President Trump holds a bilateral meeting with German Chancellor Friedrich Merz in the Oval Office. After brief remarks of mutual appreciation, President Trump and Chancellor Merz responded to questions from the assembled press pool.
Chancellor Merz expressed support for the objective of eliminating the regime threat from Iran. President Trump notes at the beginning how Iran is targeting civilian targets in the region and generating even more support from the Gulf states for the USA.
When asked about the British and Spanish refusal to support U.S. military logistics and deployment, President Trump let the media be aware he is not happy with the position of Spain and the U.K. President Trump also announced [11:00 of video] an economic embargo of trade with Spain as an outcome of their position.
The Supreme Court tariff ruling has created the need for U.S. Trade Representative Jamieson Greer and U.S. Commerce Secretary Howard Lutnick to modify the baseline tariff approach with the approvals of President Trump.
The baseline tariffs are being reset to 10% with upward adjustment to 15% as planned. The reciprocal tariffs will not require any substantive modifications as most of the Free Trade Agreements have been cemented with reciprocity tariffs as part of the negotiated deals.
USTR Greer appears on Bloomberg to clarify the current situation and provide some information as to the transitional baseline tariffs as now modified. Additionally, and importantly, Greer begins discussing the USMCA review and his acceptance that President Trump is openly questioning the value for us. Greer notes Mexico and Canada being used as import hubs to avoid tariffs is a big issue. WATCH:
Section 232 [Steel and Aluminum examples] of the Trade Expansion Act of 1962 (19 U.S.C. §1862, as amended) authorizes the President to impose trade restrictions—such as a tariff or quota—if the Secretary of Commerce determines, following an investigation, that imports of a good “threaten to impair” U.S. national security. {SOURCE}
Section 301 tariffs are a trade enforcement mechanism established under the Trade Act of 1974. They allow the U.S. government to impose tariffs on imports from countries that are found to be engaging in unfair trade practices. The Office of the United States Trade Representative (USTR) conducts investigations to determine if a country is violating trade agreements, and if so, it can impose tariffs as a corrective measure {SOURCE}
Section 122 of the Trade Act of 1974 allows the U.S. president to impose tariffs of up to 15% to address “large and serious” balance-of-payments deficits. This authority can be exercised without prior congressional approval for a limited duration of 150 days. After this period, any tariffs must be extended by Congress. {SOURCE}
*FYI, there is a lot of distracting noise in the various social media platforms about internecine MAGA battles and ego-driven points of specific interest. CTH chooses to focus energy and attention on the substantive policy issues that will generate substantive policy outcomes for America.
While the government of Canadian Prime Minister Mark Carney has inked a trade agreement with China to accept cheap imported vehicles in exchange for Beijing purchasing some agricultural products, President Trump has promised those cheap Chinese EVs will never cross the border into the USA.
The Canadian polling on the issue has done a remarkable chang in the past few years. Now, the majority of Canadians are willing to purchase cheap Chinese EVs. As outlined by Bloomberg, “More than half of Canadians, or 53%, say that knowing an EV was made in China would have no effect on their purchasing decision, according to a new poll by Nanos Research Group for Bloomberg News.”
Approximately 50,000 Chinese electric vehicles will enter the Canadian market in the first year. “The pact with China includes a provision that part of the quota will be reserved for electric vehicles priced at C$35,000 ($25,700) or less, the government has said.” {SOURCE}
The Canadian government wants a Chinese auto manufacturer, any Chinese auto manufacturer, to build factories in Canada to produce these electric vehicles. Canada wants the jobs and economic activity because Canada is currently bleeding jobs and economic activity due to the trade conflict with the U.S.
Building cheap Chinese EVs in Canada might help offset a few thousand job losses, but building Chinese EVs in Canada only further ensures there will not be a substantive trade agreement between the USA and Canada once the USMCA (CUSMA) is dissolved. [More on that coming]
Writing on a Truth Social post earlier this evening, President Trump is threatening to block the U.S. side of a new bridge that links Detroit, Michigan to Ontario, Canada:
(Truth Social) – “As everyone knows, the Country of Canada has treated the United States very unfairly for decades. Now, things are turning around for the U.S.A., and FAST! But imagine, Canada is building a massive bridge between Ontario and Michigan. They own both the Canada and the United States side and, of course, built it with virtually no U.S. content. President Barack Hussein Obama stupidly gave them a waiver so they could get around the BUY AMERICAN Act, and not use any American products, including our Steel.
