Against the intense leverage being applied by President Trump, last week Beijing doubled-down and threatened punishment against any company that would leave China and begin manufacturing elsewhere.
The totalitarian response was predictable and expected.  However, also predictable was the corporate response to the threats.
As we shared:  “China is counting on prior western investment being so significant that a corporation will be reluctant to withdraw. However, in this outlook Beijing seriously underestimates the free market because communist controlled China doesn’t understand the action of a inherently free market.
The first loss is the best loss. If walking away from an investment provides more financial security and stability than attempting to retain a grip on a tenuous position – corporations will walk away.” (more)
Now today – “Nintendo Moves Some Switch Production Out of China”:

TOKYO— Nintendo Co. is shifting some production of its Switch videogame console to Southeast Asia from China to limit the impact of possible U.S. tariffs on Chinese-made electronics, said people who work on Nintendo’s supply chain.
It is another example of manufacturers adapting to the tariff threat. Taiwan’s Foxconn Technology Group said Tuesday that it was ready to move assembly of Apple Inc.’s iPhones out of China if necessary, and Japan’s Sharp Corp. , which is controlled by Foxconn, said last week that it planned to move production of personal computers to Taiwan or Vietnam.

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On Tuesday afternoon President Trump was asked a question by media about Kim Jong Un.  President Trump responded to the question, and simultaneously delivered an openly coded message to Chinese Chairman Xi Jinping that few would understand:

[Transcript] Q (Inaudible) about your meeting with Kim Jong Un while you’re in South Korea? Are there discussions underway?
THE PRESIDENT: So, I see that. And I just received a beautiful letter from Kim Jong Un, and I think the relationship is very well. But I appreciated the letter. I saw the information about the CIA, with respect to his brother, or half-brother. And I would tell him that would not happen under my auspices, that’s for sure. I wouldn’t let that happen under my auspices.
But I just received a beautiful letter from Kim Jong Un. I can’t show you the letter, obviously, but it was a very personal, very warm, very nice letter. I appreciate it.

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There’s always a larger geopolitical dynamic when you assess the economic alliances that President Trump puts together…. Always and underlying plan…  Sometimes it just takes time to surface.
As we have noted, even going back to 2017, Japanese Prime Minister Shinzo Abe always appeared to be the fulcrum for President Trump’s Indo-Pacific strategy.  

Remember the trip to Japan as honored guests of Emperor Naruhito and Empress Masako at the Imperial Palace?  Remember last month’s (May 25th) unprecedented reception with the titans of Japanese business?  Remember the private reception set up by a very nervous U.S. Ambassador William F. Hagerty?  A reception with the most influential business CEO’s in Japan and Southeast Asia? 
Well…

TOKYO (Reuters) – Japan’s Tokyo Electron, the world’s No.3 supplier of semiconductor manufacturing equipment, will not supply to Chinese clients blacklisted by Washington, a senior company executive told Reuters.
The decision shows how Washington’s effort to bar sales of technology to Chinese firms, including Huawei Technologies, is ensnaring non-American firms that are not obliged to follow U.S. law.

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White House Council of Economic Advisers Chairman Kevin Hassett squares-off against Fox Business crew on trade tensions with China, the state of the U.S. economy, the outlook for Federal Reserve policy and his upcoming departure from the White House.
Steve Forbes is disconnected from the reality of what happens with tariffs on China. Beijing first responds to off-set the tariff by lowering the value of their currency, and/or subsidizing the targeted products. There is no price increase to U.S. consumers (check inflation).

