President Trump holds a press conference aboard Air Force One en route back to the White House. Currently the press comments are audio only, but will likely have video upon arrival.
President Trump begins his remarks talking about a threat delivered by British Prime Minister Keir Starmer to the state of Israel where the U.K is threatening to recognize a Palestinian state if Israel doesn’t stop the bombing in Gaza and deliver aid to the impacted citizens. LISTEN:
The reality of the U.S-Canada economic relationship and the position of President Donald Trump is not that difficult to understand if you take all the disparate datapoints and quotes from Trump and put them into context.
During a White House meeting with Mark Carney, President Trump essentially told the Canadian Prime Minister why he was in no hurry to get to a deal with Canada.
The 35% tariffs on non-USMCA goods are going to trigger on August 1st, because the main priority of Trump -looking toward Canada- is to dissolve the USMCA.
During the May 6th oval office meeting with Carney, President Trump was discussing the USMCA and said: “As you know it terminates fairly shortly. It gets renegotiated fairly shortly.” … “This was a transitional deal, and we’ll see what happens, we’re going to start renegotiating that” … “I don’t know if it serves a purpose anymore.” …. “And the biggest purpose it served was, we got rid of NAFTA.”
To understand why President Trump wants to dissolve the USMCA {SEE HERE}. To understand the technical value of dissolving the USMCA {SEE HERE}. It’s not a complicated economic analysis; it’s common sense.
Currently, approximately 60% of the traded goods and services between the U.S. and Canada are covered by the USMCA; the remaining 40% will be hit by tariffs on August 1st at a 35% rate.
When the USMCA is renegotiated, predictably dissolved in favor of two bilateral trade agreements – one for Mexico and one for Canada, all of the U.S-Canada trade sectors will be part of the enlarged free trade negotiation. As a result, there is absolutely no motive to engage in trade discussions now.
Commerce Secretary Howard Lutnick describes some of the details within the new U.S-European trade agreement.
As noted, the $600 billion in regular trade products exported by the EU to the USA market will be subject to a 15% reciprocal tariff. This approach effectively ends the Marshall Plan, sets the trade terms to balance and should generate approximately $90 billion in revenue to the U.S. treasury.
U.S. tariffs on cars and auto parts are being reduced to the baseline 15 percent — a level that matches the deal notched earlier this month by Japanese automakers. In exchange, the EU has agreed to lower its car tariffs from 10 percent to zero, trade spokesperson Olof Gill said. The German companies are angry though, because the 25% tariff still applies to Mexico. So, German autos manufactured in Mexico (massive prior investment) will come to the USA with a 25% tariff.
In addition to the EU agreement to open their markets to U.S. products, private companies within the EU have committed to $600 billion in direct investment within the USA. Additionally, the EU will purchase $750 billion in U.S. energy products and with the NATO commitments previously agreed significant military purchases are anticipated. That is a major purchase agreement of $250 billion each year for the next three years.
Okay, this is a very big win. EU Commission President Ursula von der Leyen outlines some more details of the U.S-EU trade agreement. The parameters fall similar to the Japanese deal, without the banking aspect.
The EU will face (and accept) a 15% tariff rate for most exports to the USA including autos, that’s huge, even with some zero-for-zero tariff sectors outlined. The primary motivating factor was to avoid the 35% tariff rate scheduled for August 1st and provide the EU corporations with certainty in their tariff rate as applied by the USA (15%). WATCH:
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This is almost full acquiescence to President Trump. WATCH THE VIDEO
President Trump and EU Commissioner Ursula von der Leyen have apparently come to terms around the broad outlines of a U.S-EU trade agreement.
The EU will commit to purchasing $750 billion in energy products. The EU will commit to investing $600+ billion in direct U.S. industries. The EU will commit to purchasing their NATO military hardware from the USA ($500+ billion likely). The EU will open up all markets to USA products without tariffs. The EU and U.S. will both carry a 15% auto tariff for imports. WATCH:
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I’m all about the broad outline described in the video above, but I also want to see the details. If what President Trump said about all EU markets being open is accurate, it sounds like the Marshall Plan is over
Canada will not be happy; Europe gets a deal – Canada gets a cold shoulder.
