Funny stuff amid headlines discussing the likelihood of President Trump postponing a 25% tariff on European autos.  What the pundits are missing is how President Trump has positioned a myriad of trade dynamics that make EU action unavoidable.   This is the fun stuff, so let’s enjoy the details.
The current headlines surround President Trump “postponing” a 25% tariff on EU automobiles as an outcome of the major EU manufacturers (mostly Germany) promising increased investment in their U.S. operations.  By itself this would be considered a win for President Trump, but that’s not the whole picture, not even close.

What the more broad trade and manufacturing dynamic includes will explain what EU economists are only just now starting to realize.  Yes, the major European auto-makers will put more investment into the United States (thereby lessening the EU industrial economy); however, the auto decision is not because they are presenting a magnanimous benefit of sorts, but rather it is a foregone conclusion; an unavoidable reality due to a previous trade agreement construct.
Within the USMCA agreement President Trump negotiated a win-win-win for Mexico, Canada and the U.S. through a requirement that 75 percent of North American auto content must originate from manufacturing within North America.  Failure to reach that threshold means the auto company will be subject to a 25 percent tariff to bring the product to the U.S. market.
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Unemployment claims dropped by 8,000 last week showcasing a very strong job market for all sectors of employment.  The U.S. Dept of Labor Report shows continued strong jobs growth surprising most economic pundits.

(DOL Report – pdf page 4)

(Reuters) – The number of Americans filing applications for unemployment benefits fell more than expected last week, consistent with strong labor market conditions and continued job growth.

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Jumpin’ ju-ju bones, the October jobs report has blown away all expectations in every possible metric.  It’s not just the top-line job gains, the two month revisions are huge.
The Bureau of Labor Statistics (BLS) report for October shows 128,000 job gains; and that number includes absorption for negative impacts due to -20,000 census workers coming off federal payrolls, and -42,000 striking auto-workers.  Far better employment numbers than all projections and estimations.
Additionally, the prior two months had massive upward revisions. August was revised up by 51,000 (from +168,000 to +219,000), and the change for September was revised up by 44,000 (from +136,000 to +180,000). With these revisions, employment gains in August and September combined were 95,000 more than previously reported (BLS Link).

“The October jobs report is unambiguously positive for the US economic outlook,” said Citigroup economist Andrew Hollenhorst. “Above-consensus hiring in October, together with upward revisions to prior months, is consistent with our view that job growth will maintain a pace of 130-150K per month. Wage growth remaining at 3.0% should further support incomes and consumption-led growth.”  (link)

The strong employment results are so strong the results now have all of the financial pundits reassessing their prior perspectives on the state of the U.S. economy.
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Wait,… what? Who cancelled the recession?

Remember when the financial media and democrats were assuring everyone the U.S. economy was g.u.a.r.a.n.t.e.e.d to enter a recessionary phase? Well, apparently MAGA Trump cancelled it… with the help of millions of U.S. middle-class workers who are spending their wage increases, bigly.
The Bureau of Economic Analysis releases the third quarter (Q3) GDP growth estimate today, and the overall Q3 GDP growth is +1.9 percent. However, behind the economic growth stats the scale of U.S. Main Street strength is the real story.

[BEA pdf link – table 3]

Main Street consumer spending was up $64 billion on goods and $36 billion on services. As those who follow MAGAnomics closely will remember, the Main Street economy is founded upon middle-class spending. Strong jobs, wage growth, low taxes, low inflation, and low energy costs, means more disposable income.  Disposable income grew 4.5% in the third quarter.
The U.S. economy is strong because approximately 80% of everything produced inside our economy is consumed inside our economy. As long as the underlying jobs market stays strong, consumer spending leads to self-fulfilling economic expansion. Main Street is doing very well.
The weakness is Wall Street investment into expanded production of goods in the U.S.
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White House Trade and Manufacturing Advisor Peter Navarro appears on Fox Business to discuss the purpose and intent of the USMCA and the ongoing China trade discussions.
What Navarro skims upon is the heart of the economic purpose behind the USMCA as requested by President Trump and constructed by USTR Lighthizer. The USMCA establishes an internal North American manufacturing system; this provides the alternative for Asian manufacturing of goods for the U.S. market.
This manufacturing system is why Mexico is “all-in” to support the USMCA. Additionally, the economic benefits within the system as constructed is exactly why Mexican President Lopez-Obrador is willing to pressure House democrats to ratify and also back-up President Trump on other geopolitical issues (immigration controls etc).

