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.

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:

The BLS released the December jobs report earlier today showing a stable 145,000 new job gains last month, and the unemployment rate remaining a very low 3.5%.
During an interview discussing the health of the U.S. economy in 2020 with National Economic Council Director Larry Kudlow, the DOW Jones industrial average crossed 29,000 for the first time in history.

Today, President Donald J. Trump delivered remarks on the latest step his Administration is taking to reverse burdensome regulations.   The executive is modernizing the National Environmental Policy Act (NEPA) regulations to promote more efficient, effective, and timely NEPA reviews of infrastructure projects that will increase our Nation’s economic competitiveness and improve the quality of life of our citizens.
NEPA regulations have not been comprehensively updated in over 40 years. Today’s action will establish time limits of 2 years for completion of environmental impact statements and one year for completion of environmental assessments.
[Video Below – Transcript ADDED]

PARTICIPANTS: Good morning.

THE PRESIDENT: Today, we’re taking another historic step in our campaign to slash job-killing regulations and improve the quality of life for all of our citizens.

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One of the key sectors gaining benefit from the USMCA trade agreement is the auto sector.  Rules on steel and aluminum smelting/origination, and rules on part origination from North America are key aspects to the trade agreement that shifts focus from the import of Asian manufactured parts for assembly to manufacturing in North America.
Essentially, seventy-five percent of the component parts for the auto industry must be manufactured in North America.  This shift directly puts U.S. auto-workers at the forefront for job gains & stops the process of using manufactured parts from China, Asia or the EU.
The goal of the agreement was/is to make manufacturing investment in North America the main consideration for auto-manufacturers who want access to the U.S. market.  Today, as a direct result of future investment considerations, General Motors and Ford unexpectedly surprise 1,500 auto-workers with the announcement their jobs have gone from part-time to full-time status.  Great news for these families:

DETROIT – General Motors’ worker Adarrey “Ace” Humphrey was blindsided Sunday. That’s when his life changed.

Humphrey, 27, has been a part-time temporary worker at GM’s Flint Assembly in Michigan for the last three years. On Sunday morning, he and about 250 of his co-workers crowded into UAW Local 598’s union hall. Most thought they were there for a routine meeting.

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A new ADP Payroll Report shows job gains of 202,000 from November to December 2019 far surpassing expectations. The increase was the largest gain since April ’19: “largest gain since April, driven mainly by professional and business services. Job creation was strong across companies of all sizes, led predominantly by mid-sized companies.”

(Reuters) – U.S. private payrolls increased by the most in eight months in December, pointing to sustained labor market strength though job gains last month were likely flattered by a seasonal quirk.
The ADP National Employment Report on Wednesday showed private payrolls jumped by 202,000 jobs last month, the largest gain since April, after an upwardly revised 124,000 rise in November.

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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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Senate Finance Committee Chairman Chuck Grassley held a mark-up hearing today to review the USMCA and vote the agreement out of committee.  After debate the agreement passed with a 25-3 vote.  Pat Toomey (R-PA), Sheldon Whitehouse (D-RI), and Bill Cassidy (R-LA) voted against the agreement (full hearing video below)

The USMCA is now sent to the full Senate for a vote this month; however, it is interesting to hear the reasons why Toomey, Cassidy and Whitehouse oppose it.
Senator Whitehouse (D) opposes USMCA because it doesn’t address climate change and have the provisions within it to support the Paris Climate Treaty.  Senators Toomey (R) and Cassidy oppose USMCA because it is not friendly to the Wall Street multinationals.
Senator Toomey doesn’t like that the Senate cannot change the USMCA to make it more favorable to the Wall Street multinationals who are invested heavily in China.  Toomey, speaking on behalf of several, noted the Trans-Pacific-Partnership (TPP) is a better trade construct.  Quite a remarkable mask-dropping was visible during the hearing.
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Any headline that uses the phrase “France Warns” immediately requires a background review to understand the big picture driving French fears.
Just like Canadian Prime Minister Justin Trudeau thinking he could outwit President Trump’s policies on NAFTA trade (he failed), Trudeau’s bestie, French President Emmanuel Macron, has stupidly exhibited similar shortsightedness.  In the case of both leaders their weasel moves have put their nations’ into a precarious economic position.
To consider the future for France, it would be wise to remember last year when President Trump arrived to attend the G-7 in Biarritz, France, President Macron was waiting at the Hotel du Palais to ambush Trump for an unscheduled luncheon (pictured below):

This was just one example in a series of scripted weasel-moves played by Macron in an attempt to pontificate his importance for the international audience.  Another example from the same event was Macron inviting the Iranian foreign Minister to the G7 for sideline meetings unrelated to the topics being discussed in Biarritz.
In an effort to create leverage against the U.S. position, President Macron never discussed his Iranian invitation -in advance- with the U.S. delegation.  It did not go over well.
The EU, and specifically France, have a dependence on foreign energy sources as a result of their ridiculous climate policies and narrow thinking.  In essence the EU wants to do business and receive oil from Iran; however, U.S. sanctions against Iran forbid those business deals.  Ergo Macron attempted to inject influence and position his interests.
As stated, the ambush approach did not go well, but POTUS played it cool.
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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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