Also, with U.K, Japan, ASEAN and EU trade agreements complete, President Trump is likely to begin focusing on the USMCA (Canada and Mexico) sooner than later. Two bilateral trade agreements will likely replace the USMCA.
Office of Management and Budgets (OMB) Director Russ Vought appears on CNN to discuss the problems noted with the Federal Reserve (FED) as the organization viewed their ‘independent’ status as meaning beyond accountability. The FED has been operating without any oversight until President Trump and Russ Vought began a baseline review of how they spend taxpayer funds.
As noted by Director Vought, the FED can have independence and yet they must be held accountable to the American people. President Trump is that accountability piece and the FED were not familiar with scrutiny. They are now.
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Russ Vought also appeared on Face the Nation to receive questions from the insufferable and ever-pontificating Margaret Brennan. Video and Transcript Below:
[Transcript] – MARGARET BRENNAN: We begin today with the director of the White House Office of Management and Budget, Russell Vought, welcome to ‘Face The Nation.’
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET RUSSELL VOUGHT: Thanks for having me.
MARGARET BRENNAN: There’s so much to get to with you. Let’s start on what’s going on with the Federal Reserve. If you take the president at his word, he does not intend to fire the Federal Reserve Chair, Jerome Powell- though he’s still criticizing him. What is the President seeking in a successor when his term ends in May 2026?
While President Trump visits his golf courses in Scotland, he will also be conducting business on behalf of the USA by meeting with trade partners from both Great Britain and Europe.
This morning USA time, President Trump is scheduled to meet with EU Commission President Ursula von der Leyen, at approximately 11:30am ET. Livestream Links Below:
The Japanese essentially did not want to face a 25% tariff on automobiles exported to the USA. At the same time, they did not want to permit full USA access to several sectors of their market. The solution is quite remarkable.
Japan agrees to be the bank, to essentially finance any national security priority of President Trump to the tune of $55o billion. In return, Japan gets a 15% tariff on automobiles, and 10% return on the profit of the ¹business they finance in the U.S. Japan is essentially purchasing a lower tariff rate.
PRESIDENT TRUMP – “We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it. Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%. This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan. Thank you for your attention to this matter!”
Commerce Secretary Howard Lutnick explains:
EXAMPLE: President Trump wants generic drug manufacturing in the USA. U.S. company ‘Main Street Drugs’ agrees to build a $100 billion manufacturing plant. Japan finances the building and company creation. Main Street Drugs owns and operates the business, keeps 90% of the profits, Japan gets 10%.
Trump (USA) has $450 billion in financing left to spend on the next priority, perhaps a railroad connection or transit system.
I’ll repeat it as much as needed, until it sinks in.
The U.S-Canada trade deal status is simply a no-brainer. President Trump will answer questions about Canada and tariffs, he’ll put people into seats to discuss trade with the Canadian delegation, and he’ll give every outward appearance of being favorable to Prime Minister Mark Carney…. BUT…
In the background, Trump is simply waiting for the USMCA timeline to trigger a renegotiation. President Donald Trump is ambivalent to the trade partnership with Canada. This moot-status reality is why there’s no substantive engagement.
‘No deal’ -until USMCA redo- is a win for President Trump.
For some bizarre reason that I simply cannot fathom, almost every Canadian politician seems entirely oblivious to this reality. Instead, Canadian Trade Minister Dominic LeBlanc and Mark Carney’s chief-of-staff, Marc-André Blanchard are once again coming to DC to ride their bicycles in slow circles at the bottom of the White House driveway while staring in the windows.
An article in Politico notes the Canadian premiers are now accepting the August 1st deadline will pass without any agreement, and the 35% reciprocal tariffs on non-USMCA products (meaning a lot of stuff) is going to trigger.
Literally, everything from Canada that has a non-USMCA component is going to be tariffed. Think about all the stuff from China, Asia (writ large) and Europe that Canada assembles for finished goods. All of that stuff will be subject to the tariffs.
