In retaliation for $50 billion in U.S. trade tariffs against Chinese imports, China laughably hits back with $3 their own billion tariffs against the U.S.  According to most reporting Beijing has selected U.S. pork and scrap aluminum as targets for a 25% tariff, along with wine and fruit tariffs around 15%.

It should be emphasized the approach by China is rather ridiculous considering the Chinese government purchased the largest U.S. pork manufacturer Smithfield in 2013 for $5 billion; at the time the purchase price was 30% more than the company was worth.  Smithfield, now a Chinese company, represents 25% of all U.S. pork products.

Do you really think China is going to not import it’s own pork products… or subject them to a domestic tax?  Think about it.  It’s ridiculous.  China knows they have ZERO leverage in a trade-dispute with the U.S., they cannot afford to lose access to the U.S. market.

The example of Smithfield foods is exactly what we have outlined in how China cannot sustain itself and needs to control the assets of foreign countries.  Hence, their one-road/one-belt program for securing products and raw materials.  China is a dependent economy, they need to exploit global trade to survive.  China cannot feed itself. This is the inherent flaw within their short-sighted authoritarian government-controlled economic model.

Again, for emphasis, the Chinese government underwrote the purchase of Smithfield foods in 2013.  They paid 30% more than the company was worth because they were securing access to food just like they would any other raw material (uranium, minerals, etc).  China also purchases U.S. politicians to retain their ability in this regard.

Now look at the cartoon from the unofficial Chinese state-run media today:

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The final quantification of the Bureau of Economic Analysis fourth quarter GDP growth rate was released today, reflecting an anticipated increase from the prior two estimations. The last revised estimation of GDP growth (February) was +2.5%, the final revised estimate is +2.9% growth.

A massive increase in consumer spending (+4%) around the October through December 31st time-frame (Q4) was offset by those dollars purchasing a large portion of imported products.  The GDP growth deduction from import purchases was 1.99%. [See table #2, line 50 pdf here]

In short, American consumers spent significantly more than usual in the holiday season; however, many of those purchases were foreign goods.

From the BEA Report – Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2017 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

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It was only six months ago when the international media and U.S. left-wing pundits were proclaiming how we were on the cusp of thermonuclear war with North Korea.  As outlined HERE there was almost no-one paying attention to the approach taken by President Donald Trump to creating the “Magnanimous Panda” outcome.

Well, today those same media are reporting on North Korean leader Kim Jong-Un meeting with Chinese President Xi Jinping and committing to a denuclearized Korean peninsular:

SEOUL, March 28 (Yonhap) — North Korean leader Kim Jong-un has visited China at the invitation of President Xi Jinping and reaffirmed his commitment to denuclearization during their first summit, the two countries’ media said Wednesday.

The North’s leader made an “unofficial” visit to China from Sunday to Wednesday, accompanied by his wife Ri Sol-ju and key officials, including de facto No. 2 figure Choe Ryong-hae, according to the North’s state-run radio.

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The actual announcement of KORUS (“KOR”+”U.S.”), the renegotiated U.S. and South Korea trade deal, has yet to be made by U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross and U.S. President Donald Trump.  However, more details are surfacing inside KORUS media leaks.  Fantastic job by Lighthizer!

TOP LINES:

• U.S. Gains twice as many exported vehicles into S-Korea (50k per manufacturer, per year).  [No word on possible Kia / Hyundai tariff or quota – RE: “unlikely”]
• South Korea drops ridiculous customs inspection barriers. [Trade trickery ploy]
• U.S. retains 25% Tariff on S-Korea pickup trucks with extension for 20 years.
• South Korea gets two year exemption from a 25% U.S. steel tariff, but must drop steel export level to 70% of prior two years shipments. (A controlled reduction of 30%).

(Via AP) The new deal doubles — to 50,000 — the cars each U.S. automaker can export annually to South Korea, reduces bureaucratic barriers to American products and extends a 25 percent U.S. tariff on South Korean pickup trucks by 20 years, through 2041.

South Korea escapes America’s new 25 percent tariff on imported steel — but must accept quotas on steel exports equal to 70 percent of its average annual shipments to the United States between 2015 and 2017.

The officials spoke on condition of anonymity in order to discuss the policy ahead of an official announcement.

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Commerce Secretary Wilbur Ross appears on Fox Business News for an extensive interview with Maria Bartiromo.  The interview covers a wide spectrum of important topics attached to the U.S. economy and ongoing trade deals.  Two great video segments for the interview will get you up to speed on ongoing initiatives:

♦Segment #1 outlines the upcoming announcement of KORUS, the South Korea and U.S. trade deal.  Additionally, Secretary Ross discusses the steel and aluminum tariffs and how they enmesh in the larger objective of the ongoing trade negotiations with China:

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♦Segment #2 outlines more on the aluminum and steel tariffs; ongoing trade talks with Europe; efforts to renegotiate NAFTA, and the possibility of a deal being reached; Saudi Arabian investment in the U.S. and the Commerce Department plans to bring back a citizenship question in the 2020 Census.