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On the Stock Market dynamic. Currently there is a great deal of investment capital waiting to see where the money should be placed. Investment in China has dropped dramatically; investment in Southeast Asia shifted, but new investment is pending this outcome. Multinationals are calculating the TCP (Total Cost of Production), and if the new USMCA is passed there will be a triggering effect of North American investment because the uncertainty will be eliminated.
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Following their bilateral meeting, U.S. President Trump and Italian President Mattarella held a joint press conference.  President Trump disassembled the U.S. media preferred narrative on Syria.  [Video and Transcript Below]
Pay close attention to the remarks about trade and the WTO, big stuff is about to happen as the Brexit plans of Trump/Johnson kick in soon. Canadian election Oct 21st.  Watch the international trade moves over the next 45 days.  Things will shake out quickly. Bigly.

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[Transcript] – PRESIDENT TRUMP: Thank you very much. Today, it is my honor to welcome President Sergio Mattarella of Italy to the White House. We’ve known each other for a while. We’ve dealt with each other for a while. And we’ve had some really great conversations. We’ve had a very productive discussion throughout the day with our staffs and representatives. And I look forward to hosting the President and his daughter, Laura, at a reception for Italian-Americans this evening. I look forward to that very much.
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In the bigger picture… Within the trade team, Commerce Secretary Wilbur Ross is positioned with primary responsibility toward the EU and India. Ross clear-cuts through the politics, explains Trump’s objectives amid the trade proposals, and paves a path for U.S. Trade Rep Bob Lighthizer to engage his counterparts.
India has always been a key strategic nation within the global trade-realignment taking place by the Trump administration.  Under all of the banter, the “Indo-Pacific” strategy is structurally the decoupling of the U.S. from China. As a part of the strategy President Trump has positioned the ASEAN (Association of Southeast Asian Nations) as benefactors in manufacturing & trade as an outcome of the U.S. decoupling from China.

However, India has genuine concerns about the global dynamic. Specifically, India is worried about allowing the multinationals to have influence over their economy and social structure. In this regard India is not wrong; their concerns are not unfounded.
We can all see, heck we’ve lived through, massive multinational corporations quickly gaining too much influence; including -eventually- corporate influence over the politics of a nation. That inherently leads to corruption.
When Americans see it in other nations we call it “bribery and corruption”, but when it happens in Washington, DC, we call it “lobbying”; the process is exactly the same.
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Everything about this short news segment has to be devastating to democrat candidates, party leadership, DC politicians and the DNC as a whole.  CNN went to Michigan to interview striking United Auto Workers (GM) about the current state of politics and impeachment of President Trump.  Man-o-man, do the results cut the legs out from the professional political apparatus.
First, in a seismic overall political shift the striking UAW workers support President Trump, not democrats.  Why?  Because President Trump has been calling out GM CEO Mary Barra for not negotiating a win/win.  There is no economic reason for a strike.  Second, the striking workers can see through the insufferable political agenda of the Democrats.  This outcome is devastating to the democrats overall.

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Jumpin’ ju-ju bones – The Trump administration via U.S. Trade Rep Robert Lighthizer and Commerce Secretary Wilbur Ross won a massive $7.5 billion award as an outcome of the World Trade Organization agreeing with the U.S. against the EU and Airbus subsidies.  The WTO arbitrators decision is final and cannot be appealed.
This win sets the stage for President Trump to deploy $7.5 billion in countervailing duties against products from the EU.  Keep in mind, a final WTO ruling means the EU cannot retaliate against any WTO-authorized countermeasures.  The downstream ramifications are very significant. Think about it: at 25% the U.S. could tariff $30 billion in EU goods.

Man, talk about serendipitous timing… But first, here’s the press release from Robert Lighthizer:

Washington, D.C.–  The United States has won the largest arbitration award in World Trade Organization (WTO)  history in its dispute with the European Union over illegal subsidies to Airbus.  This follows four previous panel and appellate reports from 2011-2018 finding that EU subsidies to Airbus break WTO rules.
Today’s decision demonstrates that massive EU corporate welfare has cost American aerospace companies hundreds of billions of dollars in lost revenue over the nearly 15 years of litigation.

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Fox News host Maria Bartiromo had Kevin McCarthy and Larry Kudlow on Fox Business to discuss the status of ratification for the USMCA agreement.   After McCarthy outlines the politics of Nancy Pelosi intentionally holding back the ratification vote, and states if the agreement is not passed prior to Thanksgiving it will not be done, Larry Kudlow follows up with a more optimistic outlook.

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Keep in mind, Speaker Pelosi doesn’t know that close trade followers are aware of her deal with Justin Trudeau to hold back on ratification in an blatantly political effort. Here’s Kevin McCarthy’s full interview.
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