. He wants the supply chains dismantled. These supply chains are what build China. President Trump is hitting then HARD!

        Liked by 1 person

      • hokkoda says:

        Don’t worry about me. I had a BALL when working in my MBA by beating my professor like a dirty old rug over these formulas. This was during the “Great Recession” – the single biggest live experiment able to test the theories espoused in nearly every MBA’s macroeconomics textbook.

        And all of the math was wrong! Unemployment didn’t match predictions. By a long shot. GDP growth severely lagged predictions. I remember Paul Krugman using those very formulas to predict GDP and unemployment. He was so utterly wrong – the guy won a Nobel Prize in Econ, years ago – that he disavows any knowledge of said predictions for Obama’s “stimulus”.

        I had a field day with my professor who barked back, “This is a macroeconomics class, not a poly sci class.” To which I replied, if you don’t understand that macroeconomics is a sub-discipline of political science, then I question your credentials to teach this class.

        I asked about his status some time later when talking to the department chair. She said, laughing, “His class is no longer going to be required for the degree program. We have decided to subject him to market forces to improve performance.” Hahaha

        Liked by 2 people

        • hokkoda says:

          I also told him (my undergrad degree is a Physics) that “if Einstein’s predictions were this bad, they’d have thrown him out on his ear. But Einstein is correct rounded to the 9th decimal place. That’s why physics is real science and macroeconomics is wishful thinking based on algebra 1.”

          Liked by 3 people

    • randyinrocklin says:

      Good job with your economic analysis brother!

      Liked by 1 person

  7. Summer says:

    The rats hope to get rid of Trump, “renegotiate” NAFTA by inserting climate change and gender-fluidity nonsense and making it much more China-friendly, and then pass it as the product of their own brilliant negotiation efforts.

    Liked by 1 person

  8. donnyvee says:

    China is as much our enemy as Japan was in the 1930’s. We need to treat them as such. Any opportunity missed to weaken them will come back to haunt us.

    Liked by 6 people

  9. weirdflunky says:

    If the Brits do get out they have the opportunity to become the true European economic super power. If they see Trump for what he is and agree to a tariff free deal with US, they will virtually overnight replace Germany as the leader of Europe. Without the crushing interference of the unelected hacks that control Europe today.

    If.

    Liked by 6 people

    • Dutchman says:

      weirdflunky,
      I agree, but I’m afraid the leadership in Britain has no aspirations to economic greatness.

      PDJT is offering them a GREAT opportunity, for the country AND its people, but the corrupt leadership will turn it down..
      Like the Uniparty here, they are blind.

      There are NONE so blind, as those who will not see.

      Sad,….really sad.

      By the time PDJT is done, there WILL BE NO EU. They should get out, while they can.

      Like

  10. milktrader says:

    Genius!

    God bless Wilbur!

    Liked by 1 person

  11. clulessgrandpa says:

    I could listen to Ross forever. His opinions are all based on facts and experience.

    Like

  12. Conservative_302 says:

    Wilbur Ross is pure genius and class. Just the fact that Wilbur is on team Trump is just another sign Trump is The right president at the right time. May God bless them both.

    Liked by 1 person

  13. De-Globalization
    Is
    RE-NATIONALISM

    Liked by 1 person

  14. Titan Trump is engaged in a process of …
    (e) Reindustrialization through Source-Shifting and Supply-Chain Resetting that WILL NOT END until Made-in-USA has become the DEFAULT mode for USA-based corporations that must EARN customer loyalty by putting America First in ALL that they do.

    RE: “These are the types of EU reforms that are needed in an era where President Trump has purposefully stalled the process of globalization and is resetting global supply chains. The Trump policies that bring massive amounts of wealth back into the United States has created the dynamic where the EU must adapt or contract.“

    HERE’s WHY: These “global” supply chains had become “China” supply chains. No other country can replicate the scope, scale and complexity of those single-country supply chains. As key components are Source-Shifted out of China, a multitude of raw materials, components, sub-assemblies, assembly operations and services must criss-cross borders and traverse longer distances in larger quantities, incurring mushrooming costs, delays, start-and-stop operations, quality defects, regulatory compliance requirements, tariffs, taxes, graft, stock-outs, lost sales, etc.

