Within the German economy the auto-sector holds the largest political influence.  Because of this dynamic all German politicians kneel at the knee of the big industrial auto manufacturers.  It has been said that losing support from within the auto-sector is much worse on a German politician than losing support from party or parliament.
Because of this dynamic; and specifically because the German auto-sector is dependent on the United States as their biggest customer, President Trump holds leverage over German Chancellor Angela Merkel.  This makes Fraulein Merkel unhappy.

President Trump wants three EU issues resolved: 1) Germany to contribute the minimum 2% of GDP for their own NATO defense.  2) Germany/EU to support enhanced sanctions against Iran; and  3) President Trump wants all German/EU protectionist trade barriers and tariffs lowered or eliminated – and new trade deals negotiated.
To gain momentum on these initiatives, President Trump is using the economics of trade as leverage.  Trump has suggested a 20% tariff on all EU automobiles shipped into the U.S. [The same standard now likely proposed toward Canada]  The German auto-sector, and as a consequence the German economy, simply cannot survive without low cost access to the U.S. market, their biggest customer.
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With new spark plugs, Kuddles was thrilled to discuss the latest economic key performance indicators.  National Economic Council Chairman Larry Kudlow talks about the health and growth of the U.S. economy with Maria Bartiromo.

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Today Canada released an updated list of retaliatory tariffs designed as countermeasures to the U.S. Steel and Aluminum tariffs [SEE HERE] which will begin Sunday, July 1st.
Additionally, Foreign Minister Chrystia Freeland, Innovation Minister Navdeep Bains, and Employment and Labour Minister Patty Hajdu, announced they would initiate an emergency program to use Canadian taxes compensate workers, expand unemployment benefits, and subsidize impacted industry.  Yes, in a transparent display of political ideology (throwing capitalism directly out the window), Canada doubles-down on centralized government subsidies to offset market impacts.   Brilliant ‘eh!

Chrystia Freeland made the announcement on the floor of a Hamilton steel factory Friday. In a rare backdrop, Ms. Freeland actually entered a factory with machines and things, to deliver the carefully choreographed political message (video below – watch the last minute to understand).
Team U.S.A. have applied tariffs to Canadian softwood lumber, Steel and Aluminum as Canada refuses to negotiate new terms for NAFTA where North American products are prioritized.  Canada demands the ability to continue importing Asian, mostly Chinese, products for their assembly-based market.
With the latest counter-move by Justin and Chrystia from Canada, it is increasingly likely President Trump will levy a 20% tariff on imported Canadian automobiles.  Last month (May) the Canadian economy dropped over 31,000 Full-Time jobs.
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Earlier today President Trump delivered remarks celebrating the six month anniversary of the U.S. Tax Cuts and Jobs Act.   Today is also the last business day of the second quarter.

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Long time CTH readers might note in 2015 when we first saw candidate Trump’s economic policy initiatives, we began outlining the sequential economic possibilities if President Trump won. So far, all is going according to plan – STUNNINGLY According To Plan.  Seriously, go back and look –FEBRUARY 2016– two-and-a-half years ago.
The possibilities were obvious.  As a result we predicted repeatedly that Q2 of 2018 would be the beginning of the largest period of U.S. GDP and wage growth in the past 30 years.  Q2 2018 ends tomorrow and the results of Q2 will be announced in the next few weeks.  Everything is happening in a logical sequence as a result of Trump’s MAGAnomic plans.
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On the six-month anniversary of the tax cut/tax reform legislation passage, Treasury Secretary Steven Mnuchin sits down with Maria Bartiromo to discuss the current status of all MAGAnomic initiatives.
Tomorrow is also the last day of the second quarter (April, May June), and today is the last business day of Fiscal Year 2018 third quarter (fiscal years start Oct. 1st).

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Segment two below. Ivanka Trump joins Secretary Mnuchin to discuss results.
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Following the groundbreaking ceremony, President Trump delivered remarks to a Wisconsin audience to commemorate the opening of the massive high-tech industrial complex.

