The BBC’s condescending Emily Maitlis demands support for the European Union and challenges the sovereign authority of Hungary to self-determination.   Hungarian Foreign Minister Péter Szijjártó was having none of that nonsense, and pushed back against little Miss feelings.

.
This occurs on the heels of Italy rebuking the EU immigration platform; and a weakened German Chancellor Angela Merkel having to beg political allies in Bavaria for support:

BERLIN (Reuters) – German Chancellor Angela Merkel’s political future rests in the hands of the Christian Social Union (CSU) on Sunday, when the Bavarian party’s leadership meets to decide whether to accept migration deals she brought back from Brussels.

(more…)

Within the German economy the auto-sector holds the largest political influence.  Because of this dynamic all German politicians kneel at the knee of the big industrial auto manufacturers.  It has been said that losing support from within the auto-sector is much worse on a German politician than losing support from party or parliament.
Because of this dynamic; and specifically because the German auto-sector is dependent on the United States as their biggest customer, President Trump holds leverage over German Chancellor Angela Merkel.  This makes Fraulein Merkel unhappy.

President Trump wants three EU issues resolved: 1) Germany to contribute the minimum 2% of GDP for their own NATO defense.  2) Germany/EU to support enhanced sanctions against Iran; and  3) President Trump wants all German/EU protectionist trade barriers and tariffs lowered or eliminated – and new trade deals negotiated.
To gain momentum on these initiatives, President Trump is using the economics of trade as leverage.  Trump has suggested a 20% tariff on all EU automobiles shipped into the U.S. [The same standard now likely proposed toward Canada]  The German auto-sector, and as a consequence the German economy, simply cannot survive without low cost access to the U.S. market, their biggest customer.
(more…)

Today Canada released an updated list of retaliatory tariffs designed as countermeasures to the U.S. Steel and Aluminum tariffs [SEE HERE] which will begin Sunday, July 1st.
Additionally, Foreign Minister Chrystia Freeland, Innovation Minister Navdeep Bains, and Employment and Labour Minister Patty Hajdu, announced they would initiate an emergency program to use Canadian taxes compensate workers, expand unemployment benefits, and subsidize impacted industry.  Yes, in a transparent display of political ideology (throwing capitalism directly out the window), Canada doubles-down on centralized government subsidies to offset market impacts.   Brilliant ‘eh!

Chrystia Freeland made the announcement on the floor of a Hamilton steel factory Friday. In a rare backdrop, Ms. Freeland actually entered a factory with machines and things, to deliver the carefully choreographed political message (video below – watch the last minute to understand).
Team U.S.A. have applied tariffs to Canadian softwood lumber, Steel and Aluminum as Canada refuses to negotiate new terms for NAFTA where North American products are prioritized.  Canada demands the ability to continue importing Asian, mostly Chinese, products for their assembly-based market.
With the latest counter-move by Justin and Chrystia from Canada, it is increasingly likely President Trump will levy a 20% tariff on imported Canadian automobiles.  Last month (May) the Canadian economy dropped over 31,000 Full-Time jobs.
(more…)

Earlier today President Trump delivered remarks celebrating the six month anniversary of the U.S. Tax Cuts and Jobs Act.   Today is also the last business day of the second quarter.

.
Long time CTH readers might note in 2015 when we first saw candidate Trump’s economic policy initiatives, we began outlining the sequential economic possibilities if President Trump won. So far, all is going according to plan – STUNNINGLY According To Plan.  Seriously, go back and look –FEBRUARY 2016– two-and-a-half years ago.
The possibilities were obvious.  As a result we predicted repeatedly that Q2 of 2018 would be the beginning of the largest period of U.S. GDP and wage growth in the past 30 years.  Q2 2018 ends tomorrow and the results of Q2 will be announced in the next few weeks.  Everything is happening in a logical sequence as a result of Trump’s MAGAnomic plans.
(more…)

President Trump often holds local media Q&A’s when discussing specific local aspects to larger trade and economic initiatives.  In this quick interview with Charles Benson President Trump discusses the Foxconn deal (more on that will follow), and the larger issue surrounding a global trade reset objective (important video below).
As steps are taken within the America-First economic initiatives, many people are overlooking President Trump’s ultimate goal of a complete global reset in trade.  The Trump administration wants all trade tariffs and trade barriers removed so that all nations can compete on an even field.
In order to achieve that goal, POTUS Trump is applying the process of reciprocity; assigning an identical U.S. trade standard as the country being confronted.
The international community cannot negotiate (in good faith), from an adversarial position, against an identical trade policy they apply toward the U.S.
However, until today no President has ever called out the global trade hypocrisy; let alone challenged it directly.   President Trump will not back down from this approach. The international trade community is just now realizing that fact.
Within the process of negotiation to achieve this reset, President Trump begins to apply the principles of reciprocal trade tariffs.  This is the first phase; this is where we are now.
(more…)