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Apparently President Trump was watching the segment, and had a word for Maria Bartiromo, Dagan McDowell, Steve Forbes and Stuart Varney:
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According to two media reports democrat presidential candidate Joe Biden is scheduled to completely reverse his position on China, and outline the Asian nation as a global geopolitical threat in an Iowa speech today. That’s not a reversal or a flip-flop, that would be a triple-lindy.
Since the first day he announced his candidacy Joe Biden has been saying China does not pose a threat to the U.S. or our global allies.  He has consistently down-played any talk of China as an economic or geopolitical threat to the U.S.
The Biden family has also made millions from their financial relationships with China, assisted by the family patriarch selling policy influence.
Biden has been so far out-front while advocating his friendly position toward China that he’s even been nick-named “China Joe” by those paying close attention….  And now he’s going to reverse that completely? Reminder:
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Earlier this morning President Donald Trump called in to CNBC to discuss a variety of subjects including: the ongoing trade negotiations with China; the threat of tariffs on Mexico over illegal immigration; the federal reserve; the status of the economy; the duplicity of the U.S. Chamber of Commerce; collusion by democrats; the upcoming G20 summit in Japan, and much, much, more.
During the interview President Trump directly calls out the U.S. Chamber of Commerce for their anti-American position and self-interested advocacy for Wall Street multinational corporations. Additionally, President Trump pushes back against the claim that tariffs lead to higher U.S. prices, citing examples of China subsidizing their exports and low U.S. inflation.  Must Watch:

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(LOL… POTUS Trump chomping-at-the-bit to get tariffs on the EU.)

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Former White House China trade negotiator Clete Willems makes a rare appearance to discuss President Trump’s ongoing trade position with China; and the lessons they are learning from Trump’s severity with Mexico.
Fox News talking-hair Leland Vitter, a prime example of the axiom: “a little knowledge is dangerous”, tries his best to promote the preferred Murdoch points; however, Vitter finds himself struggling against the weight of the examples highlighted by Mr. Willems. Quite funny actually:

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Worth noting: President Trump spoke with Mexican President Andres Manuel Lopez-Obrador (AMLO) yesterday (See Tweets Below).
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Interesting, albeit not surprising, report from the New York Times after they are debriefed by a group of U.S. tech industry executives about a compliance meeting in China.
The Beijing regime of Chairman Xi Jinping summoned leaders from the top of U.S. tech industry companies and informed them of consequences for complying with U.S. laws that relate to black-listed Chinese industry; ie. Hauwei.  It will be interesting to see how this dynamic plays out.
Beijing is counting on the far-left anti-American ideology within Silicon Valley to create a communist economic alliance on U.S. soil that will work against the interests of the American people.

SAN FRANCISCO — The Chinese government this past week summoned major tech companies including Microsoft and Dell from the United States and Samsung of South Korea, to warn that they could face dire consequences if they cooperate with the Trump administration’s ban on sales of key American technology to Chinese companies, according to people familiar with the meetings.

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The border and migration “agreement” with Mexico is a smart move by President Trump. If you worry that Mexico won’t take any action, well, don’t underestimate the dynamic President Trump just put into play.
Financial investment flows based on expectation, probability and risk management. If you don’t think Mexico will follow-up with their end of the bargain; then you are predicting the tariffs will reappear in 90-days.

Overlooked by most of the financial pundits President Trump has pre-positioned risk management actuaries with the basis for their analysis and internal investment advice. In a similar move last year, President Trump suspended tariffs against China based on an agreement (G20 summit in Argentina). After several months and a 150 page initial agreement of principle, China walked away from their prior promises and  terms.  The tariffs against China were immediately implemented at the previous rate.
That China example with tariffs is now the baseline for all multinational investment to consider as they review their current exposure in Mexico. If any financial investor (bank or corporation) believes Mexico will not adhere to the border/migration agreement, then by extension they are accepting/predicting the Mexican tariffs will take effect in 90-days.
Put another way… President Trump has just given notice to all global business interests to organize their financial affairs toward Mexico within 90 days.
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President Trump sat down for an extensive interview with Laura Ingraham to discuss the D-Day commemorative event and a variety of current event topics including: Tariffs on Mexico, Nancy Pelosi and impeachment threats, China trade confrontation and the relationship between President Trump and H.M. Queen Elizabeth.

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President Trump and First Lady Melania return from Ireland today. Schedule below.
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