Commerce Secretary Wilbur Ross appeared on CNBC earlier today to discuss the status of U.S-China trade discussions, the latest issues with tariffs on French goods, and the bigger picture issues within the EU that we previously discussed.
Ross highlights the additional tariffs on China scheduled for December 15th are currently still planned to take effect unless something substantial changes in the position of China.  Additionally, and interestingly on the French and EU tariffs, Secretary Ross reminds the financial pundits of the $7.5 billion WTO authorized award against the EU that would be in addition to the $2.4 billion in tariffs now scheduled for French products.

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Pay attention to what Ross says in that interview; the administration is being remarkably open and consistent.  Given the adversarial position exhibited by French President Emmanuel Macron today; and against the backdrop of continual EU intransigence on trade reciprocity; I suspect once the USMCA is passed we are going to see a *severe* shift in tone within the U.S. trade position toward both China and the EU.
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The synergy, flow and timing of the U.S. trade and economic team is just a marvel; a brilliant assembly of perfectly in-tune economic and trade professionals.
As President Trump touched down in the U.K. to attend the two-day NATO summit, United States Trade Representative Robert Lighthizer announces the completion of a Section 301 review of France’s Digital Services Tax (DST).
After determining the value of the French tax on U.S. internet services at $2.4 billion; Lighthizer announces a 100%  countervailing duty on a carefully selected $2.4 billion in French imports.
Obviously the agenda for the bilateral NATO meeting between U.S. President Trump and French President Emmanuel Macron just changed.  LOL, you have to love Team USA.
Oh, but wait, wait… it gets better….
We have to remember, THIS $2.4 billion U.S. tariff against France would be on top of the $7.5 billion (per year) countervailing duty recently won from the Airbus subsidy case in the WTO…. and by law France cannot retaliate.
Oh my, President Trump strolls into the NATO bilat with Macron while holding a $10 billion legally justified countervailing tariff position.  How’d ya like ‘dem grapes?
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Commerce Secretary Wilbur Ross appears on Fox Business to discuss the status of the U.S-China trade “negotiations” :::nudge-nudge, wink-wink::: and highlights the ‘phase-1’ fulcrum is China committing to the $50b Ag purchase without condition.  Secretary Ross also notes the December 15th date just happens to be “good timing” if the U.S. team is “forced” to put more tariffs on China.  LOL.
Additionally, Mr. Ross notes the challenge of a strong dollar as it relates to allied nations who are stimulating their own economy by sending us even cheaper stuff, ie. Brazil.

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Whenever we discover a financial analyst who understands the new dimension in U.S. economics (rare) it is worth revisiting them from time-to-time. Allianz chief economic adviser Mohamed El-Erian was one of the first MSM pundits to: (a) accept the disconnect between Wall Street and Main Street via de-globalization; and (b) begin to explain why that matters in the era of Trump.
El-Erian appeared this morning on Fox Business News to discuss President Trump’s re-imposition of steel and aluminum tariffs on Brazil and Argentina. Additionally El-Erian discusses trade tensions, market outlooks, consumer strength, recession fears, and the drag the rest of the world is placing in the U.S. economy.

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The U.S. economy is strong; all the fundamentals are solid. However, the multinationals on Wall Street -invested overseas- are more exposed. There is nothing that China and the EU can do to stop the de-globalization process; and efforts to stimulate their economy, more quantitative easing (pumping money) while the global supply chains are being shifted, are futile… they need “structural reform.”  The multinationals are holding cash, waiting to see how it plays out.
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Given the background activity last week between USTR Robert Lighthizer and Mexican Trade Minister Jesus Seade, and their agreement to set up a trilateral trade and labor dispute panel, President Trump now puts Speaker Pelosi in “check”….

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Having lost her labor defense shield (well played by Lighthizer/Seade), Pelosi is now either going to stand her party against the majority of Americans as President Trump pummels them over it… Or she puts the USMCA up for ratification (Trump wins) and it looks like she takes a knee….  Well played by President Trump.
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Jumpin’ ju-ju bones…. Keep in mind as you review these numbers – U.S. consumer spending accounts for two-thirds of total U.S. GDP.  The sales numbers from Thanksgiving and Black Friday are exceptionally strong, showing confidence by consumers this holiday season.  This is not the ‘recession’ we were promised by pundits.
Continued strong wage growth amid all sectors of the U.S. workforce, particularly in non-supervisory positions, combined with low inflation and low energy costs, means consumers are spending out of ‘household cash flow’ which is considerably higher.

(Via CNBC) […] Spending online on Black Friday, as of 9 pm ET, hit a new record of $5.4 billion, up 22.3% from a year ago, according to data pulled from Adobe Analytics, which measures transactions from 80 of the top 100 U.S. online retailers.
This comes as foot traffic appeared to be lighter at shopping malls across the country on Friday, a day that traditionally has been reserved for people to line up outside of big-box retailers and department stores to score doorbuster deals.
Total spending online on Black Friday is still forecast by Adobe to hit $7.6 billion, which would make the day the second-biggest online sales day ever, after Cyber Monday in 2018, where $7.9 billion was spent.