Now, the Canadian Government expects me, as President of the United States, to PERMIT them to just “take advantage of America!” What does the United States of America get — Absolutely NOTHING! Ontario won’t even put U.S. spirits, beverages, and other alcoholic products, on their shelves, they are absolutely prohibited from doing so and now, on top of everything else, Prime Minister Carney wants to make a deal with China — which will eat Canada alive. We’ll just get the leftovers! I don’t think so.
The first thing China will do is terminate ALL Ice Hockey being played in Canada and permanently eliminate The Stanley Cup. The Tariffs Canada charges us for our Dairy products have, for many years, been unacceptable, putting our Farmers at great financial risk. I will not allow this bridge to open until the United States is fully compensated for everything we have given them, and also, importantly, Canada treats the United States with the Fairness and Respect that we deserve. We will start negotiations, IMMEDIATELY. With all that we have given them, we should own, perhaps, at least one half of this asset. The revenues generated because of the U.S. Market will be astronomical. Thank you for your attention to this matter!” ~PRESIDENT DONALD J. TRUMP
The USMCA renegotiation plan likely plays a big part in this announcement. Don’t react, just watch.
Japanese Prime Minister Sanae Takaichi took a calculated risk only three months after her October 2025 election victory when she dissolved the Japanese Parliament and called for a snap election. The high-stakes gamble paid off, with Japanese voters handing her ruling Liberal Democratic Party (LDP) a big super-majority Sunday.
Takaichi said in a January press conference, calling for the snap election was a “profoundly weighty decision,” adding that “by doing so, I am also putting my position as prime minister on the line.”
The voters responded with great enthusiasm for her leadership. Sanae Takaichi was also a protege’ of former Japanese Prime Minister Shinzo Abe, a close personal friend of President Donald Trump.
President Trump who heartedly endorsed Takaichi also celebrated the outcome on Truth Social: “Congratulations to Prime Minister Sanae Takaichi and her Coalition on a LANDSLIDE Victory in today’s very important Vote. She is a highly respected and very popular Leader. Sanae’s bold and wise decision to call for an Election paid off big time. Her Party now runs the Legislature, holding a HISTORIC TWO THIRDS SUPERMAJORITY — The first time since World War Il. Sanae: It was my Honor to Endorse you and your Coalition. I wish you Great Success in passing your Conservative, Peace Through Strength Agenda. The wonderful people of Japan, who voted with such enthusiasm, will always have my strong support.”
President Trump speaks to President Sheinbaum about upcoming USMCA renegotiation, while Mexican Economy Minister Marcelo Ebrard meets simultaneously in Washington with US Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer to discuss the upcoming trade review.
(VIA BLOOMBERG) Mexican President Claudia Sheinbaum said she had a “cordial” conversation with Donald Trump on Thursday, discussing trade and security issues ahead of the review of the North American free trade deal.
Sheinbaum said the review of the United States-Mexico-Canada Agreement will continue as planned and that she and the president discussed tariffs and non-tariff barriers in their latest call.
Mexico’s leader added that Trump invited her to the US but that no date has been set for what would be their second in-person meeting.
On security, Sheinbaum offered that both leaders are pleased with the level of cooperation so far between their two countries. Trump agrees “that we are making progress in the general understanding we have,” she told reporters at her regular daily media briefing, without offering more details.
We all know what is likely to happen, these small articles are like aperitifs while we await the main performance. Meanwhile, the overwhelming majority of Canadians -sans possibly Alberta residents- are clueless.
Ontario Premier Doug Ford went for a pizza with Canadian Prime Minister Mark Carney. Following the meeting Doug Ford appears on camera for a debrief to explain how he has reversed his opposition to Chinese EV imports. The presser looks like a hostage video (prompted):
“A Party intending to negotiate a free trade agreement with a non-market country shall inform the other Parties at least three months prior to commencing negotiations and, upon request, provide information regarding the objectives of those negotiations.
A Party that enters into a free trade agreement with a non-market country shall provide the other Parties with the full text of the agreement prior to signing.
