The White House provided a background presser for information about President Trump and First Lady Melania Trump’s upcoming state visit to Japan.  [Transcript below] There are some interesting aspects to the itinerary as outlined; however, first, it’s important to emphasize the context.
As CTH shared earlier: At the highest levels of finance and business; in a process within both private industry and the geopolitical realm of government; a key aspect to every long-term strategic reset is the formation of an alliance.  Every successful titan of industry who has structurally changed history has influenced an alliance toward the effort.

I strongly suspect, in anticipation of the China confrontation; and considering the scale of the consequences therein; President Trump selected Japanese Prime Minister Shinzo Abe as the center of an Indo-Pacific alliance (several years ago).  With the knowledge of USTR Lighthizer heading to Japan with an advance trade team…. now consider:

Via Teleconference – 2:31 P.M. EDT – PRESS OFFICER: Good afternoon, everybody. I’m happy you all could join. We have with us today [senior administration official]. He’ll be providing some brief remarks about the President’s upcoming trip to Japan and a few Q&A afterwards. This will be on background and you can attribute what he says to a senior administration official.

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Last month President Trump accepted an invitation from Prime Minister Shinzo Abe for a state visit to Japan May 25th through 28th. The Japanese government is honoring President Trump as the first state guest of the Reiwa Era, introduced with the coronation of Emperor Naruhito.
The official visit itinerary will include the first formal state banquet hosted by the Emperor Naruhito and Empress Masako.  The visit is a big honor intended to convey the importance of the relationship between the U.S. and Japan.

Today Reuters is reporting that U.S. Trade Ambassador Robert Lighthizer will be heading to Japan (in advance of President Trump), to meet with Economy Minister Toshimitsu Motegi.  It seems there’s a possibility Trump and Abe have something planned….

(Reuters) – U.S. Trade Representative Robert Lighthizer will visit Japan on May 24 to meet Economy Minister Toshimitsu Motegi to accelerate trade talks ahead of a leaders’ summit a few days later, two sources with direct knowledge of the plan said on Monday.
After a late-April meeting between President Donald Trump and Prime Minister Shinzo Abe, Trump had said it was possible for the two allies to reach a new bilateral trade deal by the time he visits Tokyo in late May.

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Further evidence there will be no further engagement with China surfaces in an announced specific shift in directive from President Trump today focusing Commerce Secretary Wilbur Ross and USTR Lighthizer on a sector, not a specific nation.
The auto industry is the key sector on two specific trade fronts: the EU trade reset and the ongoing negotiations with Japan.  Both trade agreements center heavily on the auto-sector; and both Japan and the EU have cemented intransigent trade positions.

Enter President Trump to cut the Gordian knot.
It’s a small but important note that President Trump had previously assigned geographic trade responsibilities.  Wilbur Ross has the EU as his primary focus and Robert Lighthizer has authority over Asia.  Today the White House connects the objective of both Ross and Lighthizer as President Trump instructs the U.S. Trade Representative to engage in discussions around the specifics of the auto-sector:

White House – […] Following an extensive review of the Department of Commerce’s Section 232 automobile report, President Trump today issued a proclamation directing the United States Trade Representative to negotiate agreements to address the national security threat, which is causing harm to the American automobile industry. (more)

The President has designated the auto industry as a critical component of national security [More Here].  With Ross’s report in hand, the possibility of increasing tariffs on foreign automobiles is the leverage POTUS gives to Lighthizer along with the mandate to engage.
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A combination of the NAFTA “Fatal Flaw” & transnational Chinese shipments, was always at the heart of President Trump placing steel and aluminum tariffs on Canada and Mexico during negotiations that culminated in the USMCA trade agreement.  The goal was to block China from dumping product into the U.S. through the doors of Canada/Mexico.
Within the USMCA President Trump and Robert Lighthizer placed a specific rule Article 32:10 which grants the U.S. the right to veto (control) Canadian and Mexican purchase agreements with “Non FTA Market Countries”, ie. China.

This Article 32:10 rule is at the core of the USMCA agreement.   However, after the USMCA agreement was reached President Trump kept the Steel/Aluminum tariffs in place.  For those who don’t understand Trump (insert Chrystia Freeland here) the question was always: why?
Quite simply the answer behind the question was President Trump’s retention of leverage. Yes, in 2018 the USMCA was agreed to; however, the USMCA was not ratified by either Canada or Mexico…. it was only an agreement.  Why would Trump remove critical leverage on an initial promise.
Trump is not a politician; he’s a businessman who knows promises are paper until they become action. Additionally, President Trump is a tactician; the tariff leverage was held until such a time as removing it would generate an immediate gain in national compliance toward his trade objective… That’s the action.  Today:

(Bloomberg) President Donald Trump said the U.S. will lift steel and aluminum tariffs on Canada and Mexico, boosting efforts to encourage lawmakers to ratify a new North American trade deal.
“I’m pleased to announce that we’ve just reached an agreement with Canada and Mexico and will be selling our product into those countries without the imposition of tariffs or major tariffs,” Trump said at an event Friday. “Hopefully Congress will approve the USMCA quickly.”

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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.
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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”.
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Looking at the retaliatory response from China today; there’s lots of great news.  China is doing exactly what President Trump quietly predicted.  They are walking directly into his trap.  Trump is a friggin’ genius…. more on that coming.
This video from Steve Hilton last night was very well presented.

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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.
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National Economic Council Chairman Larry Kudlow appears on Fox News to debate Chris Wallace over the U.S-China trade reset.  As customary Wallace completely ignores the dynamic of communist China as a state run economy, and not a free market system; thus presenting the fictitious Wall Street position about bad tariffs.
Chairman Kudlow notes the bigger issues of President Trump confronting the enforcement mechanisms that must be in place if a trade agreement (FTA) between a free-market system (USA) and a state-run system (China) are going to work…

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Washington, DC – U.S. Trade Representative Robert Lighthizer today released the following statement regarding additional action under Section 301 of the Trade Act of 1974:
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Giddy up… President Trump has fulfilled another campaign promise to confront China and hold firm.  As promised, three decades of Donald Trump’s intense commitment to stop the exfiltration of Amerian wealth is on display today.

When you plant your tree in another man’s orchard don’t be surprised when you end up paying for your own apples….

U.S. Trade Representative Robert Lighthizer; U.S. Treasury Secretary Steven Mnuchin; U.S. Commerce Secretary Wilbur Ross and U.S. President Donald Trump are confronting Chinese Chairman Xi Jinping and Vice-Chairman Liu He… and now consequential things get economically very serious.
There are going to see multiple geopolitical background moves now as the confrontation shifts to the painful phase…. who can outlast the economic standoff.

WASHINGTON DC – Negotiations to end the US-China trade war came to a surprisingly early close in Washington on Friday with no signs of a deal – reportedly just hours before the Chinese delegation will return to Beijing.
US Treasury Secretary Steven Mnuchin told reporters at noon that the talks had been constructive as he left the US trade representative’s office, where negotiators held their latest round of talks in an attempt to end a months-long trade dispute. (more)

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