The White House provided a background presser for information about President Trump and First Lady Melania Trump’s upcoming state visit to Japan.  [Transcript below] There are some interesting aspects to the itinerary as outlined; however, first, it’s important to emphasize the context.
As CTH shared earlier: At the highest levels of finance and business; in a process within both private industry and the geopolitical realm of government; a key aspect to every long-term strategic reset is the formation of an alliance.  Every successful titan of industry who has structurally changed history has influenced an alliance toward the effort.

I strongly suspect, in anticipation of the China confrontation; and considering the scale of the consequences therein; President Trump selected Japanese Prime Minister Shinzo Abe as the center of an Indo-Pacific alliance (several years ago).  With the knowledge of USTR Lighthizer heading to Japan with an advance trade team…. now consider:

Via Teleconference – 2:31 P.M. EDT – PRESS OFFICER: Good afternoon, everybody. I’m happy you all could join. We have with us today [senior administration official]. He’ll be providing some brief remarks about the President’s upcoming trip to Japan and a few Q&A afterwards. This will be on background and you can attribute what he says to a senior administration official.

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Louisiana congressional representative and house minority whip Steve Scalise discusses current trade and economic initiatives from President Trump’s agenda.  Representative Scalise outlines the importance of the challenge to China and the benefits within the USMCA agreement.
Beyond the economics, Scalise notes the recent report about running for Louisiana governor stemmed from a short, off-the-cuff, conversation with President Trump and he dismisses the seriousness of the discussion.

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Last month President Trump accepted an invitation from Prime Minister Shinzo Abe for a state visit to Japan May 25th through 28th. The Japanese government is honoring President Trump as the first state guest of the Reiwa Era, introduced with the coronation of Emperor Naruhito.
The official visit itinerary will include the first formal state banquet hosted by the Emperor Naruhito and Empress Masako.  The visit is a big honor intended to convey the importance of the relationship between the U.S. and Japan.

Today Reuters is reporting that U.S. Trade Ambassador Robert Lighthizer will be heading to Japan (in advance of President Trump), to meet with Economy Minister Toshimitsu Motegi.  It seems there’s a possibility Trump and Abe have something planned….

(Reuters) – U.S. Trade Representative Robert Lighthizer will visit Japan on May 24 to meet Economy Minister Toshimitsu Motegi to accelerate trade talks ahead of a leaders’ summit a few days later, two sources with direct knowledge of the plan said on Monday.
After a late-April meeting between President Donald Trump and Prime Minister Shinzo Abe, Trump had said it was possible for the two allies to reach a new bilateral trade deal by the time he visits Tokyo in late May.

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Commerce Secretary Wilbur Ross has to be the coolest cat in the crew. On May 15th at 6:00pm Ross blacklists Chinese Company Huawei, requiring Commerce Dept. licensing prior to any “American technology transferring to a company or person on the Entity List.” An hour later… Wilbur Ross is chillin’ in the East Room at a black tie dinner:

President Trump […] … And Wilbur had a very big day today. You probably have read about it. It came out at about 6 o’clock in the evening. So, we’re surprised to see you here, Wilbur. You should be working right now, Wilbur — (laughter) — wherever you are. (link)

The Chinese communists hate U.S.T.R. Lighthizer, but I bet they tremble more over Ross.

NEW YORK (Reuters) – Alphabet Inc’s Google has suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing, a source familiar with the matter told Reuters on Sunday, in a blow to the Chinese technology company that the U.S. government has sought to blacklist around the world.

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President Trump is executing one of the most brilliant geopolitical economic resets in the history of global trade. It really is stunningly remarkable how President Trump has controlled the entire landscape. The consequential phase now begins.
It is fascinating how the financial pundits didn’t see this coming. Perhaps one of the best indicators of where things are today comes from this quote within the South China Post:

“The Administration’s Section 301 tariffs and China’s retaliatory tariffs will now further disrupt – or even break – many thousands of supply chains in both countries.”
[Nelson Dong, a senior partner at Dorsey & Whitney]

The quote by Nelson Dong is stated *as if* shifting/breaking supply chains is a flaw in the approach. It’s not. Exactly the opposite is true; this is a feature of the strategic reset.  A specific and purposeful feature designed by President Trump.
What Dong is predicting is the deconstruction of “one-belt, one-road”.
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Looking at the retaliatory response from China today; there’s lots of great news.  China is doing exactly what President Trump quietly predicted.  They are walking directly into his trap.  Trump is a friggin’ genius…. more on that coming.
This video from Steve Hilton last night was very well presented.

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CTH was wondering how long it would take for President Trump to point out the brutally obvious…. Thanks to some advanced planning that everyone ignored, there are multiple trade alternatives to China:

Perhaps now people will reference President Trump’s long-game strategy which has been evident since his marathon Asia trip in November 2017.
Long before media pundits starting noticing/considering how serious President Trump was about structurally resetting the entire landscape of a U.S-China trade relationship,  President Trump quietly and methodically laid the groundwork with personal visits to: Prime Minister Shinzo Abe (Japan); President Moon Jae-in (S-Korea); President Tran Dai Quang (Vietnam); and President Rodrigo Duerte (Philippines).
Oh, how quickly the media forgot.
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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.

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We have discussed the Chinese outlook toward trade and negotiations at great length.  One of the overriding issues has always been the zero-sum disposition of China as it relates to any engagement. To wit: if it does not benefit China, it simply is not done.

Peace or war. Win or lose. Yin and Yang. Culturally there is no middle position in dealings with China; they are not constitutionally capable of understanding or valuing the western philosophy of mutual benefit where concession of terms gains a larger outcome.  If it does not benefit China, it is not done. The outlook is simply, a polarity of peace or war.  In politics or economics the same perspective is true.  It is a zero-sum outlook. (link)

Against the collapse of trade negotiations, the ideology of Chairman Xi Jinping is showcased today in the first official responses from the Chinese government toward the U.S. initiating tariffs due to Beijing’s duplicitous reversal on prior commitments.

(SCMP) Beijing will not make concessions in trade talks in response to Donald Trump’s latest tariff threats, Chinese state media said in a commentary published a day after the US president announced increases in duties on Chinese goods.
“Things we think are advantageous for us, we will do it even without anyone asking,” People’s Daily reported on its WeChat account on Tuesday.
“Things that are unfavourable to us, no matter how you ask, we will not take any step back. Do not even think about it.”

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Japanese Prime Minister Shinzo Abe and Madam Akie Abe will be having dinner tonight with President Donald Trump and First Lady to celebrate Melania’s birthday.  The prime minister and the president are close personal friends and will likely play golf tomorrow.
The Trump-Abe relationship existed for many years prior to becoming U.S. President. Their respect for each-other is genuine.  Abe and Trump are competitors on trade and economics and their strategies within that competition are actually fun to watch. The long-standing friendship underpins a very genuine alliance of U.S-Japanese interests.
In advance of the dinner tonight PM Abe and President Trump meet in the Oval Office ahead of a bilateral delegation meeting to discuss trade and regional matters. They also take questions from the media [Video and Transcript Below]

[Transcript] 4:35 P.M. EDT – PRESIDENT TRUMP: Thank you very much. It’s an honor to have my friend, Prime Minister Abe — Japan. We have many things to discuss, including trade, including some of the numbers that just came out this morning. We had a very big number at 3.2 GDP for the first quarter — usually the worst quarter. That also included the little bit of a dispute we had during the quarter. So 3.2 is far above expectation. I guess many people were thinking it would be in the ones, maybe between one and two. And 3.2 is great.
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