As expected, China is starting to realize they underestimated the severity of President Trump’s three-decade-long perspective on trade.

Against the backdrop of $150 billion in looming U.S. trade tariffs, Beijing sends an economic emissary to Europe attempting to restructure international trade agreements.

(Reuters) China’s international trade representative held a series of meetings with the ambassadors from major European nations last week to ask them to stand together with Beijing against U.S. protectionism, according to four sources familiar with the discussions.

Some of the western diplomats involved in the meetings with Fu Ziying, who is also a vice-commerce minister, have viewed the approaches as a sign of how anxious Beijing is getting about the expanding conflict with Washington, the sources said.

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White House Press Briefing by National Economic Council Director Larry Kudlow and National Security Council Senior Director for Asian Affairs Matthew Pottinger. Today’s briefing is happening during a Presidential summit with Japanese Prime Minister Shinzo Abe.

Kudlow is discussing the trade and economic issues; Pottinger is discussing national security issues surrounding negotiations with North Korea.  As Secretary Ross has stated frequently: “Economic Security is National Security.”

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[Transcript] West Palm Beach, Florida – 12:20 P.M. EDT – MR. KUDLOW: I’ll just say to start, before we take some questions, this is a very important meeting. A lot of really key issues are on the line. You obviously know about the foreign policy side regarding North Korea, which is a major, major issue for Japan and for the United States.

On the economic and trade side, there will also be very important issues. Japan is a great friend and ally. We have certain disagreements with respect to some of the trading issues. We’ll iron those out, hopefully.

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“We’ve also started talking with North Korea directly. We have had direct talks at very high levels, extremely high levels, with North Korea. I really believe there’s a lot of good will. Well see what happens, as I always say. Because ultimately its the end result that counts.”  ~ President Donald Trump

The formal bilateral meeting began shortly before 4 p.m.  POTUS Trump and PM Abe together with translators and delegations.  The U.S. side: Deputy Secretary of State John Sullivan, Chief of Staff John Kelly, National Security Adviser John Bolton, US Ambassador to Japan William Hagerty and National Security Council  Asia director Matthew Pottinger.

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Prime Minister Shinzo Abe said their one-on-one meeting was productive. On North Korea, “for the first time in the history of the world there will be a summit meeting between the United States and North Korea”, Abe said. Prime Minister Abe said “Trump has applied maximum pressure on the North and credited it for leading to the direct talks.”

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President Donald Trump welcomes Japanese Prime Minister Shinzo Abe for a summit at Trump’s Mar-a-Lago estate in Florida.  The President and PM Abe have a long-standing friendship.

Among the topics for the summit will be ongoing U.S./Japan trade initiatives, and important discussions about security for Japan as talks continue between South Korea (Moon Jae-in) and North Korea (Kim Jong-un).

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There was a possibility widely discussed and debated a year ago, where President Trump’s geopolitical doctrine of using economic leverage for national security would create the “leverage” for a denuclearized North Korea.  And eventually the “economic” value for a unified Korean peninsula.

Seven months ago we wrote:  “Turning rockets into ploughshares is a good strategy.”

Stunningly today, a significant step in that direction is being outlined.

(Via CNBC) North and South Korea are in talks to announce a permanent end to the officially declared military conflict between the two countries, daily newspaper Munhwa Ilbo reported Tuesday, citing an unnamed South Korean official.

Ahead of a summit next week between North Korean premier Kim Jong Un and South Korean President Moon Jae-in, lawmakers from the neighboring states were thought to be negotiating the details of a joint statement that could outline an end to the confrontation.

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The Eagle and the Arrow – An Aesop’s Fable

An Eagle was soaring through the air. Suddenly it heard the whizz of an Arrow, and felt the dart pierce its breast. Slowly it fluttered down to earth. Its lifeblood pouring out. Looking at the Arrow with which it had been shot, the Eagle realized that the deadly shaft had been feathered with one of its own plumes.

Moral: We often give our enemies the means for our own destruction.

The United States economy is the Eagle; the shaft is Wall Street; the feather is the U.S. middle-class, and the archer is U.S. Chamber of Commerce President Tom Donohue.

Need proof?  Please, don’t take my word for it, read:

Tom Donohue: Tonight feels like a gathering of old friends. Five years ago, I had the pleasure of being in this beautiful city to help start a hemispheric business dialogue, and I’m pleased to be back in Lima for this year’s CEO Summit of the Americas.

[…] I also want to talk a little about the priorities within our government. Because, as everyone knows, many of the policy decisions coming out of Washington today not only impact the U.S. economy and its businesses and workers, but indeed those across this hemisphere and around the world.

[…] The Chamber has helped lead the fight to protect the status of more than one million people who are at risk of deportation. It makes no sense to send one million talented workers back to their home countries when we don’t have enough labor to get the job done in our own. This includes the young men and women who were brought to our country as children through no fault of their own—known as “the Dreamers”—as well as hundreds of thousands of individuals who are working in the U.S. under temporary protected status.

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While necessarily needing to continue the gamesmanship, and publicly exhibit positive reception therein, I doubt seriously President Trump is fooled by this familiar Chinese ploy. Actions speak louder than words:

BOAO/BEIJING, China (Reuters) – Chinese President Xi Jinping promised on Tuesday to open the country’s economy further and lower import tariffs on products like cars, in a speech seen as an attempt to defuse an escalating trade dispute with the United States.

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Gordon Chang discusses the ongoing trade initiatives by President Trump to reset the trade imbalance with China.  The dynamic of confronting a bilateral trade relationship with a government controlled economic state (China) is the dynamic behind the discussion.

Mr. Chang does a good job of outlining the ‘big picture’ issue from the perspective of the Trump administration trade policy toward China.

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National Economic Council Chairman Larry Kudlow appears on Fox News for an interview with Chris Wallace discussing Trump administration trade positions.  Kudlow and Wallace were previously on the same team, and held the same positions, perspectives and outlooks.

In the face of four decades of results which cannot be refuted, Chairman Kudlow is modifying his position to align with President Trump and Main Street.  At the same time Kudlow is trying to convince Wall Street and GOPe Wallace-types to follow his lead.

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[*side note* notice how no-one ever mentions MfN status?]

In some ways POTUS Trump’s selection of Kudlow is an interesting test to see if the functionally obsolescent Wall Street-minded economists have the capacity to retool decades of flawed thinking.

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After three days of discussions between U.S Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo they were not able to develop any consensus on the major issues within the North American Free Trade Agreement, NAFTA.

The likely outcome of the upcoming Mexican national election on July 1st brought the principals together for non-scheduled talks, as U.S. President Trump instructed Ambassador Lighthizer to explore whether the three nations could find common ground on the ‘big picture’ issues behind the largest schism.  The auto sector and rules of origin is the epicenter of the biggest difference between the U.S., Mexico and Canada.

The U.S. auto-sector NAFTA position is that North American content of vehicles made in NAFTA countries be increased to 85 percent from 62.5 percent.  The Canadian and Mexican position is for lower North American content.

Canada is not arguing for higher Canadian content.  Mexico is not arguing for higher Mexican content… Instead both Canada and Mexico are arguing for higher imported content (China and Asia).  Honestly, I cannot fathom why more people don’t see the inherent ridiculousness of NAFTA against the reality of Canada and Mexico arguing for more Chinese imports.

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