The Canadian government shocked the professional financial and economic media with their latest fourth quarter GDP release showing the economy has essentially come to a grinding halt at 0.1% growth.  [Compare to U.S. GDP growth of 3%]
The Canadian Q4 GDP growth isn’t one percent, it’s one-tenth of one percent: 0.1%, essentially halted; but everyone discussing this is missing something very important.
First, The Financial Post headline:

[FP] Canada’s economy practically came to a halt in the final three months of 2018, in a much deeper-than-expected slowdown that brings the underlying strength of the expansion into doubt.
The country’s economy grew by just 0.1 per cent in the fourth quarter, for an annualized pace of 0.4 per cent, Statistics Canada said Friday from Ottawa. That’s the worst quarterly performance in two and a half years, down from annualized 2 per cent in the third quarter and well below economist expectations for a 1 per cent annualized increase.

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Okay, now USTR Robert Lighthizer’s cautiously worded enforcement testimony starts to take on a fuller context.  When Ambassador Lighthizer was testifying before the mostly decepticon House Ways and Means Committee, he started to outline his newly designed trade enforcement mechanism… but he stopped; he didn’t want to reveal too much.
Now listen to Larry Kudlow describe “enforcement”.  WATCH:

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If you watched the USTR testimony you would have seen how the “enforcement” mechanism within the U.S-China trade negotiations was the priority for Lighthizer’s focus; and he specifically mentioned “layered” enforcement triggers, specific to each sector, and issue.
CTH has never seen a U.S. Trade Representative so structurally willing to clear-cut the entire bamboo forest if needed. Lighthizer is intensely focused on enforcement.
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White House Council of Economic Advisers Chair Kevin Hassett discusses the U.S. economy’s 2.6 percent growth in the fourth quarter, and the outlook for the U.S. economy through the rest of 2019.

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Notice how most of the financial pundits are focusing on what the “global economy” needs; specifically what the EU and China need to do to gain economic growth.  From that position, the U.S. trade reset is adverse to their financial interest; those financial interests are driven by Wall Street not Main Street.
Economic nationalists who understand the concept of ‘America First’ focus on what the USA economy needs, and do not accept a position that the U.S. should acquiesce our position to benefit the economic needs of other nations.  That’s the primary difference.
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The Bureau of Economic Analysis, BEA, finally released the fourth quarter growth rate estimate for 2018.  The 4th quarter growth result at 2.6% exceeded expectations, and shows the U.S. economy is growing stronger than almost all economic forecasts.

WASHINGTON DC – In the fourth-quarter, U.S. gross domestic product grew at an annualized rate of 2.6%, according to the latest data from the Bureau of Economic Analysis.
Thursday’s report beat expectations, with consensus economists polled by Bloomberg looking for growth to slow to 2.2% during the final three months of the year. The domestic economy grew at a pace of 3.4% in the third quarter and 4.2% in the second quarter.

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You might want to bookmark this congressional testimony from U.S. Trade Representative Robert Lighthizer to the House Ways and Means Committee for specific purposes…
There are many people who are understandably worried that any U.S. trade agreement between the U.S. and China might not have the most ferocious teeth behind a binding enforcement provision.  If you listen to Ambassador Lighthizer he makes clear that President Donald Trump, and the negotiating team, will not accept any agreement that does not have the strongest enforcement mechanisms at every level.

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In his testimony Lighthizer walks through the basic outline of what a U.S. successful agreement would look like.  While increased Chinese purchases to lower the deficit are a part of the goal, they are a VERY SMALL part of the goal.
The protection of U.S. intellectual property; the removal of non-tariff trade barriers; the confrontation of currency manipulation and the sector by sector enforcement provisions are the primary objective.
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There’s a considerable backstory {Go Deep} to the announcement today where Fiat Chrysler will be investing $4.5 billion in new manufacturing, and 6,500 additional jobs.
Fiat Chrysler’s Mike Manley watched legendary CEO Sergio Marchionne dealing with President Trump in 2017 during two sets of meetings with key auto leaders. POTUS and titan Marchionne got along great; both old school deal-makers. There was a lot of respect between the two leaders. There’s no doubt Mike Manley took heed of Sergio Marchionne’s approach when he took over as CEO of Fiat Chrysler in 2018.

(Via CNBC) […] The automaker says it will hire 6,500 workers and invest $4.5 billion by adding a new assembly plant in Detroit and boosting production at five existing factories.
CEO Mike Manley said expanding in Detroit is a logical decision given the company’s facilities in the area and the desire to produce Jeeps in the U.S. “We’re an American brand. We’re proud of that within the Jeep brand,” he said in a statement.

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With about a week left before the second phase of U.S. tariffs is scheduled to hit Chinese imports both the U.S. and China trade delegations met today in an ongoing effort to hammer out details about enforcement mechanisms.   The tension is thick enough to cut with a knife…

Beijing’s Red Dragon team is focused on putting together a six step Memorandum of Understanding, the Panda MOU, they hope will convince President Trump to delay any tariff action.  This cunning procedural approach is China’s historic tactic when confronted about the reality within their trade behavior and economic duplicity.   However, USTR Robert Lighthizer is well aware and unwilling to follow the path of historic failure.
These talks are intense; it is difficult to appropriately frame how consequential these negotiation sessions are. Because the trillion dollar stakes are so high; and because China is unfamiliar negotiating with a government delegation they have not purchased; this is the type of hard-line negotiation that could never be attempted by any other administration other than President Donald Trump.  It is rather epic when you stand back and consider the larger landscape.
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Asia expert Gordon Chang discusses the U.S.-China trade negotiations with Lou Dobbs and why President Trump should consider raising tariffs on Chinese imports on March 1st.
Massive pressure is being applied by Chinese purchased interests including Wall Street, the multinational corporate lobbying groups; the U.S. Chamber of Commerce and all of the global financial elite, to oppose President Trump’s confrontation with Beijing.

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President Trump Yesterday:
Q How confident are you that it will be finished by March 1? Or are you considering extending that deadline?
THE PRESIDENT: Well, they are very complex talks. They’re going very well. We’re asking for everything that anybody has ever even suggested. These are not just, you know, “let’s sell corn or let’s do this.” It’s going to be selling corn but a lot of it — a lot more than anyone thought possible. And I think the talks are going very well — with China, you’re referring to?
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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.
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Secretary of Treasury Steven Mnuchin and U.S. Trade Representative Ambassador Robert Lighthizer are currently leading another round of trade negotiations in China.  Recent reporting indicates the U.S. team will meet with Chairman Xi Jinping at the conclusion of this round of discussions.

At the conclusion of the previous round of discussions in Washington DC, President Trump invited the Chinese delegation to the Oval Office. The surface panda-face diplomacy appears to be based on reciprocity; however, there is no indication President Trump and Chairman Xi are making any efforts for a meeting.

BEIJING – China’s President Xi Jinping “is scheduled to meet” key members of the US trade talks delegation, including US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin, in Beijing on Friday, according to sources close to the matter.

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