Canada is vowing to retaliate against the U.S. if President Trump subjects NAFTA partners to the same tariffs as other trade nations and eliminates the NAFTA loophole. {Go Deep}

The NAFTA Loophole allows Canada and Mexico to broker independent trade deals with Asian and European companies; then use their Mexican and Canadian access to the U.S. market as a backdoor around U.S. Tariffs.

This loophole has been exceptionally rewarding for both Canada and Mexico and for more than a decade they have structured their economies around loophole retention. U.S. corporations, seeing advantages from cheap Asian parts in Mexico and Canada, have moved some manufacturing there to take advantage.  In an effort to reset the trade imbalance created by the loophole President Trump is threatening to close it.

OTTAWA (Reuters) – Canada will “respond appropriately” to any U.S. steel and aluminum tariffs, Foreign Minister Chrystia Freeland said on Wednesday, less than two days before the punitive measures are due to kick in.

“The government is absolutely prepared to – and will defend – Canadian industries and Canadian jobs. We will respond appropriately,” Freeland told reporters when asked about possible U.S. action.

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Buried in a Wall Street Journal article outlining their shock and horror over President Trump following through with a Phase-I trade penalty of $50 billion, you find the following quote from Captain Obvious at Cornell University:

“The Trump administration is clearly signaling, ahead of Wilbur Ross’s trip to Beijing, that the gloves are off given China’s unwillingness to agree to a trade deficit reduction target or to make broader trade concessions,” said Eswar Prasad, a Cornell University professor of international trade. In addition, the “hardline stance may partly reflect the perception that China played a part in nearly derailing the Trump-Kim summit.” (link)

Gee, ya think?

The White House announced today it will clarify by June 15 a final list of $50 billion in imports from China that would be subject to tariffs of 25%, with the duties implemented “shortly thereafter.”  Additionally, future investment restrictions aimed at preventing Chinese acquisition of American technology will be announced by June 30.

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The 30-day extension on exemptions for Steel and Aluminum tariffs is scheduled to expire June 1st.  President Trump is positioning the U.S. Trade Team for a substantial reset. According to reports, U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystina Freeland held a terse meeting today over the tariffs and Canada’s unwillingness to close the NAFTA ‘fatal flaw‘ (loophole).

Both Canada and Mexico have structured key parts of their trade agreements to take advantage of their unique access to the U.S. market.  Mexico and Canada generate billions in economic activity through exploiting the NAFTA loophole.  China, Asia (writ large), and the EU enter into trade agreements with Mexico and Canada as back-doors into the U.S. market.  So long as corporations can avoid U.S. tariffs by going through Canada and Mexico they will continue to exploit this approach.

If the U.S. applies the same tariffs to Canada and Mexico we apply to all trade nations, then the benefit of using Canada and Mexico -by those trade nations- is lost. Corporations will no longer have any advantage, and many are likely to just deal directly with the U.S.  However, this would mean hundreds of billions in lost economic activity for Mexico and Canada.  It is the NAFTA fatal flaw.

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According to Yonhap News North Korea’s vice chairman of the Central Committee, Kim Yong-chol, is traveling to Beijing China for an operational briefing -and likely instructions- prior to heading to the U.S. where he might possibly be scheduled for a meeting with Secretary of State Mike Pompeo.

The travel plans highlight the influence strategy deployed by China and Chairman Xi Jinping ahead of the tenuously scheduled June 12 summit between the U.S. and North Korea in Singapore.  The U.S. negotiation team is currently in South Korea working on summit details amid discussions between all significant stakeholders.

Watch the U.S. -vs- China trade front closely.  U.S. Commerce Secretary Wilbur Ross is scheduled to arrive in Beijing on June 2nd to discuss current trade issues.  China is hoping to manipulate their North Korean proxies as trade leverage. Communist Chinese trade negotiators are notorious for their cunning manipulation.

BEIJING, May 29 (Yonhap) — A senior North Korean official arrived in Beijing on Tuesday apparently en route to the United States to hold preparatory talks over a possible summit between the leaders of the two countries.

The trip by Kim Yong-chol, a vice chairman of the Central Committee of the North’s ruling Workers’ Party, came as Washington and Pyongyang are holding working-level talks on the summit agenda and issues related to security and protocol.

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Two-and-a-half years ago Donald Trump, then a candidate, revealed his super secret strategy for dealing with North Korean nuclear weapons.  When asked “what would you do?”:

•Senator Ted Cruz: Blame Clinton, then load up South Korea and Japan with proactive nuclear weapons.
•Senator Marco Rubio: Blame Obama, then prepare for war via South Korea and Japan.
•Governor John Kasich: Tell Japan to strike the DPRK.
•Governor Jeb Bush: Launch a pre-emptive strike against Kim Jong-un, now.
•Businessman Donald Trump: Punch China in the nose.

Watch:

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Guess which approach worked?

