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.

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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.

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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).

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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.

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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.

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Buried in a Wall Street Journal article outlining their shock and horror over President Trump following through with a Phase-I trade penalty of $50 billion, you find the following quote from Captain Obvious at Cornell University:

“The Trump administration is clearly signaling, ahead of Wilbur Ross’s trip to Beijing, that the gloves are off given China’s unwillingness to agree to a trade deficit reduction target or to make broader trade concessions,” said Eswar Prasad, a Cornell University professor of international trade. In addition, the “hardline stance may partly reflect the perception that China played a part in nearly derailing the Trump-Kim summit.” (link)

Gee, ya think?

The White House announced today it will clarify by June 15 a final list of $50 billion in imports from China that would be subject to tariffs of 25%, with the duties implemented “shortly thereafter.”  Additionally, future investment restrictions aimed at preventing Chinese acquisition of American technology will be announced by June 30.

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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.

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According to Yonhap News North Korea’s vice chairman of the Central Committee, Kim Yong-chol, is traveling to Beijing China for an operational briefing -and likely instructions- prior to heading to the U.S. where he might possibly be scheduled for a meeting with Secretary of State Mike Pompeo.

The travel plans highlight the influence strategy deployed by China and Chairman Xi Jinping ahead of the tenuously scheduled June 12 summit between the U.S. and North Korea in Singapore.  The U.S. negotiation team is currently in South Korea working on summit details amid discussions between all significant stakeholders.

Watch the U.S. -vs- China trade front closely.  U.S. Commerce Secretary Wilbur Ross is scheduled to arrive in Beijing on June 2nd to discuss current trade issues.  China is hoping to manipulate their North Korean proxies as trade leverage. Communist Chinese trade negotiators are notorious for their cunning manipulation.

BEIJING, May 29 (Yonhap) — A senior North Korean official arrived in Beijing on Tuesday apparently en route to the United States to hold preparatory talks over a possible summit between the leaders of the two countries.

The trip by Kim Yong-chol, a vice chairman of the Central Committee of the North’s ruling Workers’ Party, came as Washington and Pyongyang are holding working-level talks on the summit agenda and issues related to security and protocol.

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Two-and-a-half years ago Donald Trump, then a candidate, revealed his super secret strategy for dealing with North Korean nuclear weapons.  When asked “what would you do?”:

•Senator Ted Cruz: Blame Clinton, then load up South Korea and Japan with proactive nuclear weapons.
•Senator Marco Rubio: Blame Obama, then prepare for war via South Korea and Japan.
•Governor John Kasich: Tell Japan to strike the DPRK.
•Governor Jeb Bush: Launch a pre-emptive strike against Kim Jong-un, now.
•Businessman Donald Trump: Punch China in the nose.

Watch:

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Guess which approach worked?

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South Korean Prime Minister Moon Jae-in is the Asian version of Barack Obama, and much like North Korean Chairman Kim Jong-un essentially irrelevant in this geopolitical confrontation.  Take a seat, or make a sandwich…. it matters not.

Behind the fanciful Korean ‘denuclearization talks‘ and lofty ‘peace initiatives‘ a far more consequential geopolitical economic battle is taking place between the worlds largest two economies.  U.S. President Donald Trump and Chinese Chairman Xi Jinping are engaged.

The Sandwich Maker Summit –  (Reuters) – “South Korean President Moon Jae-in held a surprise meeting with North Korean leader Kim Jong Un on Saturday in an effort to ensure that a high-stakes summit between Kim and U.S. President Donald Trump takes place successfully, South Korean officials said.

[…]  Their two hours of talks at the Panmunjom border village came a month after they held the first inter-Korean summit in more than a decade at the same venue. At that meeting, they declared they would work toward a nuclear-free Korean peninsula and a formal end to the 1950-53 Korean War.

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Current Steel and Aluminum tariff exemptions expire June 1st.  Secretary Ross scheduled to be in Beijing, China June 2nd, 3rd, 4th.  The G7 Summit in Charlevoix, Quebec is on June 8th and 9th.  The tenuous Singapore summit was previously scheduled for June 12th.

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