[AUTHORS NOTE: Having attended the ASEAN conference to make contacts, after a brief respite at home I spent the past several weeks traveling Southeast Asia to research the likely impact from Trump’s tariff and global trade reset. Visits included manufacturing and distribution facilities in the Philippines, Malaysia, Thailand, Vietnam, Cambodia, Sri Lanka and South Korea. What I will share with you in the next few months is an overview from direct first-hand discussions, contrast against the MSM financial media outline.]

The predictable doomsday Wall Street Journal narrative includes a forecast for a massive drop in exports from China as shipping conglomerates begin to outline a drop in trans-pacific sea cargo and container carriers.

What I would say to concerned Americans is to filter out the political narrative and remind yourself of the expanded footprint throughout SE Asia that Beijing has already established.  Chinese companies, many of them subsidized by the CCP, are pre-positioned to begin transnational shipping. I have witnessed it first-hand.  However, here’s the WSJ narrative as it begins.

WSJ – The number of ships sailing from China to the U.S. laden with clothes, electronics, furniture and other goods is plunging, as an accelerating number of cargoes are canceled.

The scrapped sailings come after the Trump administration ratcheted up tariffs on China while giving a three-month reprieve on punitive levies for much of the rest of the world.

At the Port of Los Angeles, one of America’s biggest gateways for imports from China, executive director Gene Seroka told port officials Thursday that he expects a 35% drop in import volumes in two weeks “as essentially all shipments out of China for major retailers and manufacturers has ceased.”

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Wednesday, President Trump held an executive order signing ceremony in the oval office and took questions from the media on current topics.  Video Prompted:

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President Trump notes the economic team have been in contact with 90 countries from around the world who have called to renegotiate trade agreements.  Additionally, Trump notes that 11 new automotive assembly plants have been announced by car companies in order to avoid U.S. tariffs.  That’s a lot of American jobs.

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Commerce Secretary Howard Lutnick appears on ABC This Week, to explain and clarify the purpose of the recently announced tariff exceptions.

According to the explanation, there are two “sector specific” tariffs in Semiconductors and Pharmaceuticals that will be announced in the next few months.  The recently announced “exemptions” are products that will be included in the sector specific tariffs that are also identified as “non-negotiable” tariffs.

Semiconductor items, automobiles, steel and aluminum as well as pharmaceutical products will fall under categories or ‘sectors’ of products that will be non-negotiable in all trade agreements for the tariff levy applied.  Any nation who enters negotiations for new Free Trade Agreements (FTAs) will not be permitted to negotiate trade on semiconductor products, automobiles, steel, aluminum and medications.  WATCH:

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White House Senior Advisor for Trade and Manufacturing Peter Navarro discusses the trade reset and tariff impact as it works through the process.

As visible and stated by the Trump team, the broad-based tariff approach was designed to save time and create the environment where foreign countries, including those with bilateral Free Trade Agreements (FTAs) would come to President Trump in an effort to retain their interests.  From there, new trade agreements would be structured.

Navarro rightly notes that both tariff and non-tariff barriers are designed to create a structural trade imbalance in their favor. The trade reset strategy is designed to confront these issues.  Navarro also notes how Vietnam operates as case-study in the use of non-tariff barriers and simultaneously operates as a transnational shipping point for Chinese products. WATCH:

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During one of the 2016 Republican debates, the Wall Street Journal’s Kimberly Stassel challenged Donald Trump on the projected revenue from his proposed tax plan. In essence Stassel claimed some economists doubted the growth factor Mr. Trump projects in his tax proposal.

What was highlighted within the question was one of the larger hurdles Trump faced as he needs to re-educate an entire generation on a fundamentally new vision of the U.S. economy. A return to a goods-based manufacturing and industry driven economic model.

President Trump’s MAGAnomic trade and foreign policy agenda is jaw-dropping in scale, scope and consequence. There are multiple simultaneous aspects to each policy objective; they have been outlined for a long time.

Interestingly, many people have forgotten a 1991 (35 years old) video of Donald Trump testifying before congress – as evidence of him being tuned in to the economic consequences of political activity.

The entire video is well worth watching, because it gives us insight into a very specific moment in time as they discuss the ‘Reagan era’ 1986 tax reform act.

However, for the sake of this discussion post, I would like to draw your attention to a very specific exchange between Donald Trump and Representative Helen Delich Bently (R-MD).

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Canadian Prime Minister Mark Carney spins a tale of Automaker Stellantis temporarily shutting down auto plants in Canada and Mexico as an outcome of President Trump’s tariffs.  Unfortunately, the gaslighting by Carney might work on less intellectual SnowMexicans, but it fails here.

Stellantis, an EU centered auto company who sell Dodge, Ram (made in Mexico) and Dodge, Durango (made in Canada), have been in a deepening crisis for over a year as a result of poor brand management, poor development and weak North American sales.  In short, their cars and trucks are not selling, that’s why the CEO quit in December, and they fired and replaced the North American leadership team.  It has nothing to do with Trump’s auto tariffs against Mexico and Canada.

