There have been multiple media reports in the last six hours that President Trump is going to announce trade investigation/sanctions against China during a press conference scheduled for Monday.
It makes sense the previously postponed 301 trade investigation against China for violations of intellectual property rights might be announced.

Section 301 of the Trade Act of 1974 provides the United States with the authority to enforce trade agreements, resolve trade disputes, and open foreign markets to U.S. goods and services. It is the principal statutory authority under which the United States may impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices. When negotiations to remove the offending trade practice fail, the United States may take action to raise import duties on the foreign country’s products as a means to rebalance lost concessions. (LINK)

However, a note of caution. Substantive trade negotiations, the kind which involve economics and national security, are always fluid and subject to pause, postponement or changes in direction based on compliance – or expressions of a willingness to comply.
Remember, this is Trump.  Looking out for U.S. economic interests is the baseline for trade “leverage”, a tactic and skill uniquely evident in this administration’s trade team.  Section 301 is a tool, actually a massive atomic sledgehammer, to force compliance.
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The PPI is the Producer Price Index.  The CPI is the Consumer Price Index.  The PPI reflects the price product producers are getting for their goods and services.  The CPI reflects the price consumers are paying for their goods and services.  They generally run together as lower production prices usually mean lower consumer prices.
Here again today, the fed is perplexed.  With a growing economy, and with labor market tightening, the people who control the monetary policy have continued to anticipate inflation, rises in the PPI and CPI.  However, as we have outlined, it’s not happening.
It’s a little wonky, but basically prices are NOT going up.  The Fed is perplexed.  We predicted this:

[…] The Labor Department said its producer price index for final demand slipped 0.1 percent last month, weighed by decreasing costs for services. That was the largest decline since August 2016 and reversed June’s 0.1 percent gain.
In the 12 months through July, the PPI increased 1.9 percent after rising 2.0 percent in the year through June. Economists had forecast the PPI to tick up 0.1 percent last month and 2.2 percent from a year ago. (read more)

Neither the PPI nor the CPI measure changes in food or energy costs.  Those high consumption sectors have always been removed from Fed measures.
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Well, many of us were waiting for this – and we have discovered exactly what most CTH readers anticipated, China is a paper tiger.
Last night China finally delivered the official communist government position outlining their perceived leverage over the U.S. and President Trump’s economic diplomacy and economic security platform.
China has always used The Global Times to communicate their official communist state positions.  Last night China delivered their warning; oh, you’re gonna love this:

“US needs correct logic in dealing with North Korea”.

[…] The US asks China for help when it cannot solve its problems with North Korea. Some US elites even want to urge China to claim full responsibility for the issue or they will threaten to retaliate. Under this logic, isn’t it reasonable for North Korea to attack its southern neighbor when it is under military threat from the US?
Moreover, those US elites may not have considered the leverage China has over the US. What if China restricts the usage of iPhones and the number of Chinese students to the US, or imports fewer US agricultural products? (link for more)

Now, it is critical to emphasize this is the official outlook of the Chinese Communist regime and what they perceive as their leverage over the United States.  This is the official outlook of the party apparatus behind Xi Jinping.
So let’s look at their position in sequence.
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As you know CTH takes a different approach at significant world events. We try to share the untold stories as they shake out, in real time, in granular details not noted by the MSM.  We discuss the stuff on the way to the destination.  That way when we arrive at a ‘way point’ we have a historic reference, a back-story, to comprehend consequential headlines when they happen.
With that in mind, here’s another non-discussed granular detail, spotted recently, building toward a much more significant geopolitical outcome, vis-a-vis Russia.
You might remember on August 4th President Trump and French President Emmanuel had a phone call.  The outline of the phone conversation is HERE, but there was no real reason for them to be chatting…. or was there?
Western media has paid virtually no attention to how Trump’s big picture economic policy enmeshes and bolsters his national security policy.
Quite literally, and I really want to emphasize this, Secretary Mnuchin (Treasury) and Secretary Ross (Commerce) are just as important as Secretary Mattis (Defense) and Secretary Tillerson (State).
Stop and think about that for a minute.
When President Trump went to Saudi Arabia for the Arab Security Summit the two most visibly active cabinet members were Mnuchin and Ross.  When has a Treasury Secretary and Commerce Secretary ever had as much importance during world security events?
Think about it.
Who was Obama’s Commerce Secretary during Iran negotiations?
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– “Walking in a Winner Wonderland” –

Two years ago CTH began discussing the ramifications to a new emphasis on the economy outlined as a possibility of candidate Donald Trump’s economic policy outlook. Within the overall discussion we walked through the anticipated changes possible if A.) Trump won the election, and B.) Trump began instituting Main Street economic policy ahead of Wall Street policy (the past 20+ years).
We discussed the new dimension that would occur between two economic engines (Main Street -vs- Wall Street) as three decades of federal policy shifted. CTH outlined anticipated economic activity in the space between the two dynamics.