    THE SOLUTION: Transition to “USA” Supply Chains in the only alternative economy that can replace “China” Supply Chains, coupled with the “magnets” of tax cuts, deregulation and the largest and now fastest-growing market on the planet.

    Liked by 4 people

    • Dutchman says:

      BKR,
      Hit the nail, on the head. And what does this do, to Sundances whole “exfiltration of wealth”, with lemons and widgets”?

      Pretty much destroys it, completely.

      No more transnational companies, creating multinational monopolies, in order to control and manipulate supply and demand, by passing the laws against such behavior in any one country.

      THATS the reason many of these countries are holding back, I suspect. Its not JUST cheap labor, and lax environmental controls.

      Let them wither on the vine, like China and EU.

      Liked by 2 people

    • Bruno says:

      Coupled with existing Trade Zones and tax-breaking new Economic Development Zones and energy costs and I gotta believe some some people are gonna recognize that USA is the place to be!

      Like

  15. 2Alpha says:

    And CNBC actually pays those people? Oh my…😂

    Like

  16. NoTwoSystemsOnlyOneChiCom says:

    The Un’s utopian socialist Santa / Kim village opens with a ‘Christmas’ shot at Trump. Beijing bans HK as a port for the U.S. Navy. The CCP smells more pressure coming. Now, open official diplomatic ties with Taiwan before their January election and jam Beijing with a BRIC.

    Like

    • Dutchman says:

      CCP can fuss, fret, bluster, make empty threats, symbolic gestures all they want, they are screwed.

      Painted in a corner, with no way out.
      And it couldn’t happen to a nicer bunch.
      Ditto for Merkel, Macaroni, and Sparkle socks.

      Uniparty in Congress, your about to get yours, as well!

      Liked by 1 person

  17. HM3Navygal says:

    Had to buy a new TV for my mom. Bought a Phillips TV made in Thailand! Trying to buy stuff made in USA or anywhere BUT China. Love this President and all his trade “killers”. I laugh at most TV finance pundits who still have no clue about PTrump’s true end game of de-coupling!

    Like

    • Dutchman says:

      Its hard to believe, but I really think the vast majority of them REALLY just don’t get it, what,PDJT is doing.

      They keep innadvertently helping him, LOL, by talking like there IS,going to be a trade deal with China, because they simply can not fathom the idea of PDJT not getting a deal.

      The notion of decoupling entirely from China is just so far outside their reality, they can’t see it when its happening right in front of them.

      Funny,…tragically funny!

      Like

  18. TrueNorthSeeker says:

    Sundance…Thank you for that easy-to-understand explanation of these trade issues and their ramifications. Especially the way you explained the need for China to have US dollars in order to buy industrial goods from EU and the ripple affects those tariffs have on the global economy under President Trump’s plan. Your explanation in this post has helped me better understand these matters. You are a true GEM ! Thank you for continuing to share your knowledge with us branch dwellers. You are a natural-born educator and I, for one, appreciate you very much!

    Like

  19. Larry says:

    One should note the “large” carbon footprint of the French luxury good industry. Most of their luxury goods are exported around the world to the “1 per centers” who have the ability to lower their carbon footprints in meaningful ways.

    In the United States, we have many 1 per centers talking about voluntarily raising their tax levels to add funds to governments’ coffers. Rather than raise income taxes, levies and tariffs should be added to the luxury goods France exports to the United States. This would be a win/win for all parties in this discussion.

    Those 1 per centers can continue to purchase their French luxury goods with the warming knowledge that the additional fees they pay are going to a worthwhile cause. Those 1 per centers who do not want to pay the additional fees can find a substitute good. There is nothing particularly unique about French luxury goods (other than marketing).

    Like

  20. Vincent Piotet says:

    Our President & small group so effective! Lets are flush-oil-change our Senate and House in 2020!.

    Liked by 1 person

  21. vincepiotet says:

    Our President & small group are so effective! Lets flush-oil-change our Senate/House in 2020 !!!

    Like

  22. vincepiotet says:

    Our President & small group are so effective! Lets flush-oil-change our Senate/House in 2020 !!!

    Like

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