That said, Mark Carney used the Stellantis plant closing (Windsor) as cover to announce that Canada would match the auto-tariffs with a 25% countervailing duty against all U.S. made cars and trucks. [Prompted]

This approach only raises the ceiling for the U.S. tariffs against Canada.  Quite frankly, I’m not sure why President Trump would continue to play this game with Carney and should (for the sake of simplicity) just cancel all trade with Canada and begin an immediate embargo and border blockade.

Tell the Carney clown to stay at home, shut it all down and let the Canadians live as a sovereign nation under the rule and regulation of the EU while they continue to destroy their energy resources and import foreign workers.  It’s silly to keep entertaining Canada as if they really matter.

If it wasn’t for the national security threat they could represent on our border, Canada would likely get little policy attention from any administration.   The Trudeau/Carney’s of the world are just annoying now.  Sorry Canada, but this Carney guy is even worse than the last Prime Minister.   They won’t even say “USMCA” because it’s Trump or something.  So, Carney says “CUSMA” 😂🤣😂 Childish, silly and so typically leftist. Too funny!

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The response from the EU is exactly what we would expect to see from the end of the 80-year-old Marshal Plan.

EU Commission President Ursula von der Leyden has three big concerns with the new trade/tariff reset.  I strongly suggest everyone to read the EU concerns slowly to fully absorb decades of hypocrisy now surfacing:

#1 The EU will not be able to compete for U.S. market share with 20% general tariffs and 25% auto tariffs.

#2 The EU must deploy countermeasures against the risk of losing industrial capacity and manufacturing to the United States.

And #3 The EU must defend itself against China dumping cheap products into the EU now rejected by the USA.

von der Leyen is concerned mostly about the extremely valuable U.S. consumer being leveraged by President Trump, essentially blocking exploitation from EU and Asia. The EU will not tolerate losing access to the most valuable customers in the world, Americans.

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President Donald Trump talks about placing tariffs on Canadian goods.  Ontario Premier Doug Ford talks about “inflicting as much pain as possible on the American people.”  See the difference?   Tell me again how the term “snowmexicans” is insulting.  I digress.

A few thoughts.  First, apparently Doug Ford doesn’t quite understand that tariffs on steel, aluminum and auto imports are not part of the “reciprocity” tariff regime.  They are an entirely different category classified under national security directives to ensure American industrial capacity.

Second, as Canada moves into the “freedom fries” phase, voices like Doug Ford might want to consider the end of this continuum that finds the word “embargo” in the lingo. Perhaps President Trump would consider elevating the conversation to “reciprocity” in the banking sector.  Again, I digress.

Ontario Premier Doug Ford announces the Canadian government intention to “inflict as much pain as possible against the American people.”  WATCH:

Canadians just don’t get it.  Meanwhile, as it was within most of the originating negotiations of the USMCA, Mexico smartly stays quiet as stompy feet Canada draws the attention from President Donald Trump.

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The atomic sledgehammer that President Trump just delivered to the German auto industry simply cannot be overemphasized.  A 25% tariff on imported cars and car parts completely negates hundreds of billions in pre-positioned investment dollars by German auto companies in Mexico.  [Executive Order Here]

[Cliff Notes Here]

To give scale to the impact on Germany, consider that German automakers currently have 330 automotive suppliers in Mexico according to information from VDA.  Audi (a subsidiary of Volkswagen) has no U.S. production sites; every Audi sold in America will be subject to a 25% tariff. The Audi brand access to the U.S. market was/is 100% dependent on Mexico, including for manufacturing the Q5 SUV, its top-selling U.S. model.

According to prior reporting from Politico, “Volkswagen’s most popular model for American consumers is the Tiguan, an SUV that is entirely manufactured in Mexico. The German automaker sold over 30,000 of the vehicles in the final quarter of last year, a nearly 50 percent year-over-year increase.”  But wait, it gets worse….

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During an executive order signing session in the White House today, President Trump announced a major change in tariffs on the auto industry.  [Full Executive Order Here]

The 25% import duty applies on top of any preexisting tariff for cars and light trucks.  The 25% tariff also applies to imported car parts.  The USMCA trade agreement between the U.S. Canada and Mexico still applies.

If the content of a car assembled in Mexico/Canada contains 50 percent component parts from the USA, the 25% tariff only applies to the final value of the imported components. In this example the tariff rate would be 12.5% of the total value.

The tariff applies to all imported cars and light trucks.  Approximately half of all cars sold in the USA are currently American made, the other half are import vehicles from mainly Mexico, Japan, South Korea, Canada and Germany.

This is a very big kick in the teeth to Germany.  Previously in a long-term strategy to avoid U.S. tariffs, German automakers invested billions in auto assembly plants in Mexico.  Ex. the BMW parts were shipped from Germany and the cars assembled in Mexico.  Now that investment is worthless as the vehicle will be taxed at a rate of 25% regardless of whether it is assembled in Germany or Mexico.

Ex.2 High end auto Mercedes currently builds SUVs in the USA in order to avoid the previous 25% tariff; however, they still build cars outside the USA and export them into the USA market.  This will likely change quickly, and Mercedes will begin building all cars and SUVs in the USA.

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