China Announces $3b Tariffs on U.S. Imports – Pork, Scrap Aluminum, Wine and Fruits…

In retaliation for $50 billion in U.S. trade tariffs against Chinese imports, China laughably hits back with $3 their own billion tariffs against the U.S.  According to most reporting Beijing has selected U.S. pork and scrap aluminum as targets for a 25% tariff, along with wine and fruit tariffs around 15%.

It should be emphasized the approach by China is rather ridiculous considering the Chinese government purchased the largest U.S. pork manufacturer Smithfield in 2013 for $5 billion; at the time the purchase price was 30% more than the company was worth.  Smithfield, now a Chinese company, represents 25% of all U.S. pork products.

Do you really think China is going to not import it’s own pork products… or subject them to a domestic tax?  Think about it.  It’s ridiculous.  China knows they have ZERO leverage in a trade-dispute with the U.S., they cannot afford to lose access to the U.S. market.

The example of Smithfield foods is exactly what we have outlined in how China cannot sustain itself and needs to control the assets of foreign countries.  Hence, their one-road/one-belt program for securing products and raw materials.  China is a dependent economy, they need to exploit global trade to survive.  China cannot feed itself. This is the inherent flaw within their short-sighted authoritarian government-controlled economic model.

Again, for emphasis, the Chinese government underwrote the purchase of Smithfield foods in 2013.  They paid 30% more than the company was worth because they were securing access to food just like they would any other raw material (uranium, minerals, etc).  China also purchases U.S. politicians to retain their ability in this regard.

Now look at the cartoon from the unofficial Chinese state-run media today:

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President Trump Makes Brief Remarks Prior to Attending Easter Service…

Earlier today President Trump tweeted concern about the politicization of border security and the unwillingness of Mexico to confront their side of the equation.  [the three tweets from POTUS Trump follow the video snippet]

Before attending Easter Mass today, President Donald Trump briefly paused and responded to a question about his calling out Mexico for not helping the U.S. secure the border. WATCH:

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Final Fourth Quarter GDP Increase 2.9% (exceeds expectations), Third Quarter Revised Upward to 3.2%…

The final quantification of the Bureau of Economic Analysis fourth quarter GDP growth rate was released today, reflecting an anticipated increase from the prior two estimations. The last revised estimation of GDP growth (February) was +2.5%, the final revised estimate is +2.9% growth.

A massive increase in consumer spending (+4%) around the October through December 31st time-frame (Q4) was offset by those dollars purchasing a large portion of imported products.  The GDP growth deduction from import purchases was 1.99%. [See table #2, line 50 pdf here]

In short, American consumers spent significantly more than usual in the holiday season; however, many of those purchases were foreign goods.

From the BEA Report – Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2017 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

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White House Trade Policy Advisor Peter Navarro Discusses KORUS and Ongoing Trade Initiatives…

White House Director of Trade and Manufacturing policy Peter Navarro discusses the revamp of the KORUS trade deal with South Korea.  In addition Navarro discusses the ongoing Trump administration’s tariffs on steel and aluminum, as well as plans to impose tariffs on Chinese products surrounding violations of intellectual-property rights.

[NOTE: Final USTR 301 Report on China was released last night]

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KORUS Agreement Announced – Details of Historic Trade Deal and Repositioning Between U.S. and South Korea…

JOINT STATEMENT – Today, Ambassador Lighthizer and Minister Kim are pleased to announce that the United States and the Republic of Korea have reached an agreement in principle on the general terms of amendments and modifications to the United States-Republic of Korea Free Trade Agreement (KORUS FTA). The nations have also agreed on terms for a country exemption for the Republic of Korea from tariffs imposed on steel imports under Section 232 of the Trade Expansion Act of 1962 pursuant to Presidential Proclamation 9705, as amended.  The arrangement with respect to steel imports is expected to take effect on May 1, 2018.  (link)

Ever since the original 2012 US-Korea free trade agreement (KORUS) went into effect, the U.S. trade deficit in goods with Korea increased by over 73 percent from $13.2 billion to $22.9 billion (2017), while the overall deficit increased by 70 percent from $6.3 billion to $10.7 billion (2017).  President Trump committed his administration to changing this immediately and renegotiating a deal that benefited the United States.

