It is more than likely President Trump and Commerce Secretary Wilbur Ross knew this was in the making several months ago.  In hindsight it now appears Germany presented a false proposal to U.S. Ambassador Richard Grenell intentionally to poke him in the eye.
Germany has sealed the fate of their auto-industry with a multi-company agreement to manufacture vehicles in China and share all their intellectual processes therein.

FRANKFURT (Reuters) – German companies signed a series of agreements with Chinese partners at a meeting of Chancellor Angela Merkel and Prime Minister Li Keqiang in Berlin on Monday, according to a document seen by Reuters. Following are details of them:
♦BASF signed a Memorandum of Understanding (MoU) with China’s Guangdong Province to look at building a highly-integrated chemical production site there, BASF said.

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White House Office of Trade and Manufacturing Policy Director Peter Navarro appeared on Fox Business last night to outline the U.S. position in the ongoing trade reset against communist China.  Almost all of the financial media and economic punditry are intentionally obfuscating the underlying nature of China’s economic model.
China is a communist central government controlled economic system.  Free-market principles do not apply when dealing with China; therefore trade strategies based on ‘free markets’ cannot succeed against the centralized planning of a communist regime.

The Bureau of Labor Statistics presents the latest snapshot of jobs and employment.  According to the BLS data, behind the 213,000 jobs added, the most significant gains all center around growth in durable goods, manufacturing, transportation/distribution and the ancillary business services directly connected to the blue collar sector.
In addition, April was revised up from +159,000 to +175,000, and the change for May was revised up from +223,000 to +244,000. With these revisions, employment gains in April and May combined were 37,000 more than previously reported.

In the macro-review things are looking great; however, when you go into the micro-review you discover things are even better, they are MAGAnificent.
To understand what is happening we must all remember the Trump MAGAnomic policies are geared toward enhancing the creation of “goods”; the production of physical “stuff”; the manufacturing and durable good sector; or put another way: Main Street/Blue Collar work.   MAGAnomic policy is geared toward expanding the production base of the U.S. economy.  Therefore all majority benefit will be necessarily attached to those workers and industries that are part of the expanding production base.
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For more than three decades all U.S. economic policy has been elevating Wall Street and diminishing Main Street. As a result blue-collar workers have not had wage gains keeping up with inflation for over 30 years…. Then came the era of Trump.

– “Walking in a Winner Wonderland” –

More than 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 30+ years).
We discussed the new dimension that would occur between two economic engines (Main Street -vs- Wall Street) as three decades of policy shifted. CTH outlined statistical and measurable KPI’s that would become visible in the space between the policy shifts.
Part of those discussions focused on energy costs, 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 Q2 of 2018, which is April-June 2018.  Well:

(Via CNBC) […] The Bureau of Labor Statistics reported that April closed with 6.7 million job openings. May ended with just over 6 million people the BLS classifies as unemployed, continuing a trend this year that has seen openings eclipse the labor pool for the first time. At some point that gap will have to close. Economists expect that employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives.

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Last month the White House presented a 36-page outline of the U.S. position toward trade with China (full pdf below).  White House National Trade Council and Office of Trade and Manufacturing Policy Director Peter Navarro delivers a presentation to discuss that report.  Very well worth watching:

Pontificating economic globalists are stuck between empirical good news and their preferred anti-Trump tariff narrative.  Economic media like the Wall Street Journal are filled with angst, as Trump’s manufacturing MAGAnomics continues to destroy their decades-long talking points and globalist preferences.

The analysis of June factory and manufacturing indicators from the Institute for Supply Management (ISM) highlight an expanding reality: increased production, increased new orders, increased employment, and demand outpacing supplies and transportation capacity.  Yes, all of this means the Main Street U.S. economic engine is firing on all cylinders.  We can only imagine what the Q2 numbers will reflect when it’s all rolled up.

ISM DATA – “Comments from the panel reflect continued expanding business strength. Demand remains strong, with the New Orders Index at 60 percent or above for the 14th straight month, and the Customers’ Inventories Index remaining low. The Backlog of Orders Index continued to expand, reading at 60 percent of higher for the third consecutive month. Consumption, described as production and employment, continues to expand in spite of labor, skill and material shortages.