National Economic Council Chairman Larry “Kuddles” Kudlow is back after suffering a mild heart attack. [Yikes, “mild“, is there such a thing?]
Appearing on TV with Stuart Varney Chairman Kudlow explains how the administration hopes to use the Foreign Investment Risk Review Modernization Act (FIRRMA) to enhance U.S. trade policy.  Mr. Varney cannot comprehend Trump-speed in achieving a global trade reset:

.
While media wasn’t paying attention, President Trump brilliantly played congress to gain strategic trade leverage.  Knowing political opposition would unite, POTUS Trump took a forgiving position toward Chinese company ZTE; Trump-haters and NeverTrumpers quickly aligned to push through hammer legislation designed to hurt China and by extension Trump’s position.  However, Trump actually wanted the tool.  POTUS now weaponizes FIRRMA as trade leverage against all 301 targets.   Brilliant.
USTR Robert Lighthizer Final 301 Report on China Trade Infractions HERE
Part 2 of Kudlow interview below:
(more…)

Earlier today President Trump’s National Security Advisor John Bolton met with Russian officials including President Vladimir Putin. At the conclusion of their discussions Mr. Bolton held a brief press conference to answer questions.
We anticipate that tomorrow a joint U.S-Russia announcement for a summit to be held later this year.

(more…)

There is an article from Bloomberg which finally concedes the obvious economic and trade dynamic within a U.S. -vs- China confrontation.  The media paradigm shift is based on new statements from Chinese Ministers admitting they cannot win a trade confrontation with U.S. President Trump.
The summary reason is simple, we have discussed it frequently:
China is a production-based economic model, they do not have the ability, or wealth, to consume their own durable goods production; they rely on exports.
The U.S. is a more balanced economy; we consume 80% of our own production.  We are self-sustaining, China is not.
Without a market to sell their products, the Chinese economy cannot survive.
Conversely, China has focused so intensely on durable-goods manufacturing, their consumable goods market (food) is dependent; they cannot feed themselves.  The U.S. can survive without exporting food, China cannot survive without importing food.  The U.S. economy can survive without importing durable goods; the Chinese economy cannot survive without exporting durable goods.  This is the unavoidable trade reality.  As a consequence President Trump has all the factual leverage.
In stunning, and carefully worded economic writings, Chinese academics and economic ministers are now talking about the inherent weakness of the Red Dragon policies:
(more…)

This has to be one of the single funniest French retorts in the history of commerce.  If President Trump follows through on auto tariffs, France will strike back.  Let that sink in.
Oh noes,… your next Peugeot, Citroen or Renault purchase might cost more.  D’oh.

PARIS (Reuters) – Europe will hit back if U.S. President Donald Trump follows through with a threat to slap import tariffs on European-made cars, France’s finance minister said on Monday. Trump escalated already burning trade tensions on Friday by threatening to hit all imports of cars assembled in the European Union (EU) with a 20 percent tariff.   (more)

The EU is the most protectionist trade bloc in the world.  The German auto-sector is the most protected trade sector inside the EU.  The hypocrisy is silly.
The EU, Germany specifically, needs access to the U.S. market to survive.  Angela Merkel has already conceded this point in the EU concessionary position to abandon all auto tariffs; in exchange for removal of Steel and Aluminum tariffs.
(more…)

Earlier today President Trump and First Lady Melania welcomed King Abdullah II bin Al-Hussein and Queen Rania Al Abdullah of Jordan back to the White House.  This is the second official visit of King Abdullah and Queen Raina.
In the background it is likely much of the executive conversation surrounds the current issues with Iran, the state of Syria, Israel and the Palestinian Authority as it pertains to regional stability overall and Jordan specifically.   In the quiet distance, and entirely overlooked by Western -mostly U.S. media, President Trump has been positioning the EU via economic leverage against Iranian influence.

.
[Transcript] PRESIDENT TRUMP: Thank you very much. It’s a great honor to have the King and Queen of Jordan with us. They’re friends. We’ve known each other now for quite a while. Long before this.
(more…)