Trade Stuff: Trump Refuses Chinese Steel Compromise – Mexico Sees NAFTA Collapsing, Turns to China…


There is an saying people use to criticize President Trump based on the people around him:

“People are policy, and policy is people”…

The basic argument is that Mr. Trump can be swayed or distracted from his mission by his staff and those he hires.

This is a common catch-phrase brought about by historic and conventional wisdom.  However, when applied to President Trump, it’s also just plain wrong.

No similar cliche is appropriate for Donald Trump, nothing deters or influences him from his larger decades-long ‘America-First’ economic strategy. Nothing.

Donald Trump is the policy. There’s no assembly of advisers on economic issues that can ever sway his instinct.

Example:

(Reuters) – U.S. President Donald Trump last month rejected a Chinese proposal to cut steel overcapacity, despite the endorsement of some of his top advisers, the Financial Times said, citing people familiar with the matter.

Beijing proposed cutting steel overcapacity by 150 million tonnes by 2022 in a deal twice rejected by Trump, who instead urged advisers to find ways to impose tariffs on imports from China, the paper said, citing the sources.

The deal was endorsed by U.S. Commerce Secretary Wilbur Ross a week before U.S. and Chinese officials held a high-level economic dialogue, the FT added, citing a U.S. official and another person familiar with the matter.

White House spokeswoman Natalie Strom declined to comment on the “purported internal discussions” between the president and his cabinet members when contacted by Reuters.  (read more)

Panda expected POTUS Trump to go for the “Wimpy strategy”? ‘We’ll pay you Tuesday (2022) for our steel access today‘.

Nope.

That’s not going to happen; now is now.  U.S. Steel industry is at a critical mass; if we wait five years for a Chinese production reduction we might not have an industry.

Even if Secretary Wilbur Ross endorsed it, he’s not going to sway POTUS Trump on an economic dynamic Trump has already mapped out.  President Trump respects Wilbur Ross; heck, the Manhattan bankers hired Ross when they were in battle with Trump over the Atlantic City Casino loans.  Donald Trump and Wilbur Ross were adversaries then.  Why do you think President Trump wanted hired-gun Ross as his Commerce Secretary?

But even “Killer” Wilburine isn’t going to hold sway when it comes to an economic issue that cuts to the central point of MAGAnomics and Making U.S. Manufacturing Great Again.  However, that’s probably where the ‘bring me tariff’s” story’s came from.

♦Second issue.  Mexico realizes they might be getting played with this NAFTA renegotiation strategy.  President Trump might indeed be letting Canada and Mexico spin their wheels only to say ‘oh well’, and walk away at a time of his choosing.   Even USTR Robert Lighthizer and Secretary Ross are not guaranteed to know in advance.

MEXICO CITY (Reuters) – Mexico’s President Enrique Pena Nieto will travel to China next week to discuss trade and investment, as Mexico looks for ways to decrease its dependence on NAFTA, especially trade with neighboring United States.

He will hold a bilateral meeting with China’s President Xi Jinping and participate in a summit of the BRICS nations, a grouping that includes Brazil, Russia, India, China and South Africa, on Sept. 4 and 5, Mexico’s Foreign Ministry said in a statement.

Pena Nieto’s visit comes as U.S., Mexican and Canadian negotiators meet Sept. 1-5 in Mexico City for a round of talks to revamp the 23-year-old North American Free Trade Agreement (NAFTA).

Mexico is trying to increase trade with Latin America and Asia, and on Monday took part in the first of three days of talks in Australia aimed at reviving the Trans-Pacific Partnership trade agreement, disrupted by the withdrawal of the United States.

On Sunday, U.S. President Donald Trump renewed his threat to scrap NAFTA, which he has cast as killing jobs and exacerbating the U.S. deficit, and ripped into trading partners Canada and Mexico. (read more)

Mexico might think they are hedging their bets, however they are actually playing right into Donald Trump’s preferred method of confronting adversaries.   Trump prefers united opposition; it’s easier to leverage a better outcome when the mutual interests of two parties who oppose you are in alignment and plain view.

Rather than face Mexico and China individually, POTUS Trump would much rather have Mexico and China attached in economic interest. It doubles the leverage by enlarging the target; we are the customer for both; and we can play each against the other.

In addition, it’s a commonly accepted open secret that China and Mexico are already working together to exploit the U.S. market via NAFTA back doors.  Why not remove Panda mask and make it formal opposition? Much easier that way.

However, Trump is steadfast on big picture USTR Trade Deals for manufacturing, but not necessarily intransigent on specific sector details; ie. willing to give Canada and U.S. teams more negotiation time to work out the lumber issues with Commerce, prior to tariffs:

WASHINGTON (Reuters) – U.S. Commerce Secretary Wilbur Ross on Monday announced a 2-1/2 month delay in determining final anti-dumping and anti-subsidy duties on Canadian softwood lumber to buy more time to negotiate a settlement of the trade dispute.

The Commerce Department had previously been scheduled to announce final lumber duties on Sept. 6, a step that would have ended the current negotiating process with Canada’s government. Ross set a new deadline of no later than Nov. 14.

“I remain hopeful that we can reach a negotiated solution that satisfies the concerns of all parties,” Ross said. “This extension could provide the time needed to address the complex issues at hand and to reach an equitable and durable suspension agreement.”

U.S. and Canadian softwood lumber producers and government officials have all said they want to reach an “equitable” arrangement to settle U.S. claims that Canadian lumber is unfairly subsidized and dumped onto U.S. markets below cost. (read more)

“Taking the lumps out”, and pushing the deadline past NAFTA rounds #2 and #3…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s