The final quantification of the Bureau of Economic Analysis fourth quarter GDP growth rate was released today, reflecting an anticipated increase from the prior two estimations. The last revised estimation of GDP growth (February) was +2.5%, the final revised estimate is +2.9% growth.

A massive increase in consumer spending (+4%) around the October through December 31st time-frame (Q4) was offset by those dollars purchasing a large portion of imported products.  The GDP growth deduction from import purchases was 1.99%. [See table #2, line 50 pdf here]

In short, American consumers spent significantly more than usual in the holiday season; however, many of those purchases were foreign goods.

From the BEA Report – Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2017 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

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White House Director of Trade and Manufacturing policy Peter Navarro discusses the revamp of the KORUS trade deal with South Korea.  In addition Navarro discusses the ongoing Trump administration’s tariffs on steel and aluminum, as well as plans to impose tariffs on Chinese products surrounding violations of intellectual-property rights.

[NOTE: Final USTR 301 Report on China was released last night]

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JOINT STATEMENT – Today, Ambassador Lighthizer and Minister Kim are pleased to announce that the United States and the Republic of Korea have reached an agreement in principle on the general terms of amendments and modifications to the United States-Republic of Korea Free Trade Agreement (KORUS FTA). The nations have also agreed on terms for a country exemption for the Republic of Korea from tariffs imposed on steel imports under Section 232 of the Trade Expansion Act of 1962 pursuant to Presidential Proclamation 9705, as amended.  The arrangement with respect to steel imports is expected to take effect on May 1, 2018.  (link)

Ever since the original 2012 US-Korea free trade agreement (KORUS) went into effect, the U.S. trade deficit in goods with Korea increased by over 73 percent from $13.2 billion to $22.9 billion (2017), while the overall deficit increased by 70 percent from $6.3 billion to $10.7 billion (2017).  President Trump committed his administration to changing this immediately and renegotiating a deal that benefited the United States.

“The improved KORUS agreement reflects the President’s leadership in delivering more reciprocal trade outcomes benefiting U.S. workers, exporters, and businesses. The United States and Korea have strengthened an important economic relationship by agreeing to substantial improvements to KORUS that will help rebalance our trade, reduce our trade deficit, and expand U.S. export opportunities.”  ~ U.S. Trade Representative Robert Lighthizer

Here’s the historic details:

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The actual announcement of KORUS (“KOR”+”U.S.”), the renegotiated U.S. and South Korea trade deal, has yet to be made by U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross and U.S. President Donald Trump.  However, more details are surfacing inside KORUS media leaks.  Fantastic job by Lighthizer!

TOP LINES:

• U.S. Gains twice as many exported vehicles into S-Korea (50k per manufacturer, per year).  [No word on possible Kia / Hyundai tariff or quota – RE: “unlikely”]
• South Korea drops ridiculous customs inspection barriers. [Trade trickery ploy]
• U.S. retains 25% Tariff on S-Korea pickup trucks with extension for 20 years.
• South Korea gets two year exemption from a 25% U.S. steel tariff, but must drop steel export level to 70% of prior two years shipments. (A controlled reduction of 30%).

(Via AP) The new deal doubles — to 50,000 — the cars each U.S. automaker can export annually to South Korea, reduces bureaucratic barriers to American products and extends a 25 percent U.S. tariff on South Korean pickup trucks by 20 years, through 2041.

South Korea escapes America’s new 25 percent tariff on imported steel — but must accept quotas on steel exports equal to 70 percent of its average annual shipments to the United States between 2015 and 2017.

The officials spoke on condition of anonymity in order to discuss the policy ahead of an official announcement.

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Commerce Secretary Wilbur Ross appears on Fox Business News for an extensive interview with Maria Bartiromo.  The interview covers a wide spectrum of important topics attached to the U.S. economy and ongoing trade deals.  Two great video segments for the interview will get you up to speed on ongoing initiatives:

♦Segment #1 outlines the upcoming announcement of KORUS, the South Korea and U.S. trade deal.  Additionally, Secretary Ross discusses the steel and aluminum tariffs and how they enmesh in the larger objective of the ongoing trade negotiations with China:

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♦Segment #2 outlines more on the aluminum and steel tariffs; ongoing trade talks with Europe; efforts to renegotiate NAFTA, and the possibility of a deal being reached; Saudi Arabian investment in the U.S. and the Commerce Department plans to bring back a citizenship question in the 2020 Census.