“The improved KORUS agreement reflects the President’s leadership in delivering more reciprocal trade outcomes benefiting U.S. workers, exporters, and businesses. The United States and Korea have strengthened an important economic relationship by agreeing to substantial improvements to KORUS that will help rebalance our trade, reduce our trade deficit, and expand U.S. export opportunities.”  ~ U.S. Trade Representative Robert Lighthizer

Here’s the historic details:

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KORUS Details Emerging – South Korea Agrees to 30% Reduction in Steel, Accepts Doubling of U.S. Autos, Accepts 20 Year Extension on Truck Tariff…

The actual announcement of KORUS (“KOR”+”U.S.”), the renegotiated U.S. and South Korea trade deal, has yet to be made by U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross and U.S. President Donald Trump.  However, more details are surfacing inside KORUS media leaks.  Fantastic job by Lighthizer!

TOP LINES:

  • U.S. Gains twice as many exported vehicles into S-Korea (50k per manufacturer, per year).  [No word on possible Kia / Hyundai tariff or quota – RE: “unlikely”]
  • South Korea drops ridiculous customs inspection barriers. [Trade trickery ploy]
  • U.S. retains 25% Tariff on S-Korea pickup trucks with extension for 20 years.
  • South Korea gets two year exemption from a 25% U.S. steel tariff, but must drop steel export level to 70% of prior two years shipments. (A controlled reduction of 30%).

(Via AP) The new deal doubles — to 50,000 — the cars each U.S. automaker can export annually to South Korea, reduces bureaucratic barriers to American products and extends a 25 percent U.S. tariff on South Korean pickup trucks by 20 years, through 2041.

South Korea escapes America’s new 25 percent tariff on imported steel — but must accept quotas on steel exports equal to 70 percent of its average annual shipments to the United States between 2015 and 2017.

The officials spoke on condition of anonymity in order to discuss the policy ahead of an official announcement.

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Commerce Secretary Wilbur Ross Talks KORUS, Tariffs, China, EU, NAFTA and Census With Maria Bartiromo…

Commerce Secretary Wilbur Ross appears on Fox Business News for an extensive interview with Maria Bartiromo.  The interview covers a wide spectrum of important topics attached to the U.S. economy and ongoing trade deals.  Two great video segments for the interview will get you up to speed on ongoing initiatives:

♦Segment #1 outlines the upcoming announcement of KORUS, the South Korea and U.S. trade deal.  Additionally, Secretary Ross discusses the steel and aluminum tariffs and how they enmesh in the larger objective of the ongoing trade negotiations with China:

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♦Segment #2 outlines more on the aluminum and steel tariffs; ongoing trade talks with Europe; efforts to renegotiate NAFTA, and the possibility of a deal being reached; Saudi Arabian investment in the U.S. and the Commerce Department plans to bring back a citizenship question in the 2020 Census.

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National Trade Council Director Peter Navarro Discusses Ongoing Trade Initiatives…

National Trade Council Director Peter Navarro appeared on CNBC, prior to today’s massive U.S. stock market increase, to discuss ongoing trade initiatives.

U.S.T.R. Robert Lighthizer is currently conducting simultaneous bilateral trade negotiations with South Korea, Philippines, Vietnam, Australia, China (way-points), Japan, Mexico/Canada (NAFTA) and the European Union.

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India Invests $500 Million In Two U.S. Steel Operations…

The passage of the defense spending portion of the Omnibus bill ultimately means there will be increased demand for U.S. steel and aluminum within new defense equipment. The contracts within the procurement process will predictably require the use of U.S. parts.

Add the increase in defense spending with the pending global tariffs on steel imports, and the environment is created for foreign investment in domestic steel and metal manufacturing…. Then add into the mix the geopolitical economic relationship developed between India’s Prime Minister Modi and President Trump… And you discover the backdrop for this announcement from India owned JSW Steel:

(Reuters) – India’s JSW Steel Ltd said on Monday it would spend $500 million to build out its U.S. operations in Texas, amid heightened global trade tensions following U.S President Donald Trump’s decision to pursue steep import tariffs.

The company has signed an agreement with the Texas governor’s office, under which the governor has approved a grant worth $3.4 million to the company’s unit, the steelmaker said in a statement here.

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