Good discussion between Tom Friedman and Steve Bannon on the ‘big picture’ of the U.S. -vs- China geopolitical trade confrontation. Friedman is an insufferable prog on methods, but he recognizes the President Trump approach is necessary. Worth Watching:
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Where academic Friedman is helplessly naive is on the key point of how a coalition approach toward China is a pipe-dream. When it comes to economics each entity has unique self-interests. Put fifty self-interested governments together (ie. TPP) and you end up with paralysis of analysis and no action; as each entity fights to hold their own interest over the group interest….. While China grows in the background. (more…)
President Trump is executing one of the most brilliant geopolitical economic resets in the history of global trade. It really is stunningly remarkable how President Trump has controlled the entire landscape. The consequential phase now begins.
It is fascinating how the financial pundits didn’t see this coming. Perhaps one of the best indicators of where things are today comes from this quote within the South China Post:
“The Administration’s Section 301 tariffs and China’s retaliatory tariffs will now further disrupt – or even break – many thousands of supply chains in both countries.”
[Nelson Dong, a senior partner at Dorsey & Whitney]
The quote by Nelson Dong is stated *as if* shifting/breaking supply chains is a flaw in the approach. It’s not. Exactly the opposite is true; this is a feature of the strategic reset. A specific and purposeful feature designed by President Trump.
What Dong is predicting is the deconstruction of “one-belt, one-road”. (more…)
CTH was wondering how long it would take for President Trump to point out the brutally obvious…. Thanks to some advanced planning that everyone ignored, there are multiple trade alternatives to China:
Perhaps now people will reference President Trump’s long-game strategy which has been evident since his marathon Asia trip in November 2017.
Long before media pundits starting noticing/considering how serious President Trump was about structurally resetting the entire landscape of a U.S-China trade relationship, President Trump quietly and methodically laid the groundwork with personal visits to: Prime Minister Shinzo Abe (Japan); President Moon Jae-in (S-Korea); President Tran Dai Quang (Vietnam); and President Rodrigo Duerte (Philippines).
Oh, how quickly the media forgot. (more…)
This is the big one. This is the inflection moment. Tonight around 5:00pm Chinese Vice-Chairman Liu He will engage with team U.S.A. on the substantive issues around the future of the U.S-China trade relationship. Trillions at stake.
At midnight tonight the tariffs on Round One of Chinese goods are scheduled to increase from 10 percent to 25 percent. Round Two is yet determined. The background for the disposition of TEAM USA was outlined HERE.
Mnuchin – Trump – Lighthizer and Ross
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnunchin previously worked a 150-page outline agreement with China on seven chapters of trade issues covering: Theft of U.S. intellectual property; protection for trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation. Last week China reversed course on all of the substantive agreements.
Today Vice-Chairman Liu He is going to try to justify to President Trump why China can no longer accept the commitments they made over the past three months.
It cannot be overstated how everything in/around DC must first be filtered through the prism of this inflection point. At the heart of U.S. politics, the majority of the Senate Chamber is aligned with the Chinese through purchased multinational lobbying interests. Again, there are trillions at stake. Wall Street through K-Street has paid the Big Club to defend their multinational/financial interests from President Trump. (more…)
President Donald Trump hosts Japanese Prime Minister Shinzo Abe for a round of golf today, while First Lady Melania Trump hosts Madame Akie Abe in DC.
The relationship between the Trump’s and the Abe’s goes back quite a while and is rooted in a genuine friendship. The president and prime minister are strong competitors on trade and economic policy; however, the competition is founded on respect.
Prime Minister Abe’s economic policies are rooted in the growth process taught by Edwards Demming. If you follow their professional business ideology, it is easy to see how President Trump and Prime Minister Abe would face-off around a standard of excellence.
When combined the economies of the United States and Japan account for approximately 30 percent of all global gross domestic product.
This is really old-school business stuff. Each leader, is essentially an economic policy coach for his country; creating strategies and championing growth in a challenge to see who can succeed the most. They respect each-other, but this is old school. PM Abe isn’t about to concede to a deal where Japanese growth is ceded; however, he will not cheat to achieve success (unlike Xi). So friendly adversarial negotiations continue. Good stuff.
Meanwhile First-Lady Melania Trump and Madame Akie Abe toured some of the historic sites in the capital, including the Washington Monument and US National Arboretum. (more…)
Japanese Prime Minister Shinzo Abe and Madam Akie Abe will be having dinner tonight with President Donald Trump and First Lady to celebrate Melania’s birthday. The prime minister and the president are close personal friends and will likely play golf tomorrow.
The Trump-Abe relationship existed for many years prior to becoming U.S. President. Their respect for each-other is genuine. Abe and Trump are competitors on trade and economics and their strategies within that competition are actually fun to watch. The long-standing friendship underpins a very genuine alliance of U.S-Japanese interests.
In advance of the dinner tonight PM Abe and President Trump meet in the Oval Office ahead of a bilateral delegation meeting to discuss trade and regional matters. They also take questions from the media [Video and Transcript Below]
[Transcript] 4:35 P.M. EDT – PRESIDENT TRUMP: Thank you very much. It’s an honor to have my friend, Prime Minister Abe — Japan. We have many things to discuss, including trade, including some of the numbers that just came out this morning. We had a very big number at 3.2 GDP for the first quarter — usually the worst quarter. That also included the little bit of a dispute we had during the quarter. So 3.2 is far above expectation. I guess many people were thinking it would be in the ones, maybe between one and two. And 3.2 is great. (more…)
Steve Bannon appears on CNBC to discuss the economic objectives of China and how President Trump and USTR Lighthizer are confronting three very important convergences.
Bannon does a good job outlining the three Chinese priorities: ¹One-belt, one road; ²Made in China 2025; and ³Huawei 5G rollout; and how those efforts conflict with U.S. interests.
Commerce Secretary Wilbur Ross has completed the section 232 investigation on the auto industry, reviewing the sector as a vital economic interest for continued national security.
The content of the investigative finding is unknown. The Commerce Department has privately delivered the 232 report directly to the White House. However, with the possibility of the report empowering President Trump to implement 20 to 25% import auto tariffs industry executives are proactively going bananas.
An important aspect here is that the USMCA (U.S., Mexico and Canada) agreement exempts the trilateral North American pact from any auto tariff fear. If the vehicle consists of 75% North American (USMCA) content, there’s no tariff. (more…)
Secretary of State Mike Pompeo goes one-on-one with Martha MacCallum to discuss his message to the World Economic Forum in Davos, Switzerland and Trump’s approach to NATO. This is a really strong interview.
Secretary Pompeo brilliantly outlines the value of the nation state, and the principle that when a coalition is formed all members within that coalition (ie. NATO) have a responsibility to participate. Watch:
The baseline when reviewing economic data from China is to remember the entire economy is controlled by the communist central government. If they say the economy is “less strong” than previously expected, generally we can anticipate the truth is much worse.
The second aspect to remember is that many U.S. manufacturers made anticipatory advanced purchases, building up inventory ahead of possible tariffs, in the 3rd and 4th quarters of 2018. Those advance purchases can amplify any manufacturing slow down.
BEIJING (Reuters) – China is expected to report on Monday that economic growth cooled to its slowest in 28 years in 2018 amid weakening domestic demand and bruising U.S. tariffs, adding pressure on Beijing to roll out more support measures to avert a sharper slowdown.
Growing signs of weakness in China — which has generated nearly a third of global growth in the past decade — are stoking worries about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.
