Justin from Canada had a tough time getting any respect while attending the G20 in Osaka, Japan.

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Justin from Canada travels to the White House for a conversation with President Trump about the USMCA deal, ratification, and a request from Canada for assistance in their conflict with China.  The relationship between President Trump and the arrogant Justin from Canada is tenuous at best.  [Video and Transcript]

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[Transcript] 12:10 P.M. EDT – PRESIDENT TRUMP: Well, thank you very much. We had some good news. The market hit a all-time high today. The S&P just broke its record, so we’re very happy about that. The stock market continues to do well. Jobs have been literally through the roof. And, speaking of jobs, we have the USMCA with Canada, with Mexico. And we’ve come a long way. It’s a great agreement. As you know, Mexico, yesterday, approved it.
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Iran didn’t just shoot down a simple ‘drone’, Iran used a surface-to-air missile to shot down one of the most technologically advance U.S. aircraft costing $123 million; more than the price of an F-35 stealth fighter jet.
The targeted aircraft was a US Navy Broad Area Maritime Surveillance (BAMS-D); a RQ-4A Global Hawk high-altitude long endurance (HALE) drone, flying in international airspace over the Gulf of Oman.

“The RQ-4 flies at upwards of 65,000 feet,” Tyler Rogoway, the editor of The War Zone, wrote. “So this would have been a sophisticated radar-guided surface-to-air missile that shot the aircraft down, not a shoulder-fired, heat-seeking missile.”

(Business Insider)The US military called the incident “an unprovoked attack on a US surveillance asset in international airspace” over the Strait of Hormuz, the entrance to the Persian Gulf. The Iranians have accused the US drone of entering Iranian airspace, an allegation Central Command characterized as completely false.

President Trump responds below:
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The construct of the USMCA was always anticipated to sail through ratification in Mexico because, well, quite frankly, the USMCA is specifically structured to provide great benefit toward Mexico. It’s not because the language within the USMCA favors Mexico, but rather the rules are centered around deregulating industry, and lifting wages.
The rules-of-origin, in combination with mandated minimum wage rates attached to the manufacturing sector; and the fact that Mexico has the lowest current wage rates in North American; specifically means that Mexican workers stand to get the biggest financial benefits… and that’s ok.  Trump, Lighthizer and Ross designed it that way.

The U.S. benefits when the Mexican wage rates are raised.  Heck, there was a time in the early negotiations, after Canada was kicked out of the room, when Secretary Wilbur Ross was advocating for an $11/hr minimum wage in Mexico, and the Mexicans were like ‘whoa, wait a minute, too high, too high’… [It was quite funny, because Trump was being called racist simultaneous to him trying to give a $85/day pay raise to Mexicans (from $3/day)].

MEXICO CITY (Reuters) – Mexico on Wednesday became the first country to ratify the United States-Mexico-Canada Agreement (USMCA) agreed late last year to replace the North American Free Trade Agreement (NAFTA) at the behest of U.S. President Donald Trump.

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Charles Payne, filling in for Maria Bartiromo, interviews White House Manufacturing and Trade Policy advisor Peter Navarro.  Unfortunately the interview begins with a discussion of tariff polling….  The vast majority of Americans have no understanding of the impact of tariffs and/or MAGAnomic policy; they only know the economic outcomes they can feel.
Mr. Navarro walks through how tariffs interact with global supply chains and the financial manipulation by multinational corporate interests.

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Apparently Justin from Canada is coming to the White House for a meeting with President Trump…

WHITE HOUSE – President Donald J. Trump will welcome Prime Minister Justin Trudeau of Canada to the White House on June 20, 2019. The visit will reaffirm America’s deep partnership with Canada, and allow the two leaders to address opportunities and challenges related to expanding bilateral cooperation.
President Trump and Prime Minister Trudeau will discuss the shared economic interests of their countries, including the United States-Mexico-Canada Agreement and opportunities to drive more growth and create jobs in both the United States and Canada. The two leaders will also discuss the upcoming G20 Summit, which will take place from June 28 to 29 in Osaka, Japan. (read more)

Last month, Manny Montenegrino had a good discussion with Ezra Levant about the current issues with the relationship between Justin from Canada and President Trump.  Against the backdrop of this upcoming visit, it’s worth revisiting:
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The border and migration “agreement” with Mexico is a smart move by President Trump. If you worry that Mexico won’t take any action, well, don’t underestimate the dynamic President Trump just put into play.
Financial investment flows based on expectation, probability and risk management. If you don’t think Mexico will follow-up with their end of the bargain; then you are predicting the tariffs will reappear in 90-days.

