USTR Robert Lighthizer has filed the official notification with the federal register for the increase in Section 301 tariffs from 10% to 25% effective Friday (full pdf below).  Additionally Reuters has exclusive details of the collapse in U.S-China trade talks.
As most CTH readers are aware, Lighthizer has focused heavily on the enforcement mechanisms within the trade talks. [Previous Bookmark] Apparently, when the 150 page draft agreement was presented to the Chinese politburo, Beijing balked at allowing the U.S. to hold controlling enforcement over the trade agreement terms.

The fallback presentation from Vice-Chairman Liu was: we cannot put the binding enforcement mechanisms in writing, you’ll have to ‘trust us’ to honor the agreement; at which time Lighthizer said no-way.

WASHINGTON/BEIJING (Reuters) – The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.
The document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters.

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We have discussed the Chinese outlook toward trade and negotiations at great length.  One of the overriding issues has always been the zero-sum disposition of China as it relates to any engagement. To wit: if it does not benefit China, it simply is not done.

Peace or war. Win or lose. Yin and Yang. Culturally there is no middle position in dealings with China; they are not constitutionally capable of understanding or valuing the western philosophy of mutual benefit where concession of terms gains a larger outcome.  If it does not benefit China, it is not done. The outlook is simply, a polarity of peace or war.  In politics or economics the same perspective is true.  It is a zero-sum outlook. (link)

Against the collapse of trade negotiations, the ideology of Chairman Xi Jinping is showcased today in the first official responses from the Chinese government toward the U.S. initiating tariffs due to Beijing’s duplicitous reversal on prior commitments.

(SCMP) Beijing will not make concessions in trade talks in response to Donald Trump’s latest tariff threats, Chinese state media said in a commentary published a day after the US president announced increases in duties on Chinese goods.
“Things we think are advantageous for us, we will do it even without anyone asking,” People’s Daily reported on its WeChat account on Tuesday.
“Things that are unfavourable to us, no matter how you ask, we will not take any step back. Do not even think about it.”

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To say there are conflicting reports of the U.S-China trade discussion, and possible breakdown therein, would be an understatement.  However, mining through the various U.S. and China news agencies, a more clear picture emerges.

U.S. Trade Representative Robert Lighizer is quoted today: “We felt we were on track to get somewhere. Over the course of last week we have seen an erosion of commitments by China. That in our view is unacceptable.”  This statement appears to be in line with reports from Beijing about Chinese negotiators: “with sources suggesting that President Xi Jinping vetoed additional concessions proposed by his negotiators.”

(Bloomberg) […] Lighthizer and Treasury Secretary Steven Mnuchin told reporters on Monday that the Chinese backsliding became apparent during their visit to Beijing last week, but that they had been reassured by their Chinese interlocutors that everything would turn out.

That changed over the weekend when China sent through a new draft of an agreement that included them pulling back on language in the text on a number of issues, which had the “potential to change the deal very dramatically,” Mnuchin said.

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The Treasury Department informed congress Monday it will not release President Trump’s tax returns.  This follows a politically motivated request from House Democrats, and potentially sets-up a legal battle to be resolved by the Supreme Court.
Letter from Treasury Secretary Steven Mnuchin:

(Link to Letter)

CTH shared last week the visibility of a cross-party political and economic horse-trade {Go Deep}.  It would appear some evidence toward that likelihood is gathering:

(Schumer link)

Speaker Nancy Pelosi and Minority Leader Chuck Schumer want their infrastructure proposal.  President Trump wants a fundamentally realigned geopolitical trade reset.  No doubt Pelosi/Schumer will attempt to get their political win and simultaneously eliminate any Trump win.  However, until the weeds are reached they are each playing their role.
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Well, it looks like all suspicions are now confirmed. The dragon dance of 2017 and 2018 has extended into 2019. DPRK Chairman Kim fires rockets, Trump smacks Chinese Chairman Xi. Yes, we can officially put the remaining bits of skepticism to rest…
The meeting last week between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and their Chinese counterparts including Vice-Chairman Liu, was especially important.  Mnuchin and Lighthizer said they would debrief President Trump on the likelihood of whether a successful trade deal with a communist regime was structurally possible; or whether Beijing was playing a game of delay.
The ongoing dance with the dragon has been a series of cunning manuevers between the Panda mask and the Dragon face. At the conclusion of the Beijing visit by Mnuchin and Lighthizer, Chinese Chairman Xi sent a proactive response using his familiar proxy North Korean Chairman Kim. The DPRK test-fired three missiles.
Today President Trump responds:

The increase of the Round-1 tariffs from 10% to 25%, previously delayed after discussions between Xi and Trump in Argentina, will now be triggered. Additionally, the Round-2 tariffs (25% on $325 billion of different goods), originally scheduled for March 1, also postponed after the Argentina dinner, will now be implemented.
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Rep. Devin Nunes appears on Fox News to discuss his letter raising questions about academic center of origin of Russia probe. Nunes says if Joseph Mifsud is a Russian agent, it would be one of the biggest intelligence scandals in history.

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Earlier today President Trump met with Slovakia Prime Minister Peter Pellegrini in the White House.  Prior to bilateral meetings they held a press availability in the oval office and President Trump took questions from the media. [Video and Transcript]

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[Transcript] – Oval Office – 1:55 P.M. EDT – PRESIDENT TRUMP: Thank you very much. It’s my honor to have the Prime Minister of Slovakia with us today in the Oval Office. We have a lot of talking to do. We’re dealing on trade. We have a very big trade arrangement and deal. They’re buying quite a few of the F-16 planes from us. And a very big order, actually. I’m very impressed. And it’s — I have to say, it’s a great plane. It’s a great, great plane.
But we do a lot of trade. And NATO partner. And our relationship has been very good. And this is the Prime Minister’s first time in the Oval Office, and I think he’s impressed with it.
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National Economic Council Director Larry Kudlow appears on Fox Business to discuss the most excellent April jobs report and the continued forecast for U.S. economic growth.
Director Kudlow points out the greatest current economic benefits are being felt in the blue-collar Main Street sector; and rebuts former Vice President Joe Biden’s comments on the administration policy.

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The Bureau of Labor Statistics (BLS) releases the April 2019 jobs report and the results are excellent.  It’s a home run for MAGAnomics as the trifecta continues: Job gains +263,000, Wage growth +3.2%, Inflation low at 1.4%.
With a gain of 263,000 new jobs in April, the overall unemployment rate dropped to 3.6%.  There are more jobs available than people looking for work.  Additionally, the prior two months jobs results were revised upward by 16,000 more than previous reported.

• Total nonfarm payroll employment increased by 263,000 in April, compared with an average monthly gain of 213,000 over the prior 12 months.
• Professional and business services added 76,000 jobs in April. Over the past 12 months, professional and business services has added 535,000 jobs
• In April, construction employment rose by 33,000. Construction has added 256,000 jobs over the past 12 months.
• Employment in health care grew by 27,000 in April and 404,000 over the past 12 months.
• In April, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.77. Over the year, average hourly earnings have increased by 3.2 percent.
• BLS Release Link

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