Part of those discussions focused on energy costs (we see them lowering), product costs (we explained how inflation would be weird), and importantly, wage rates. It takes several months of policy emphasis, actual outcomes, before the labor market wage rates would grow. We anticipated seeing that impact in Q1 of Fiscal Year 2018, which is October 1st 2017.
Today the Job Opening and Labor Turnover Survey, “JOLTS report”, begins to show the initial stages of that wage rate increasing trend. The job market has tightened,… considerably. *Note* We are ending fiscal year Q4 (July, Aug, Sept.) and the trend within MAGAnomics is responding according to predictions. For those of us who argued these policy theories for the past two decades, these results are really cool.
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President Trump’s strategic approach using economic leverage to gain U.S. national security has established a very rare victory in the U.N. with unanimous support for Security Council sanctions against North Korea.  Yes, China and Russia supported.
Remember, from Day #1 of his administration President Trump was faced with a threat from N-Korea.  On his departure President Obama told the incoming new President Trump that North Korea would be his #1 Geopolitical national security challenge.
The MSM will likely never give President Trump credit for the remarkable long-term economic strategy he deployed to gain China and Russia’s support today.

UNITED NATIONS (Reuters) – The United Nations Security Council imposed new sanctions on North Korea on Saturday that could slash by a third the Asian state’s $3 billion annual export revenue over Pyongyang’s two intercontinental ballistic missile tests in July.

The U.S.-drafted resolution bans North Korean exports of coal, iron, iron ore, lead, lead ore and seafood. It also prohibits countries from increasing the current numbers of North Korean laborers working abroad, bans new joint ventures with North Korea and any new investment in current joint ventures.

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POTUS direct confrontation is not reserved for domestic political enemies, it also applies to external nations threatening the U.S.  However, notice with each example there is an almost identical pattern: ♦An honest attempt at an open handed diplomacy; ♦a rebuke from the opposition in favor of the status quo; ♦a sincere appeal to reconsider; ♦time for reflection, contemplation and planning; ♦a final request not to engage in combat (today); ♦and then the hammer.
The sequence is always the same.

“foolish past leaders” … “We will no longer allow”..

China, the Big Panda, chose the Red Dragon approach and is positioned to feel the big hurt if they don’t take action…

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The U.S. Gross Domestic Product (GDP) is the value of all goods and services generated within the U.S. economy over a designated period of time. In the second quarter (April, May, June) the GDP grew at a rate of 2.6%. That’s more than double the first quarters 1.2% growth rate.

President Trump set a goal of 3% GDP growth for the first year of his administration. Reaching 2.6% in the second quarter is significant progress toward the attainment of a goal all economists said was unattainable. Those same nay-sayers are also focused on wage rate growth which they claim is not moving with the economy. They are disconnected.
Again, CTH draws attention to the new modern era in economics. Most analysts and punditry have no historic reference points for a new dimension in U.S. economics; where 30 years of fiscal policy to the benefit of Wall Street has how shifted to the benefit of Main Street. We are now in the space between these two economic engines. Traditional economic review no longer applies.
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Finally today we see a significant loss for the “Big Club”. Speaker Paul Ryan, the GOPe professional business class, Wall Street and the U.S. CoC accept the Border Adjustment Tax is not going to be a part of any larger tax reform agenda under the Trump administration.

Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and President Trump win the policy argument with the removal of the B.A.T.
In a joint statement outlining the forward plans for tax reform the “Big Six” tax negotiators (Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury Secretary Steve Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch, House Ways and Means Committee Chairman Kevin Brady), announce the consumer punishing BAT will not be included.

[…] “While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.” (more)

The B.A.T was to revenue collection on imported products and impact on consumers – what the Obamacare mandate was to revenue collection on healthcare and impact on consumers.
The B.A.T  was simply a scheme to embed the cost of renegotiated trade import tariffs, directly onto the consumer, isolated away from any responsibility on the corporation to reduce their own internal efficiencies as a method to keep the price down. It was a dubious and manipulative effort.
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Those who have followed the MAGAnomic trade and economic policy closely were aware a tonal shift had taken place in the last several weeks.
Specifically because of their weak position, and faced with the first U.S. President in their modern economic history who intends to stop the erosion of American wealth, China intentionally used North Korean aggression in order to create trade leverage with the U.S.
Today, at the U.S./China Comprehensive Economic Dialogue in Washington DC Commerce Secretary Wilbur Ross left no room to doubt the approach President Trump and the U.S. trade team are going to take in the upcoming trade standoff.
At opening remarks between the two sides, Ross outlined the U.S. trade gap with China in unusually blunt terms. While U.S. exports to China have grown in recent years, imports have expanded even faster, leading to a $309 billion trade deficit.

“If this were just the natural product of free-market forces, we could understand it, but it’s not,” Ross said, as Chinese Vice Premier Wang Yang looked on. “So it’s time to rebalance in our trade and investment relationship in a more fair, equitable and reciprocal manner.”  (video below)

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