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National Trade Council Director Peter Navarro appeared on CNBC, prior to today’s massive U.S. stock market increase, to discuss ongoing trade initiatives.

U.S.T.R. Robert Lighthizer is currently conducting simultaneous bilateral trade negotiations with South Korea, Philippines, Vietnam, Australia, China (way-points), Japan, Mexico/Canada (NAFTA) and the European Union.

Trade talks going on with numerous countries that, for many years, have not treated the United States fairly. In the end, all will be happy!

— Donald J. Trump (@realDonaldTrump) March 27, 2018

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The passage of the defense spending portion of the Omnibus bill ultimately means there will be increased demand for U.S. steel and aluminum within new defense equipment. The contracts within the procurement process will predictably require the use of U.S. parts.

Add the increase in defense spending with the pending global tariffs on steel imports, and the environment is created for foreign investment in domestic steel and metal manufacturing…. Then add into the mix the geopolitical economic relationship developed between India’s Prime Minister Modi and President Trump… And you discover the backdrop for this announcement from India owned JSW Steel:

(Reuters) – India’s JSW Steel Ltd said on Monday it would spend $500 million to build out its U.S. operations in Texas, amid heightened global trade tensions following U.S President Donald Trump’s decision to pursue steep import tariffs.

The company has signed an agreement with the Texas governor’s office, under which the governor has approved a grant worth $3.4 million to the company’s unit, the steelmaker said in a statement here.

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Perhaps as early as this week we should anticipate hearing about completion a significant trade agreement with South Korea.  The deal is known as “KORUS” (KOR+U.S.), and has been in negotiations for over a year.

Part of the recent agreement within the auto-sector of the deal, between Moon Jae-in and President Donald Trump, via Lighthizer and Ross, is an exemption of U.S. steel tariffs for South Korea in exchange for a doubling of U.S. auto exports; from 25,000 to 50,000 American made cars, per U.S. automaker, per year.  (link)

The results within KORUS exhibit the intended outcome of the global tariff proposal from President Trump as leverage to enhance the administration policy of reciprocity.  The world is taking notice, and China is now beginning to signal their understanding of President Trump leading the international discussion of reciprocal trade.

The unspoken background is that all nations, who have acquiesced to the overwhelming demands of China’s trade position, are now beginning to reassess the value of President Trump confronting the equation head-on.  Ultimately it is beginning to sink-in that all nations can benefit from correcting a trade imbalance within their own position.  In essence, U.S. President Trump is moving the entire global trade dynamic.

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Author of “The Coming Collapse of China”, Gordon Chang, discusses the effect of President Trump’s tariffs on China and the epic battle ahead.  Last night China announced their feeble retaliatory actions – SEE HERE.  A professionally nervous Maria Bartiromo, frames a series of questions from the perspective of Wall Street.

Fortunately Gordon Chang understands the Red Dragon, and more importantly understands Chinese Chairman Xi Jinping’s geopolitical goals through economic conquest. Mr. Chang is one of the few people who appear regularly in media and know the truth behind the Panda Mask.

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People often talk about the ‘strength’ of China’s economic model; and indeed within a specific part of their economy -manufacturing- they do have economic strength.

However, the underlying critical architecture of the Chinese economic model is structurally flawed and President Trump with his current economic team understand the weakness better than all international adversaries.

China is a central planning economy.  Meaning it never was an outcropping of natural economic conditions.  China was/is controlled as a communist style central-planning government; As such, it is important to reference the basic structural reality that China’s economy was created from the top down.

This construct of government creation is a key big picture distinction that sets the backdrop to understand how weak the economy really is.

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Commerce Secretary Wilbur Ross appears with Bloomberg Inc. to discuss the ongoing U.S. trade initiatives and the need for immediate and urgent trade reciprocity.

Within the discussion Secretary Ross talks about the current targeted tariff proposal, and why intellectual property theft by Chinese state-run companies poses a clear threat to U.S. economic growth and national security interests.

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From the Office of the U.S.T.R. – Washington, DC – Today President Trump announced his decisions on the actions the Administration will take in response to China’s unfair trade practices covered in the USTR Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. U.S. Trade Representative Robert Lighthizer initiated the investigation in August 2017 at the direction of President Trump.

The President has instructed that the appropriate response to China’s harmful acts, policies and practices should include three separate actions.

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