As if on cue, a short article from the Chamber of Shipping notes that cargo from China is being rerouted to avoid tariffs.

The destination of the cargo is, wait for it,… CANADA!

USCoS – As U.S. tariffs on Chinese goods soar to as high as 145%, a growing number of companies are rerouting shipments to Canada and storing them in bonded warehouses in hopes of avoiding the duties and capitalising on a future rollback. This strategy has caused a sharp spike in Chinese shipments to Canada, with logistics firms and customs brokers reporting surging inquiries and storage demand from consumer goods, chemical, and auto parts sectors. However, experts caution that prolonged storage costs—estimated at $1,750 per container per week—and limited warehouse capacity could force sellers to offload discounted goods into the Canadian market, potentially disrupting domestic manufacturing. Others warn the strategy is risky and unsustainable, especially if the trade conflict drags into next year’s U.S.-Mexico-Canada Agreement negotiations. (link)

This will not end well….

… For Canada.

(more…)

Think about it.  We’ve already heard about the massive stoppages of April factory work in China, causing serious concern for Beijing and Chinese worker protests.

American importers front loaded inventory in February and March with a 50% increase in orders.  Now, in addition to those factories going quiet, the de minimis rule kicks in.

(Via CNBC) – Chinese bargain retailer Temu changed its business model in the U.S. as the Trump administration’s new rules on low-value shipments took effect Friday.

In recent days, Temu has abruptly shifted its website and app to only display listings for products shipped from U.S.-based warehouses. Items shipped directly from China, which previously blanketed the site, are now labeled as out of stock.

Temu made a name for itself in the U.S. as a destination for ultra-discounted items shipped direct from China, such as $5 sneakers and $1.50 garlic presses. It’s been able to keep prices low because of the so-called de minimis rule, which has allowed items worth $800 or less to enter the country duty-free since 2016.

The loophole expired Friday at 12:01 a.m. EDT as a result of an executive order signed by President Donald Trump in April. (more)

The de minimis loophole comes from back in the 1930s. The idea back then was, say you went on a vacation to Paris, you shouldn’t have to file customs paperwork or pay taxes if you decided to ship some little Eiffel Tower statues to your friends back home.

(more…)

According to the people present, when former Canadian Prime Minister Justin Trudeau traveled to Mar-a-Lago to meet with President-elect Donald Trump, his primary objective was to inform President Trump his public demands for U.S. trade reciprocity with Canada were unachievable.

Trudeau was not lying.  In this outline we will explain a dynamic that is certain to surface this summer.

President Trump has deferred all North American trade negotiations with Canada and Mexico until later in the year, after the priority trade deals with other large trade partners are completed.  The USMCA trade pact is due for review and renegotiation this year [BACK STORY]. We should expect an entirely different trade pact as an outcome, quite possibly the ending of the trilateral nature of the current agreement.

A few days ago, Politico noted that Canadian Prime Minister Mark Carney had a reprieve from his prior campaign points about confronting President Trump on tariffs immediately.  PM Carney is currently trying to align allies for what will likely be a major confrontation that he cannot win.

♦ BACKGROUND – Following the 2024 presidential election, Prime Minister Justin Trudeau traveled to Mar-a-Lago and said if President Trump was to make the Canadian government face reciprocal tariffs, open the USMCA trade agreements to force reciprocity, and/or balance economic relations on non-tariff issues, then Canada would collapse upon itself economically and cease to exist.  In essence, in addition to the NATO defense shortfall, Canada cannot survive as a free and independent north American nation, without receiving all the one-way benefits from the U.S. economy.

To wit, President Trump then said, if Canada cannot survive in a balanced rules environment, including putting together their own military and defenses and meeting their NATO obligations, then Canada should become the 51st U.S state.  It was following this meeting that President Trump started emphasizing this point and shocking everyone in the process.  However, in the emotional reaction to Trump’s statements, no-one looked at the core issues outlined by Trudeau that framed President Trump’s opinion.

(more…)

Kevin O’Leary appears on Fox Business to support President Trump’s tariff proposal against China that is targeted to confront the dragon behind the Beijing panda mask.  WATCH:

.

(more…)

The Bureau of Labor and Statistics (BLS) has released the jobs and employment data for April [SEE HERE].  Within the data we see 177,000 jobs were gained, beating expectations of 133,000.   The unemployment rate remains unchanged at 4.2%.

Federal government employment declined by 9,000 in April [BLS, Table B-1]  Health care added 51,000 jobs: consisting of hospitals (+22,000) and ambulatory health care services (+21,000). Transportation and warehousing increased by 29,000 jobs in April: with warehousing and storage (+10,000), couriers and messengers (+8,000), and air transportation (+3,000).

.@StephenMoore reacts to the jobs report: “436,000 increase in the number of people who are employed. So, this is an amazing report… The labor force participation rate rose. So, this is a very strong number.” pic.twitter.com/CuAPwD52Yn

— Rapid Response 47 (@RapidResponse47) May 2, 2025

(Via Wall Street Journal) – The U.S. economy continued to add jobs at a steady clip in April, although the pace of gains slowed slightly during a month that saw changing tariff announcements and market turmoil.