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The act that President Trump signed today is a law that requires the U.S. to review all of the democracy issues within Hong Kong to assess whether any Chinese violations to Hong Kong autonomy are happening.  If so, the U.S. can take remedial steps to punish China.

The Hong Kong Human Rights and Democracy Act would require the State Department annually re-certify Hong Kong’s autonomous nature, in order for the so-called “special treatment” the U.S. affords Hong Kong to continue. (more)

Keep in mind a dual purpose to this latest move:  Hong Kong holds a special trade status with the U.S. and is exempt from tariffs placed on China.  Part of the punitive action President Trump could take against China involves tariffs against Hong Kong.

Today, I have signed into law S. 1838, the “Hong Kong Human Rights and Democracy Act of 2019” (the “Act”). The Act reaffirms and amends the United States-Hong Kong Policy Act of 1992, specifies United States policy towards Hong Kong, and directs assessment of the political developments in Hong Kong.
Certain provisions of the Act would interfere with the exercise of the President’s constitutional authority to state the foreign policy of the United States. My Administration will treat each of the provisions of the Act consistently with the President’s constitutional authorities with respect to foreign relations.
~  President Donald J Trump

Again, back to the big picture, is this an action that would indicate President Trump is actually looking for a U.S-China trade agreement?   Of course not.  So why now, what changed?…  The USMCA!   It’s all connected folks.

The New York Federal Reserve made a quiet admission two days ago that was missed by almost all financial media.  In the NY Fed economic blog they admitted everyone was wrong, President Trump’s 2017 tariffs against China did not lead to increased U.S. consumer prices [Read Here].  The Fed also said imports of the Chinese products affected by U.S. tariffs have fallen by an annualized $75 billion. That’s a huge chunk of business U.S. purchasers have shifted to Japan and other Southeast Asian countries.

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Within this dynamic lays the real reason why Beijing cannot wait for a 2020 election hoping that Biden or Bloomberg can stop their bleeding.  Before going into more depth, this brief explainer from Charles Payne will help establish a framework.  WATCH:
What Payne outlines is correct; however, the internal Chinese ‘tariff-offset’ dynamic is actually even a little deeper.  Overlaying the NY Fed research we can see that Beijing has attempted to offset the Trump tariffs in four majority ways:
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Something is shaping up in the political background around the USMCA.

Yesterday Mexican President Andres Manuel Lopez-Obrador (AMLO) sent a second letter to House Speaker Nancy Pelosi urging USMCA ratification.  Team Trump and Team AMLO are working together against Team Pelosi & AFL-CIO Richard Trumka.
Essentially AMLO has been saying the labor provisions within the USMCA trade pact are already being put in place by Mexico, and Pelosi should quit trying to hide behind labor concerns to avoid ratification.

Tomorrow, on the eve of Thanksgiving at the request of the Trump administration, U.S. Trade Representative Robert Lighthizer, Mexican Foreign Minister Jesus Seade and Canadian Deputy Minister Chrystia Freeland are holding a meeting to discuss the  AFL-CIO/Pelosi issues within the USMCA labor provisions.
FM Chrystia Freeland is irrelevant to the meeting; she’s a potted-plant rubber stamp for whatever scheme Pelosi is cooking. It is House Speaker Pelosi who is using her pressure over labor unions to hide behind AFL-CIO Richard Trumka and claim U.S. labor unions have issues with the USMCA labor provisions. It ain’t about labor; it is all political cover.
However, it is interesting that USTR Lighthizer, a man with the patience of Job, called Jesus Seade and Freeland to DC:

WASHINGTON – The three trade ministers from the United States, Canada and Mexico are set to meet in Washington on Wednesday to discuss the deal to replace NAFTA, seven people familiar with the plans told POLITICO.
The meeting involving U.S. Trade Representative Robert Lighthizer, Deputy Canadian Prime Minister Chrystia Freeland and Mexican Undersecretary for North America Jesús Seade comes as the Trump administration is nearing a compromise with House Democrats to make changes to the USMCA.

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I can’t stop laughing…. just too darned funny.  CTH has long outlined how President Trump has taken the decades-long panda-mask game/approach of Beijing and mirrored it right back upon them.  Today Chinese Coucillor Wang Yi, while delivering a strongly worded statement to G20 ministers, is positively verklempt in his open admission therein.
Our President Trump is the only person who could have delivered this wonderful outcome… well done.  Beijing is very angry about how a U.S. President is disrupting a new world economic order that China has so artfully manipulated for the past two decades.

It is simply beyond delicious.

(Reuters) – The United States is the world’s biggest source of instability and its politicians are going around the world baselessly smearing China, the Chinese government’s top diplomat said on Saturday in a stinging attack at a G20 meeting in Japan.
Relations between the world’s two largest economies have nose-dived amid a bitter trade war – which they are trying to resolve – and arguments over human rights, Hong Kong and U.S. support for Chinese-claimed Taiwan.

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