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National Trade Council Director Peter Navarro appeared on CNBC, prior to today’s massive U.S. stock market increase, to discuss ongoing trade initiatives.

U.S.T.R. Robert Lighthizer is currently conducting simultaneous bilateral trade negotiations with South Korea, Philippines, Vietnam, Australia, China (way-points), Japan, Mexico/Canada (NAFTA) and the European Union.

Trade talks going on with numerous countries that, for many years, have not treated the United States fairly. In the end, all will be happy!

— Donald J. Trump (@realDonaldTrump) March 27, 2018

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The passage of the defense spending portion of the Omnibus bill ultimately means there will be increased demand for U.S. steel and aluminum within new defense equipment. The contracts within the procurement process will predictably require the use of U.S. parts.

Add the increase in defense spending with the pending global tariffs on steel imports, and the environment is created for foreign investment in domestic steel and metal manufacturing…. Then add into the mix the geopolitical economic relationship developed between India’s Prime Minister Modi and President Trump… And you discover the backdrop for this announcement from India owned JSW Steel:

(Reuters) – India’s JSW Steel Ltd said on Monday it would spend $500 million to build out its U.S. operations in Texas, amid heightened global trade tensions following U.S President Donald Trump’s decision to pursue steep import tariffs.

The company has signed an agreement with the Texas governor’s office, under which the governor has approved a grant worth $3.4 million to the company’s unit, the steelmaker said in a statement here.

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Perhaps as early as this week we should anticipate hearing about completion a significant trade agreement with South Korea.  The deal is known as “KORUS” (KOR+U.S.), and has been in negotiations for over a year.

Part of the recent agreement within the auto-sector of the deal, between Moon Jae-in and President Donald Trump, via Lighthizer and Ross, is an exemption of U.S. steel tariffs for South Korea in exchange for a doubling of U.S. auto exports; from 25,000 to 50,000 American made cars, per U.S. automaker, per year.  (link)

The results within KORUS exhibit the intended outcome of the global tariff proposal from President Trump as leverage to enhance the administration policy of reciprocity.  The world is taking notice, and China is now beginning to signal their understanding of President Trump leading the international discussion of reciprocal trade.

The unspoken background is that all nations, who have acquiesced to the overwhelming demands of China’s trade position, are now beginning to reassess the value of President Trump confronting the equation head-on.  Ultimately it is beginning to sink-in that all nations can benefit from correcting a trade imbalance within their own position.  In essence, U.S. President Trump is moving the entire global trade dynamic.

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Oh, here we go. Fox News owner Rupert Murdoch has a decades-earned nickname, “Mr. Wall Street”, Chris Wallace is the insufferable media mouthpiece for the financial interests of the guy who signs the front of his paycheck.  This is Wall Street -vs- Main Street.

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When Main Street economic principles are applied Wall Street will initially lose. There’s no way for this not to happen. Most of Wall Street is built on the Multinational platform of economic globalism. Weaken the grip of the multinational corporations and financial interests on the U.S. economy and Wall Street will drop… this is not difficult to predict. This is also necessary.

U.S. stocks, centered around U.S. domestic companies, will go up. U.S. stocks, centered around multinational companies -invested heavily overseas, and dependent on exploitation of the U.S. trade deficit- will go down.

As Secretary Wilbur Ross, U.S.T.R. Robert Lighthizer and U.S. President Trump have previously affirmed, they are going to restore the U.S. manufacturing base or lose office trying.

Additionally, the U.S. GDP is measured by deducting the value of imports from the value of everything produced domestically.  Therefore, initially as the economy expands, and as more Americans have more money to buy more stuff, lots of the things they buy will come from overseas.  This increase in purchasing of imports drives down the GDP despite the overall economic activity expanding.

I hope everyone has been prepared with prior information on how the economic system works so we can understand this weird and predictable dynamic.  Increased consumer spending can actually drive down the GDP if the stuff we are buying is imported.

National Trade Council Director Peter Navarro appears on Fox News with Maria Bartiromo for a discussion of ongoing trade initiatives.

Keep in mind, while simultaneously confronting China head-on, USTR Lighthizer has current trade deals, centered around reciprocity, being negotiated with: NAFTA [Mexico and Canada (round #7)], the EU, South Korea (almost done), Vietnam, Philippines, Malaysia, Australia and Japan (almost done).

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A rolling stone gathers no moss.

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