U.S. Delays and Modifies “Next Step” Tariffs on Chinese Products…


Early on Tuesday United States Trade Representative Robert Lighthizer announced the modification of “next step” tariffs on Chinese products.  [See Here] “Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.”

President Trump responded to the delay/modification when questioned in New Jersey.  President Trump noted a “very productive” phone call between Lighthizer and Vice-Premier Liu He of China:

[Transcript Segment] – […] Q Why did you make the decision on the tariffs, to delay the implementation of the tariffs?

THE PRESIDENT: Only to help, I think, a lot of different groups of people. And we had a very good talk yesterday with China — a very, very productive call. I think they want to do something. I think they’d like to do something dramatic. I was not sure whether or not they wanted to wait until a Democrat has a chance to get in. Hopefully that’s not going to happen because the economy would go to hell in a handbasket very fast.

But they really would like to make a deal. The call itself was very productive. I’m not sure if it was the tariffs or the call, but the call was very productive. Again, they’ve said this many times; they’ve said they’re going to buy farm products. So far, they’ve disappointed me with the truth. They haven’t been truthful, or, let’s say, they’ve certainly delayed the decision. But it’s their intention to buy a lot of farm product.

And we did — we had a very good call with China. I mean, they would really like to do — as you know, they have a problem in Hong Kong, but they would like very much to do something.

Q Would you consider moving the tariffs, even? Delaying them even further, past December 15?

THE PRESIDENT: No, we’re doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers, which, so far, they’ve had virtually none. The only impact has been that we’ve collected almost $60 billion from China — compliments of China. But just in case they might have an impact on people, what we’ve done is we’ve delayed it so that they won’t be relevant for the Christmas shopping season.

Q Mr. President, are you more optimistic now that there’s a chance of getting a deal between China on trade?

THE PRESIDENT: Well, I’ve always been optimistic. My only question is whether or not they were willing to wait and take the chance on winning the election and deal with somebody who’s weak and ineffective and doesn’t know what he’s doing or she’s doing, like they’ve had in the past.

This should have been done 25 years ago. It should have been done 10 years ago or 5 years ago. This should have been done a long time ago. This should have been done by Biden and Obama. China is taking out $500 billion a year, and much more than that, if you include the theft of intellectual property. What I’m doing now should have been done many years ago.  (link)

At the 30,000 ft level, the decision to postpone and modify looks political from the perspective of timing.  Additionally the use of the term “next step tariffs” by USTR Lighthizer implies a sense of inevitability to a pre-determined process of increasing tariffs.

It would appear that President Trump has made a move based on a statement by Liu He about China making good on a prior promise to purchase significant agricultural products.  Whether or not Vice-Premier Liu He is being misled (or used) by Beijing’s strong-arm and duplicitous Commerce Minister Zhong Shan is yet to be determined.

Minister Zhong, who previously worked under Xi when the president was at the helm of Zhejiang province, is viewed as a hardliner who has strictly toed the party line.  Zhong was moved into primary trade negotiation position when China reengaged with the U.S. team.

My hunch is President Trump has delayed the Sept. 1st tariffs to see if Liu He will deliver on the agriculture promise, or if Zhon Shan is manipulating a lie to gain breathing room. While the latter seems more likely; it would make sense for President Trump to see of a multi-billion Ag purchase will take place.  The benefit to the U.S. would mean a pending  farm subsidy wouldn’t be needed; and based on the timing of the phone contact and message from China, this scenario appears to be the most likely background.

In essence President Trump appears to be looking to save U.S. money by avoiding a subsidy; and simultaneously benefit from the optic of the upcoming trade discussions with China in Washington DC in early September.

Pushing the full tariff decision to December 15th, puts a window of activity between now and the “next step” toward China.

Within that window President Trump will be traveling to Biarritz, France, (August 24th through 26th) for the G7 [U.S., U.K, Germany, France, Italy, Japan and Canada +EU weasels)] where it is now anticipated an interim U.S-U.K trade deal will be announced.  [Maybe some unspoken five-eyes ‘spygate’ leverage for wheel grease]

Also within that window, the IG report on FISA abuse and ‘spygate’ (Sept?).

Also within that window, Australian Prime Minister Scott Morrison will be coming to the White House for an official state visit, and state dinner, in September.  A key strategic trade ally, geopolitical foil against China, and ASEAN member. [Maybe more five-eyes ‘spygate’ wheel-greasing leverage]

Also within that window the Canadian election will take place on October 21st; which, depending on outcome, could radically change the time-frame for the USMCA ratification.

It still seems more likely than not that President Trump (Team USA) and Shinzo Abe (Team Japan) have hammered out the U.S-Japan trade agreement.

Most forget, but team USA and team Japan met for weeks of negotiations before Trump’s state visit to Japan, and the G20 in Osaka soon thereafter.

Everyone suspected a trade announcement, but curiously there was no mention.  Instead, everyone immediately became distracted by President Trump’s visit to the DPRK and meeting with Kim Jong-un at the DMZ.

I suspect there was a purposeful intent (dual purpose) in the DPRK distraction; and I suspect the U.S-Japan trade announcement is being purposefully delayed based on the ongoing issues with China and the tentacles that extend globally and financially.

If my suspicions are accurate, President Trump is positioning the U.K. trade deal to be the ultimate leverage to force the EU into negotiations…. socialism is hit hard.  Then, if/when the Canadian election concludes, the USMCA ratification will be a primary focus…. Then comes an announcement of the U.S. and Japan deal…. then comes the hammer on China (and/or possibly now including Hong Kong)…. and communism is hit hard.

With the foundation of the USMCA, UK and Japan providing the overwhelming financial momentum, both parasitic wealth-sucking book-ends: China and the EU, are hit in a sequence of trade actions (tariffs) that could radically alter the global supply chain.

Just a hunch.

It all seems rather Trumpian.

No-one else could ever possibly pull this off.

No-one else would even try.

 

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