If a Party enters into a free trade agreement with a non-market country, the other Parties may terminate this Agreement on six months’ notice and replace it with a bilateral agreement.” [SOURCE]
Canadian Ambassador to the U.S., Kirsten Hillman, appears on CBS Face The Nation to discuss ongoing political and trade relations between Canada and the United States – Video and Transcript below.
During one segment of the interview, Ambassador Hillman is asked about the dissolution of the USMCA (CUSMA) trade agreement, and immediately Hillman falls back upon the same Justin Trudeau position of the government. The U.S. politicians will not allow President Trump to dissolve the USMCA.
“I think that we have to believe that our political leaders are going to be listening to the people in the constituencies for whom that instrument was drawn up, and they’re saying, this is vital to us, do no harm.”
Canada is counting on American political opposition to defend the economic interests of Canada. This is exactly the same position that former Canadian Prime Minister Justin Trudeau espoused in 2017 and 2018.
[Transcript] – So a lot is going on in the relationship between our two countries. We are so deeply integrated here on trade, you buy more from the U.S. than any other country. We have the world’s longest land border. We have shared defense interests through NATO, shared air defense with NORAD. Are we like in the middle of a divorce? Like, how do you describe the relationship?
AMB HILLMAN I- I- we’re not in the middle of a divorce, but we are in the middle of a change. There’s no question about it. I think that we are finding ourselves, quite frankly, in- in a situation where some of the foundations that have governed our relationship for a long time, that you know, integrated supply chains are good, that working together on strategic issues is- are important, that looking out for each other in important ways is- is a number one priority. I think in some quarters, Canadians feel that those foundations are being tested. We will adapt. We will make it through, I have no doubt about that, but it’s yeah, it’s a complicated time.
Canada signing a trade agreement with China to permit the import of EVs is another escalation in the exploitation of the USMCA compact.
For the position of China, using Canada as a route to ship component goods into the United States is just a slight expansion of their current technique to avoid U.S. tariffs. However, President Trump is taking action immediately.
Noting on his Truth Social platform, President Trump announced that if Canada does effectively go through with allowing the import of Chinese electric vehicles, then the U.S. will impose a 100% countervailing duty against all Canadian imports.
“[…] As a part of the deal, Canada will ease the tariffs on Chinese electric vehicles that it imposed in tandem with the U.S. in 2024. In exchange, China will lower retaliatory tariffs on key Canadian agricultural products.” ~Politico
Canadian Prime Minister Mark Carney continues giving President Trump the ammunition to dissolve the USMCA trade agreement this year.
USTR Jamieson Greer and Commerce Secretary Howard Lutnick have both expressed anticipation of a new bilateral trade agreement to stop all this Canadian nonsense.
Hilarious Bloomberg interview with Commerce Secretary Howard Lutnick. The topics are European trade and politics combined with the overlay of Canadian trade and politics. The Bloomberg panelists question Lutnick about the similar “feelings” of the Europeans and Canadians, as it pertains to the outcome of trade discussions. It’s the feelings that make things difficult to negotiate.
Secretary Lutnick doesn’t dismiss the narrative but deconstructs the substance of the topic brilliantly. Lutnick notes the ridiculous nature of the Canadian trade position and their decision to go running to China because their feelings are hurt. Lutnick then affirms the USMCA is going to be dissolved mid-summer and fall of this year.
As we noted at the end of last year, splitting the USMCA into two bilateral trade deals, one for Mexico and one for Canada, will be one of the most interesting and long-term economically significant moves in U.S. trade history. It is going to be a lot of fun to watch these negotiations, and the pre-positioning gives us a preview of what is to come.
Mexico is doing everything almost perfectly in preparation for their bilateral deal. Canada is doing exactly the opposite and positioning themselves for the worst possible outcome of a deal with the USA. The disparity in approaches is so different, even now it is remarkable to watch. PROMPTED:
(VIA BLOOMBERG) – […] Canada has “the second-best deal in the world” with its access to the US market, Lutnick said, behind only Mexico. The Commerce chief also indicated that Canada’s tilt toward China could become an issue in talks over revamping the US-Mexico-Canada trade agreement known as USMCA.
If Ottawa opts to import Chinese electric vehicles and other trade-strengthening steps with Beijing, “do you think the president of the United States is going to say you should keep having the second-best deal in the world” during USMCA talks, Lutnick questioned.