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President Trump delivers a 2018 Memorial Day speech during the official memorial ceremony at Arlington National Cemetery.  Transcript Added:

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THE PRESIDENT: General Dunford, Joint Chiefs, members of the Armed Forces, members of the Cabinet, members of Congress, and distinguished guests: Thank you for joining us on this solemn day of remembrance. We are gathered here on the sacred soil of Arlington National Cemetery to honor the lives and deeds of Americas greatest heroes: the men and women who laid down their lives for our freedom. Today, we pay tribute to their service, we mourn alongside their families, and we strive to be worthy of their sacrifice.

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With much of the media, and indeed the President himself, fueling the ongoing headline discussion over the ramifications of the Obama administration setting up “surveillance”, “informants”, counterintelligence operations and “agent provocateurs” against their political opposition, ie. “SpyGate”, it is perhaps time for some mental sorbet.

Relating to the overall issue, on March 28th, 2018, the DOJ Office of Inspector General Michael Horowitz formerly announced an additional investigation of how the U.S. Department of Justice and Federal Bureau of Investigation engaged with the Foreign Intelligence Surveillance Court (FISC) in matters relating to the FISA Title-1 application filed against U.S. person Carter Page.  However, one part of the OIG notification was generously overlooked by a defensive and IC compliant media:

As part of this examination, the OIG also will review information that was known to the DOJ and the FBI at the time the applications were filed from or about an alleged FBI confidential source. Additionally, the OIG will review the DOJ’s and FBI’s relationship and communications with the alleged source as they relate to the FISC applications.  (pdf link)

Two months later on Monday May 21st, Deputy Attorney General Rod Rosenstein added a significant DOJ mandate to the Inspector General review.  Rosenstein expanded the original FISA review to include looking at whether officials within the intelligence community may have unlawfully used human intelligence assets to “spy” or “surveil” the Trump campaign:

“The Department has asked the Inspector General to expand the ongoing review of the FISA application process to include determining whether there was any impropriety or political motivation in how the FBI conducted its counterintelligence investigation of persons suspected of involvement with the Russian agents who interfered in the 2016 presidential election.” (link)

The overall FBI and DOJ corruption and political weaponization discussion has now shifted to issues of politically motivated spies, surveillance and the use of intelligence agents to conduct domestic operations.  There are obvious ramifications and seemingly and endless series of directions and outlines for evidence therein.

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South Korean Prime Minister Moon Jae-in is the Asian version of Barack Obama, and much like North Korean Chairman Kim Jong-un essentially irrelevant in this geopolitical confrontation.  Take a seat, or make a sandwich…. it matters not.

Behind the fanciful Korean ‘denuclearization talks‘ and lofty ‘peace initiatives‘ a far more consequential geopolitical economic battle is taking place between the worlds largest two economies.  U.S. President Donald Trump and Chinese Chairman Xi Jinping are engaged.

The Sandwich Maker Summit –  (Reuters) – “South Korean President Moon Jae-in held a surprise meeting with North Korean leader Kim Jong Un on Saturday in an effort to ensure that a high-stakes summit between Kim and U.S. President Donald Trump takes place successfully, South Korean officials said.

[…]  Their two hours of talks at the Panmunjom border village came a month after they held the first inter-Korean summit in more than a decade at the same venue. At that meeting, they declared they would work toward a nuclear-free Korean peninsula and a formal end to the 1950-53 Korean War.

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Current Steel and Aluminum tariff exemptions expire June 1st.  Secretary Ross scheduled to be in Beijing, China June 2nd, 3rd, 4th.  The G7 Summit in Charlevoix, Quebec is on June 8th and 9th.  The tenuous Singapore summit was previously scheduled for June 12th.

Tweet Link

Secretary of State Mike Pompeo testified to the Senate Foreign Relations Committee yesterday on multiple issues.  Much of the debriefing to the Senate revolved around Secretary Pompeo’s contacts and coordination with North Korean Chairman Kim Jong-un.

The testimony is interesting for those who are following the DPRK issues.  During many of the exchanges Secretary Pompeo clarifies his certainty that Kim Jong-un fully understood the U.S. position surrounding denuclearization; and for several weeks was progressing toward the June 12 summit with clarity of outcome between the U.S. and North Korea.

Then something happened…

[Watch the Briefing HERE] Secretary Pompeo’s briefing when overlaid with the timing of the first U.S. trade delegation to China (May 2-5); and then the second trip by Chairman Kim to Beijing (May 8); highlights the connectivity of Chairman Xi Jinping instructing Chairman Kim to change his approach publicly in order to provide China with leverage in the U.S./China trade summit which took place shortly thereafter (May 15-18).

As noted by President Donald Trump during his Oval Office remarks with NATO Secretary General Jens Stoltenberg, the specifically scheming and cunning influence by Chairman Xi, what we customarily call ‘Red-Dragon-China‘, was -and is- accepted by President Trump as evidence of Beijing’s manipulative intent.

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