Overlooked by most of the financial pundits President Trump has pre-positioned risk management actuaries with the basis for their analysis and internal investment advice. In a similar move last year, President Trump suspended tariffs against China based on an agreement (G20 summit in Argentina). After several months and a 150 page initial agreement of principle, China walked away from their prior promises and  terms.  The tariffs against China were immediately implemented at the previous rate.
That China example with tariffs is now the baseline for all multinational investment to consider as they review their current exposure in Mexico. If any financial investor (bank or corporation) believes Mexico will not adhere to the border/migration agreement, then by extension they are accepting/predicting the Mexican tariffs will take effect in 90-days.
Put another way… President Trump has just given notice to all global business interests to organize their financial affairs toward Mexico within 90 days.
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Vice-President Mike Pence traveled to Canada today as an emissary of the Trump administration to support Canadian passage of the USMCA trade agreement.
According to Reuters media reports the vice-president was focused on the importance of a strong North American economic alliance, and how a united tri-lateral agreement can form a geopolitical hedge against influence from communist China and socialist ideologies in Cuba and Venezuela. Justin from Canada expressed his perspectives over diminished women’s rights, U.S. abortion laws, the important contributions of a transgender workforce, climate change and the NBA championship playoffs…. Yes, really:

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Meanwhile in Mexico: “The Senate, controlled by Lopez Obrador’s National Regeneration Movement (MORENA) and its allies, should approve the United States-Mexico-Canada Agreement (USMCA) once it has passed through congressional committee, the president said.” (link)
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Chrystia Freeland has presented the initial procedural process for  the Canadian Parliament to take up a bill to pass the USMCA.  However, the Canadian window is short, if they don’t ratify the trade pact by the end of June, the Canadian parliament will go into legislative recess until after the general elections October 21st, 2019.

OTTAWA (Reuters) – Canada took a first step toward ratifying the new North American trade agreement on Monday just three days ahead of U.S. Vice President Mike Pence’s trip to Ottawa to discuss the passage of the treaty.
Foreign Minister Chrystia Freeland presented what is known as a “ways and means motion” to the House of Commons, which opens the way for the formal presentation of a bill.

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A combination of the NAFTA “Fatal Flaw” & transnational Chinese shipments, was always at the heart of President Trump placing steel and aluminum tariffs on Canada and Mexico during negotiations that culminated in the USMCA trade agreement.  The goal was to block China from dumping product into the U.S. through the doors of Canada/Mexico.
Within the USMCA President Trump and Robert Lighthizer placed a specific rule Article 32:10 which grants the U.S. the right to veto (control) Canadian and Mexican purchase agreements with “Non FTA Market Countries”, ie. China.

This Article 32:10 rule is at the core of the USMCA agreement.   However, after the USMCA agreement was reached President Trump kept the Steel/Aluminum tariffs in place.  For those who don’t understand Trump (insert Chrystia Freeland here) the question was always: why?
Quite simply the answer behind the question was President Trump’s retention of leverage. Yes, in 2018 the USMCA was agreed to; however, the USMCA was not ratified by either Canada or Mexico…. it was only an agreement.  Why would Trump remove critical leverage on an initial promise.
Trump is not a politician; he’s a businessman who knows promises are paper until they become action. Additionally, President Trump is a tactician; the tariff leverage was held until such a time as removing it would generate an immediate gain in national compliance toward his trade objective… That’s the action.  Today:

(Bloomberg) President Donald Trump said the U.S. will lift steel and aluminum tariffs on Canada and Mexico, boosting efforts to encourage lawmakers to ratify a new North American trade deal.
“I’m pleased to announce that we’ve just reached an agreement with Canada and Mexico and will be selling our product into those countries without the imposition of tariffs or major tariffs,” Trump said at an event Friday. “Hopefully Congress will approve the USMCA quickly.”

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