What does this mean in blue collar language?  Short term: OVERTIME pay folks…. maximum earnings possibilities as demand for factory and manufacturing has all employment working maximum production shifts. Long term: upward wage pressure, jobs, jobs, jobs.
For the Truck Drivers?  Work, work, work.  You got a rig, they need it hauled. Everywhere.
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Today U.S. Chamber of Commerce President Tom Donohue announced another campaign to protect and defend his Wall Street contributors against initiatives that benefit Main Street U.S.A. This is not the first time, and unfortunately it will likely not be the last time.
For a great historic reference consider THIS ARTICLE from 2014; when the U.S. Chamber of Commerce announced their direct attack against the Tea Party backed candidates that threatened to remove the massive lobbying power of Tom Donohue’s corrupt officials. That 2014 reference point has two parts. I strongly urge anyone who would defend the U.S. CoC approach to read both.

The overwhelming majority of economic punditry and opinion come from salespeople on the purchased payroll, direct and indirect, of the chamber. It is one of the most, check that, it is the most corrupt and abusive enterprise in the history of our nation. They are pulling out a very familiar playbook.

(Reuters) – The U.S. Chamber of Commerce on Monday denounced President Donald Trump’s handling of a global trade dispute, issuing a report that argued the tariffs imposed by Washington and retaliation by its partners would boomerang badly on the American economy.

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President Donald Trump meets with Prime Minister of the Netherlands Mark Rutte in the Oval Office at the White House.
During remarks President Trump notes a phone call with Mexico’s winning presidential candidate Andres Manuel Lopez Obrador; and ongoing interviews/discussions with possible Supreme Court nominees.  [Four SCOTUS nominees were interviewed today and three or four more will come in the next few days.]
On the trade front President Trump notes the ongoing issues with the WTO (World Trading Organization), and a possible confrontation looming over structural changes needed to reset global trade disparities and establish open markets.

Mexico’s president-elect Andres Manuel Lopez Obrador “AMLO” easily won yesterday’s election with 54% of the vote; the highest vote total in three decades.  In addition his MORENA party won an absolute majority in both the Mexican Senate (38% +/-) and the Chamber of Deputies (38% +/-).

The multinational financial community is in the process of evaluating how the nationalist win will impact all prior investing.  One of the key issues is NAFTA.  Multinational corporations have poured billions into Mexico as a structural method to utilize the trade deal to gain access to the U.S. market.
Despite his campaign position, AMLO is now affirming a positive intention to renegotiate NAFTA; however, he is speaking from both sides of the current issue.  Example:

[Today] Lopez Obrador said he supports reaching a deal on renegotiating the North American Free Trade Agreement with the United States and Canada.
[…]  Lopez Obrador said he will propose that his own team of experts be included in the talks. The winning candidate said he will make that proposal in a meeting Tuesday with current President Enrique Pena Nieto.

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Within the German economy the auto-sector holds the largest political influence.  Because of this dynamic all German politicians kneel at the knee of the big industrial auto manufacturers.  It has been said that losing support from within the auto-sector is much worse on a German politician than losing support from party or parliament.
Because of this dynamic; and specifically because the German auto-sector is dependent on the United States as their biggest customer, President Trump holds leverage over German Chancellor Angela Merkel.  This makes Fraulein Merkel unhappy.

President Trump wants three EU issues resolved: 1) Germany to contribute the minimum 2% of GDP for their own NATO defense.  2) Germany/EU to support enhanced sanctions against Iran; and  3) President Trump wants all German/EU protectionist trade barriers and tariffs lowered or eliminated – and new trade deals negotiated.
To gain momentum on these initiatives, President Trump is using the economics of trade as leverage.  Trump has suggested a 20% tariff on all EU automobiles shipped into the U.S. [The same standard now likely proposed toward Canada]  The German auto-sector, and as a consequence the German economy, simply cannot survive without low cost access to the U.S. market, their biggest customer.
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