Focusing a lot of today’s information on the economic front and the implementation of the U.S. America-First trade discussion because this is the very heart of the Trump MAGA initiatives. Everyone who voted for President Trump should be grinning ear-to-ear today at how steadfast POTUS has been – against all economic adversaries foreign and domestic.
White House Trade Council Director Peter Navarro discusses the implementation of countervailing U.S. duties; the transshipment issues, NAFTA and the intended trade reset therein. “Economic Security is National Security“!
Justin from Canada presents one of the most ridiculous contexts for the U.S. 232 Steel and Aluminum tariff decision. Justin proclaims the imposition of countervailing duties by the U.S. indicates that President Trump considers Canada a national security threat. Seriously, I’m not kidding, that’s what he is stating – watch. Additionally, his feelings are hurt.
Apparently Justin from Canada cannot draw a distinction between an industry being lost, and that loss being a national security risk, and the hurt feelings of the Canadian Prime Minister. Intensely ridiculous… even for Justin. Obviously the irrational liberals in both the U.S. and Canada will likely draw the same ridiculous and illogical conclusions.
.
China, the EU, Canada and Mexico have been exploiting weak U.S. trade policy for years. Through the effective utilization of targeted tariffs, with multiple opportunities -and warnings- to avoid the outcome, President Trump and Wilbur Ross cut the Gordian Knot.
The Big Club, driven almost entirely by the U.S. Chamber of Commerce and Tom Donohue are going bananas….. They can’t believe Trump actually did it. He actually followed through. The Wall Street consortium of multinationals are apoplectic.
Decades of economic gaslighting upon the U.S. electorate; massive manipulative multinational corporate influences; hundreds of millions spent purchasing U.S. politicians; and POTUS has just punched it all square in the face.
Amid ongoing trade stalemates with NAFTA and the EU, Commerce Secretary Wilbur Ross has announced the U.S. Commerce Department will no longer provide exemptions for the European Union, Canada or Mexico.
As anticipated, during a telephone briefing with reporters Secretary Ross announced at midnight tonight the 25% steel, and 10% aluminum, tariffs on imported goods will begin.
Via Reuters: U.S Commerce Secretary Wilbur Ross told reporters on a telephone briefing that a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from the EU, Canada and Mexico would go into effect at midnight (0400 GMT on Friday).
The Wall Street Journal is publishing a report the European Union is likely to lose their exemption on Friday June 1st, from the U.S. Steel (25%) and Aluminum (10%) tariffs. Despite their article outline almost everything is still speculation at this point; however, our own review of the trade position indicates the administration is very prepared to begin delivering the metal tariffs on all nations, including NAFTA partners, without reservation.
President Trump positioning the auto-industry 232 review, May 23rd, was one of the key ‘leverage signals‘ something was about to change.
Despite massively one-sided EU imposed tariffs against U.S. products, the EU is demanding to be permanently exempted from any U.S. reciprocal tariff measures or they will block the import of U.S. products. The hypocrisy is typically European.
Adding fuel to the speculation the tariff exemptions will be allowed to expire Commerce Secretary Wilbur Ross stated earlier today, at the Organization for Economic Co-operation and Development (OECD) summit – a multinational trade conference, that any/all trade discussions are entirely possible regardless of whether the U.S. begins the tariff against steel and aluminum imports.
WSJ – […] Mr. Trump has threatened to punish EU car exports if the bloc retaliates, and Mr. Ross is pursuing a study of car and auto-part imports similar to the one he completed on steel and aluminum.
Officials in some EU member states are already angry at Washington over Mr. Trump’s decision to pull out of the Iran nuclear deal. Still, others, including some German officials, want to seek a solution that prevents economic damage.
Canada is vowing to retaliate against the U.S. if President Trump subjects NAFTA partners to the same tariffs as other trade nations and eliminates the NAFTA loophole. {Go Deep}
The NAFTA Loophole allows Canada and Mexico to broker independent trade deals with Asian and European companies; then use their Mexican and Canadian access to the U.S. market as a backdoor around U.S. Tariffs.
This loophole has been exceptionally rewarding for both Canada and Mexico and for more than a decade they have structured their economies around loophole retention. U.S. corporations, seeing advantages from cheap Asian parts in Mexico and Canada, have moved some manufacturing there to take advantage. In an effort to reset the trade imbalance created by the loophole President Trump is threatening to close it.
OTTAWA (Reuters) – Canada will “respond appropriately” to any U.S. steel and aluminum tariffs, Foreign Minister Chrystia Freeland said on Wednesday, less than two days before the punitive measures are due to kick in.
“The government is absolutely prepared to – and will defend – Canadian industries and Canadian jobs. We will respond appropriately,” Freeland told reporters when asked about possible U.S. action.
