Notice how Wallace never interrupts a Wall Street Decepticon? Senator Pat Toomey (U-CoC) and swamp gatekeeper Chris Wallace discuss tariffs on China, the immigration crisis and a possible threat from Iran.
Further evidence there will be no further engagement with China surfaces in an announced specific shift in directive from President Trump today focusing Commerce Secretary Wilbur Ross and USTR Lighthizer on a sector, not a specific nation.
The auto industry is the key sector on two specific trade fronts: the EU trade reset and the ongoing negotiations with Japan. Both trade agreements center heavily on the auto-sector; and both Japan and the EU have cemented intransigent trade positions.
Enter President Trump to cut the Gordian knot.
It’s a small but important note that President Trump had previously assigned geographic trade responsibilities. Wilbur Ross has the EU as his primary focus and Robert Lighthizer has authority over Asia. Today the White House connects the objective of both Ross and Lighthizer as President Trump instructs the U.S. Trade Representative to engage in discussions around the specifics of the auto-sector:
White House – […] Following an extensive review of the Department of Commerce’s Section 232 automobile report, President Trump today issued a proclamation directing the United States Trade Representative to negotiate agreements to address the national security threat, which is causing harm to the American automobile industry. (more)
The President has designated the auto industry as a critical component of national security [More Here]. With Ross’s report in hand, the possibility of increasing tariffs on foreign automobiles is the leverage POTUS gives to Lighthizer along with the mandate to engage.
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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.”
The overall strategery here is brilliant. After two years of rope-a-dope…. Trump exits the corner for the championship rounds in the trade fight: First the body blow, China boxed-in with trade confrontation and consequences of retreat from agreement (Mnuchin and Lighthizer);… Then whammo, the roundhouse XO placing telecom under national security review (Navarro and Pillsbury); then upper-cut, Wilburine places Hauwei and affiliates on Commerce Dept. trade blacklist… Lions and Killers and Strategists, oh my.
WASHINGTON/NEW YORK (Reuters) – The U.S. Commerce Department said on Wednesday it is adding Huawei Technologies Co Ltd and 70 affiliates to its so-called “Entity List” – a move that bans the telecom giant from buying parts and components from U.S. companies without U.S. government approval.
U.S. officials told Reuters the decision would also make it difficult if not impossible for Huawei, the largest telecommunications equipment producer in the world, to sell some products because of its reliance on U.S. suppliers.
Under the order that will take effect in the coming days, Huawei will need a U.S. government license to buy American technology. Huawei did not immediately comment.
Good discussion between Tom Friedman and Steve Bannon on the ‘big picture’ of the U.S. -vs- China geopolitical trade confrontation. Friedman is an insufferable prog on methods, but he recognizes the President Trump approach is necessary. Worth Watching:
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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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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Giddy up… President Trump has fulfilled another campaign promise to confront China and hold firm. As promised, three decades of Donald Trump’s intense commitment to stop the exfiltration of Amerian wealth is on display today.
When you plant your tree in another man’s orchard don’t be surprised when you end up paying for your own apples….
U.S. Trade Representative Robert Lighthizer; U.S. Treasury Secretary Steven Mnuchin; U.S. Commerce Secretary Wilbur Ross and U.S. President Donald Trump are confronting Chinese Chairman Xi Jinping and Vice-Chairman Liu He… and now consequential things get economically very serious.
There are going to see multiple geopolitical background moves now as the confrontation shifts to the painful phase…. who can outlast the economic standoff.
WASHINGTON DC – Negotiations to end the US-China trade war came to a surprisingly early close in Washington on Friday with no signs of a deal – reportedly just hours before the Chinese delegation will return to Beijing.
US Treasury Secretary Steven Mnuchin told reporters at noon that the talks had been constructive as he left the US trade representative’s office, where negotiators held their latest round of talks in an attempt to end a months-long trade dispute. (more)
Today President Trump outlines an approach to head-off the anticipated retaliation from China over the increase in U.S. tariffs that began today. Whether this is structurally possible, or whether this is Trump’s attempt to diminish the leverage carried by Vice-Chairman Liu He, is an interesting question. However, the strategy is clear.
Overall U.S. inflation remains low relative to the economic gains from MAGAnomic policy. [Current CPI HERE]. GDP and wage growth are both exceeding inflation. As such, now is indeed the best time to confront China. President Trump notes this today in a tweet:
Inflation in the U.S. remains low overall at 1.8%…. now is the perfect time to hit Beijing with expanded tariffs. However, President Trump knows China will retaliate through the multinationals on Wall Street. President Trump knows China will specifically target the U.S. Agriculture sector. China will likely attempt to put pressure on Trump by refusing to buy U.S. farm product. The BIG AG multinationals will go bananas.
The BIG AG multinationals, those who control food/farm production, also control key Senators; they have been purchased through lobbyists. This is part of the Big Club approach/strategy. Wall Street and the U.S. Senate will be aligned to support China; as a consequence President Trump needs to counteract their effort.
President Trump’s approach to counteract China’s strike against the U.S. agricultural community is visible in a series of tweets today. I don’t necessarily agree with the proposal long-term, BUT I do understand the short-term objective…. optimum expediency.
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This is the big one. This is the inflection moment. Tonight around 5:00pm Chinese Vice-Chairman Liu He will engage with team U.S.A. on the substantive issues around the future of the U.S-China trade relationship. Trillions at stake.
At midnight tonight the tariffs on Round One of Chinese goods are scheduled to increase from 10 percent to 25 percent. Round Two is yet determined. The background for the disposition of TEAM USA was outlined HERE.
Mnuchin – Trump – Lighthizer and Ross
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnunchin previously worked a 150-page outline agreement with China on seven chapters of trade issues covering: Theft of U.S. intellectual property; protection for trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation. Last week China reversed course on all of the substantive agreements.
Today Vice-Chairman Liu He is going to try to justify to President Trump why China can no longer accept the commitments they made over the past three months.
It cannot be overstated how everything in/around DC must first be filtered through the prism of this inflection point. At the heart of U.S. politics, the majority of the Senate Chamber is aligned with the Chinese through purchased multinational lobbying interests. Again, there are trillions at stake. Wall Street through K-Street has paid the Big Club to defend their multinational/financial interests from President Trump.
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