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From the office of Commerce Secretary Wilbur Ross: The groundbreaking on Foxconn’s $10-billion factory to produce state-of-the-art flat-panel displays in Mount Pleasant represents a milestone for America.
With a 20-million-square-foot campus situated on 3,000 acres, the new Foxconn plant will be among the largest factories ever built in the United States. It will take two years and 10,000 construction workers to build, and employ 13,000 workers when in full production of a variety of LCD screens. It is one of the largest foreign direct investments ever made in the United States.

It would never have happened without the promise of the Trump tax cuts and the President’s personal intervention.
As important as the new factory is to the workers of Wisconsin, the facility is also a symbol of what is to come: It is the first of a large number of investments in advanced manufacturing facilities being reshored from overseas locations back to the United States.
Foxconn CEO Terry Gou has already said that he is considering another enormous facility in the United States.
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President Trump often holds local media Q&A’s when discussing specific local aspects to larger trade and economic initiatives.  In this quick interview with Charles Benson President Trump discusses the Foxconn deal (more on that will follow), and the larger issue surrounding a global trade reset objective (important video below).
As steps are taken within the America-First economic initiatives, many people are overlooking President Trump’s ultimate goal of a complete global reset in trade.  The Trump administration wants all trade tariffs and trade barriers removed so that all nations can compete on an even field.
In order to achieve that goal, POTUS Trump is applying the process of reciprocity; assigning an identical U.S. trade standard as the country being confronted.
The international community cannot negotiate (in good faith), from an adversarial position, against an identical trade policy they apply toward the U.S.
However, until today no President has ever called out the global trade hypocrisy; let alone challenged it directly.   President Trump will not back down from this approach. The international trade community is just now realizing that fact.
Within the process of negotiation to achieve this reset, President Trump begins to apply the principles of reciprocal trade tariffs.  This is the first phase; this is where we are now.
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National Economic Council Chairman Larry “Kuddles” Kudlow is back after suffering a mild heart attack. [Yikes, “mild“, is there such a thing?]
Appearing on TV with Stuart Varney Chairman Kudlow explains how the administration hopes to use the Foreign Investment Risk Review Modernization Act (FIRRMA) to enhance U.S. trade policy.  Mr. Varney cannot comprehend Trump-speed in achieving a global trade reset:

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While media wasn’t paying attention, President Trump brilliantly played congress to gain strategic trade leverage.  Knowing political opposition would unite, POTUS Trump took a forgiving position toward Chinese company ZTE; Trump-haters and NeverTrumpers quickly aligned to push through hammer legislation designed to hurt China and by extension Trump’s position.  However, Trump actually wanted the tool.  POTUS now weaponizes FIRRMA as trade leverage against all 301 targets.   Brilliant.
USTR Robert Lighthizer Final 301 Report on China Trade Infractions HERE
Part 2 of Kudlow interview below:
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Good news within a strenuously spun Reuters article. Don’t get lost looking at the granules; apparently all of the prior Canadian strategy against President Trump has failed.
For well over a year Justin from Canada and Foreign Minister Chrystia Freeland were confident they could leverage the U.S. Chamber of Commerce, purchased DC politicians and ideological allies against President Trump in NAFTA negotiations. The result? Fail, fail and more fail.

Running out of options, Canada now attempts to save their NAFTA construct by turning to the executives within the auto industry:

OTTAWA (Reuters) – Canada’s trade minister last week met senior officials from General Motors Co and Fiat Chrysler Automobiles NV in Detroit, as Ottawa takes its lobbying effort directly to the Big Three carmakers to avert potential U.S. auto tariffs.
The Liberal government is relying on industry partners to press Canada’s cause in the White House and elsewhere, using their influence to protect Canadian interests, sources with direct knowledge of the discussions told Reuters.

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