The 30-day extension on exemptions for Steel and Aluminum tariffs is scheduled to expire June 1st. President Trump is positioning the U.S. Trade Team for a substantial reset. According to reports, U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystina Freeland held a terse meeting today over the tariffs and Canada’s unwillingness to close the NAFTA ‘fatal flaw‘ (loophole).
Both Canada and Mexico have structured key parts of their trade agreements to take advantage of their unique access to the U.S. market. Mexico and Canada generate billions in economic activity through exploiting the NAFTA loophole. China, Asia (writ large), and the EU enter into trade agreements with Mexico and Canada as back-doors into the U.S. market. So long as corporations can avoid U.S. tariffs by going through Canada and Mexico they will continue to exploit this approach.
If the U.S. applies the same tariffs to Canada and Mexico we apply to all trade nations, then the benefit of using Canada and Mexico -by those trade nations- is lost. Corporations will no longer have any advantage, and many are likely to just deal directly with the U.S. However, this would mean hundreds of billions in lost economic activity for Mexico and Canada. It is the NAFTA fatal flaw.
The NAFTA phone call between Justin from Canada and U.S. President Trump took place yesterday.
Due to the importance of the timing; and against the backdrop of Trump’s meeting with auto executives; and considering that Canadian Foreign Minister Chrystia Freeland spent five days in Washington DC last week without an agreement; and understanding no NAFTA talks are taking place this week; it was important to see who called whom in order to understand the import of the phone contact:
President Donald J. Trump spoke today with Prime Minister Justin Trudeau of Canada to address the renegotiation of the North American Free Trade Agreement. President Trump underscored the importance of quickly concluding an agreement. (WH – link)
According to Canadian officials, Justin from Canada was the initiator of the call yesterday.
Speaker of the House Paul Ryan previously set a deadline date of May 17th, due to the statutory requirements for any agreement, based on this year’s legislative calendar. That’s the day after tomorrow. There is general consensus no agreement prior to that date is possible. Additionally Mexico’s national election is July 1st, 2018.
Those who are watching the NAFTA negotiations must pay close attention to the activity in the past 36 hours. There is a key video at the bottom. First the backdrop:
As most are aware the NAFTA fatal flaw, the “loophole”, surrounds Mexico and Canada structuring their economic manufacturing policy -and trade deals- through the exploitation of a back-door into the U.S. Market. Understanding this key issue is paramount to understanding President Trump’s approach therein.
Remove the NAFTA “loophole” and there is no longer an incentive for U.S. manufacturers to locate their operations in Mexico or Canada. However, the removal of this loophole also means China, ASEAN nations and the EU lose the same incentive.
There have been hundreds of billions of previous investment by multinational corporations in Mexico and Canada. Every dollar spent was intended to continue this exploitation.
Then came Trump.
In terms of investment size and scale of manufacturing, the auto-sector is perhaps the primary industry attempting to position themselves to avoid any reversal of the NAFTA scheme; and it is a self-interested economic scheme. In the short term there are billions at stake; in the longer term there are trillions within the equation.
Earlier today President Trump announced via Twitter the date and location for the upcoming denuclearization talks between the U.S. and North Korea.
As announced, the summit between President Trump and Chairman Kim Jong-un will take place in Singapore on June 12th, 2018.
In the days leading up to the Singapore summit, there is a G7 meeting in Quebec, Canada, on June 8th and 9th. The timing affords France, Germany, Italy, Britain, Japan and Canada an opportunity to share their perspectives, and simultaneously provides an opportunity for President Trump to solidify international support in advance of the summit. Importantly the G7 allows time with Shinzo Abe of Japan.
South Korean Prime Minister Moon Jae-in is scheduled to visit the White House May 22nd, to brief President Trump on his prior meeting with Chairman Kim and discuss regional strategy and key issues for the Korean peninsula.
NAFTA is at a critical stage. Mexico has committed themselves to a full-court press this week in an effort to retain the investment influx from multinational corporations. To retain their advantage, Mexico needs to keep the NAFTA loophole allowing Asia and EU to use Mexico and Canada as back-doors to the U.S. market.
Additionally, AM-LO, a self-described soft-Marxist (similar to Hugo Chavez) is likely to win the July 1st Mexican election. Yesterday, Mexican Foreign Secretary Luis Videgaray travels down the street to the State Department for a meeting with Secretary Pompeo. From the U.S. perspective, anything from Secretary Videgaray is essentially moot at this point; the Mexican government is moving toward a more socialistic economic model.
[Transcript] SECRETARY POMPEO: Good afternoon. Today it is my pleasure and a great honor to welcome the Mexican Foreign Secretary Luis Videgaray to the State Department. Welcome.
We had a great discussion and we had so because Mexico is one of the United States’ closest partners. Together we are working to build a more secure, prosperous, and democratic hemisphere. We are neighbors, allies, and friends.