The U.S. added 177,000 jobs in April, the Labor Department reported Friday, above the gain of 133,000 jobs economists polled by The Wall Street Journal had expected to see.

(more…)

The move and shift in National Security Advisor responsibility makes sense on a couple of different levels.  First the U.N position carries “prestige” softening the ouster of Waltz; second, with the foreign policy run from the White House, a dual Secretary of State/NSA role works under currently assigned responsibilities.

[SOURCE]

The combined nature of the SoS and NSA position makes good interim sense; both would have essentially been traveling the same itinerary.  However, putting the former head of the Senate Select Committee on Intelligence into place as National Security Advisor, well, that’s a level of trust that has never before been witnessed.

Mike Waltz becomes the Nikki Haley of term-2.

Optimal solution.

(more…)

Republican senators Rand Paul, Susan Collins and Lisa Murkowski all voted in support of removing President Trump’s ability to impose tariffs under national security grounds.  However, the overall vote failed in the Senate 49-49.

The vote was mostly symbolic for the upper chamber as the House previously approved a rule to block any effort to restrict President Trump’s trade authority, and the White House would obviously veto any bill that might pass.  However, the vote does showcase the Republicans who are in support of multinational corporations outsourcing jobs and manufacturing.

The bill was originally created by Republican Senator Rand Paul and Democrat Senator Ron Wyden.  The intransigent neocon wing of the GOPe, those who take funds from the U.S. Chamber of Commerce (aka Decepticons) also supported the bill, but given the certainty of Trump’s veto, needed to retain their masks.

WASHINGTON – […] The legislation, designed to end the national emergency Trump used to impose his now-paused “Liberation Day” tariffs, failed by a vote of 49 to 49 despite three Republicans joining all Democrats. {Full Story}

(more…)

Will U.S. taxpayers ever see a dime repaid? Probably not, because the proceeds will likely end up in the pockets of the professional political class; however, the concept is a good idea in principle.  It is more than likely Zelenskyy has sold his “minerals” to several countries in his perpetual tin cup tour. The ‘investment fund’ aspect is just another way to transfer proceeds into the bank accounts of U.S. Senators.

The previously called “minerals deal” is now essentially a fund created between the USA and Ukraine where proceeds from exploiting Ukraine natural resources will be used to rebuild the country and repay the USA for prior financial support.  According to ABC News, “Both sides were ready to sign the agreement on critical minerals and other resources earlier, but the U.S. said it wanted the main minerals resources agreement signed and the creation of an investment fund document signed at the same time, Ukrainian Prime Minister Denys Shmyhal and a source in the Ukrainian president’s office said.”

Thanks to @POTUS @realDonaldTrump’s tireless efforts to secure a lasting peace, I am glad to announce the signing of today’s historic economic partnership agreement between the United States and Ukraine establishing the United States-Ukraine Reconstruction Investment Fund to help… pic.twitter.com/N1jPa35DYh

— Treasury Secretary Scott Bessent (@SecScottBessent) April 30, 2025

WASHINGTON — On April 30, the United States and Ukraine signed an agreement to establish the United States-Ukraine Reconstruction Investment Fund. In recognition of the significant financial and material support that the people of the United States have provided to the defense of Ukraine since Russia’s full-scale invasion, this economic partnership positions our two countries to work collaboratively and invest together to ensure that our mutual assets, talents, and capabilities can accelerate Ukraine’s economic recovery.

(more…)

This next story is a natural outcome in the flow of goods. Remember, the Bureau of Economic Analysis (BEA) of the first quarter is a hindsight review. Meaning the information released today was based on activity in January, February and March 2025.

U.S. companies surged the purchasing of import goods, mostly from China, by more than 50% in the first quarter. They were/are building inventory. So, what happens in China starting in April?

Hong Kong, CNN – China’s factory activity contracted at its fastest pace in 16 months in April, as steep US tariffs took a heavy toll on the manufacturing sector, adding urgency to Beijing’s efforts to roll out fresh economic stimulus.

The manufacturing Purchasing Managers’ Index (PMI) fell to 49.0 in April, the weakest reading since December 2023, according to data released by the National Bureau of Statistics (NBS) on Wednesday. A reading below 50 signals a contraction.

Zhao Qinghe, a senior statistician at the NBS, said in a statement that the contraction in factory activity was due to “sharp changes in the external environment and other factors.” (read more)

The U.S. has front-loaded the inventory. So, orders to China drop now. It’s a natural outcome.

We have purchased goods in advance. So, orders to China drop. As a result, the cargo shipments from China to the USA drop in April, May and June.

(more…)

As we saw previously in Term-1, President Trump has again divided and assigned trade negotiation responsibility to key cabinet members.  In this interview with CNN National Economic Council Director Kevin Hassett smiles and walks effortlessly through the narrative engineering attempt by CNN pundit Kassie Hunt.

This is a must watch interview if you are following the details of the current global trade renegotiation.

Hassett outlines the current status of trade negotiations with some of the biggest trade partners in the world.  India and Southeast Asia are being handled by Treasury Secretary Scott Bessent.  Commerce Secretary Howard Lutnick is in control of the section 232 (national security) tariffs, and USTR Jamison Greer has 19 current Free Trade Agreements outlined with various partners all willing to accept the reciprocity agreement.  WATCH:

.

(more…)