Treasury Secretary Steven Mnuchin appeared on Fox News with Brett Baier for a more detailed discussion of the U.S-China ‘phase-one’ trade agreement.  Additionally, Secretary Mnuchin discussed the status of sanctions with Iran and his view on impeachment.

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…and Brett Baier is a human cabbage patch doll.
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After the signing ceremony to celebrate a historic U.S-China ‘phase-one’ trade agreement, President Trump and the U.S. trade delegation hosted Vice-Premier Liu He and the Chinese delegation for a luncheon. [Video and Transcript Below]

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[Transcript] – PRESIDENT TRUMP: I thought that we would do it the way other; that the more I thought about this, the better it is. It’s — you can get your arms around it better the way we’ve got it. I like it better the way we’ve done it.

I just want to say this is a great day for both China and the United States. This is an agreement that people have been talking about for 40 years and never were able to get even a piece of paper signed. And we never had an agreement. And this is going to be a great agreement for both countries. It’s far greater than $200 billion, and it’ll grow every year. It also unifies the countries.

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White House National Economic Council Director Larry Kudlow appears on FOX Business for his first interview since the signing of the U.S.-China trade deal.  Mr. Kudlow is optimistic but also shares notes of caution for the compliance and enforcement aspects.

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In the background of the delegation it should be noted Chinese Chairman Xi Jinping sent a hard-line handler, Commerce Minister Zhong Shan, to accompany the more moderate Vice-Premier Liu He.  Zhong Shan was noted at the center of the signing ceremony and directly opposite Robert Lighthizer at the luncheon.
The two Beijing representatives highlight the ongoing Dragon -vs- Panda dynamic within China.
Internal to Chinese politics…. If the reformers are successful (Liu He) the compliance and enforcement mechanisms will succeed and ‘phase-one’ will lead to future negotiations.  However, if the hardliners block reform (Zhong Shan), then the compliance and enforcement mechanisms will fail and ‘phase-one’ becomes a dead end.
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Earlier today President Trump, together with his trade delegation and the delegation from China represented by Vice-Premier Liu He, signed a new, fully-enforceable Phase One Trade Agreement. This is the first ever trade agreement any nation has attempted to change the dynamic of how a free-market system (USA) can engage with the Communist system within China. [Video Below – Transcript ADDED]
While ‘phase-one‘ was structurally created to set the foundation, and test the principles of enforcement, this historic trade agreement will frame the text that all other free-market nations will follow in their own efforts to come to a substantive agreement with Beijing.
This is a really big deal on a worldwide scale of international commerce.  Structurally the biggest changes inside China relate to Intellectual Property protections, U.S. ownership of assets, and changes within the Chinese legal system to stop Forced Technology Transfer.
During the ceremonial remarks Vice-Premier Liu read a statement from Chinese Chairman Xi Jinping to commemorate this historic trade agreement.

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[Transcript]  PRESIDENT TRUMP: Thank you very much. Please. We greatly appreciate your joining us at this White House event. This is a very important and remarkable occasion.

Today, we take a momentous step — one that has never been taken before with China — toward a future of fair and reciprocal trade, as we sign phase one of the historic trade deal between the United States and China. Together, we are righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers, and families.

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U.S. Treasury Secretary Steven Mnuchin appears on FOX Business to discuss the U.S-China ‘phase-one’ trade agreement, the benefits, enforcement mechanisms and retention of tariffs and particular sanctions until compliance can be reviewed.
Phase-1 establishes the baselines; resets the ability of U.S. companies to enter China; establishes rules for market entry; and sets the parameters for enforcement.  Any future phase is contingent upon evaluation of phase-one enforcement mechanisms.

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U.S. Trade Representative Robert Lighthizer is a smart, serious and deliberate professional on a very specific and important mission for the United States.  In my opinion Lighthizer is the most under-appreciated member of an exceptionally good economic team. Everything about Lighthizer’s approach is based on enforcement.
Ambassador Lighthizer has been consistent over multiple years, on his intention to create enforceable trade reform between the U.S. and China, or, if needed, decouple the two economies if China fails to accept the necessary structural reforms.
Tonight, as the Chinese delegation arrives, Lighthizer discusses the U.S-China ‘phase-one’ agreement with Lou Dobbs. WATCH:

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Secretary of Treasury Steven Mnuchin appears with Maria Bartiromo to discuss the latest round of sanctions against Iran.  Secretary Mnuchin notes the economic engagement by China with Iran may open up Beijing to countermeasures for violating sanctions.
Additionally, Secretary Mnuchin outlines some aspects of the U.S-China ‘phase-one’ trade agreement and affirms the key point of enforcement mechanisms built into the agreement by U.S.T.R. Robert Lighthizer.  The official signing is this coming Wednesday.

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The results of a massive turnout vote in Taiwan reflect the country wishes to remain free from the overbearing influence of communist China.

(Hong Kong Free Press) […] Taiwan’s incumbent leader Tsai Ing-wen has won Saturday’s presidential election, defeating her Beijing-friendly rival Han Kuo-yu by a wide margin.
[…] With 8.1 million votes as of 10:30pm, Tsai won the highest number of votes of any presidential candidate in Taiwan’s history of democratic elections. Han, on the other hand, received just over 5.5 million votes, according to the Central Election Commission (CEC).

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The Bureau of Economic Analysis (BEA) has released Q4 (November) import/export data showing a considerable drop in the U.S. trade deficit. [Release Here]  Exports increased approximately .7 percent ($208.6 billion) while imports dropped one percent ($251.7 billion.  Lowering the overall trade deficit to $43.1 billion.

While the pundits are surprised at the strong result, it should not come as a surprise to many CTH readers.  During Q2 (June) and Q3 (July, Aug, Sept) the rate of GDP growth was impacted -in part- by inflated U.S. purchases as companies bought holiday merchandise earlier than normal.  This was an effort to avoid looming tariffs, and as a result companies increased their overall inventory.  We predicted Q4 purchases (Oct, Nov, Dec) would be lower specifically because of this backlog of retail inventory.
With the massively successful holiday season now over, those inventories have sold.  Specifically because the value of imports are deducted from the GDP calculations, there will likely be a much stronger Q4 GDP growth resulting from less import activity.
The Wall Street financial pundits are too focused on the multinational side of the ledger; and they simultaneously don’t review data from a Main Street perspective; therefore they don’t see -or pretend not to see- the common sense equation staring them in the face.
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White House economic and manufacturing advisor Peter Navarro appeared on Fox News today to discuss the procedural process anticipated for the USMCA passage as early as the end of next week. Additionally, Navarro highlights the upcoming signing for the U.S-China ‘phase-one’ agreement on January 15th.

(Reuters) – A Chinese trade delegation is planning to travel to Washington on Jan. 13 for the signing of the U.S.-China Phase 1 trade deal, the South China Morning Post reported on Sunday citing a source briefed on the matter.
The Chinese delegation will return on Jan. 16, SCMP said here
The trade delegation, led by Vice Premier Liu He, had originally planned to set off earlier in the month but had to change plans after U.S. President Donald Trump sent a tweet here claiming that he would sign the Phase 1 trade deal with China on Jan. 15. (read more)

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