Gordon Chang discusses the ongoing trade initiatives by President Trump to reset the trade imbalance with China. The dynamic of confronting a bilateral trade relationship with a government controlled economic state (China) is the dynamic behind the discussion.
Mr. Chang does a good job of outlining the ‘big picture’ issue from the perspective of the Trump administration trade policy toward China.
National Economic Council Chairman Larry Kudlow appears on Fox News for an interview with Chris Wallace discussing Trump administration trade positions. Kudlow and Wallace were previously on the same team, and held the same positions, perspectives and outlooks.
In the face of four decades of results which cannot be refuted, Chairman Kudlow is modifying his position to align with President Trump and Main Street. At the same time Kudlow is trying to convince Wall Street and GOPe Wallace-types to follow his lead.
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[*side note* notice how no-one ever mentions MfN status?]
In some ways POTUS Trump’s selection of Kudlow is an interesting test to see if the functionally obsolescent Wall Street-minded economists have the capacity to retool decades of flawed thinking.
After three days of discussions between U.S Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo they were not able to develop any consensus on the major issues within the North American Free Trade Agreement, NAFTA.
The likely outcome of the upcoming Mexican national election on July 1st brought the principals together for non-scheduled talks, as U.S. President Trump instructed Ambassador Lighthizer to explore whether the three nations could find common ground on the ‘big picture’ issues behind the largest schism. The auto sector and rules of origin is the epicenter of the biggest difference between the U.S., Mexico and Canada.
The U.S. auto-sector NAFTA position is that North American content of vehicles made in NAFTA countries be increased to 85 percent from 62.5 percent. The Canadian and Mexican position is for lower North American content.
Canada is not arguing for higher Canadian content. Mexico is not arguing for higher Mexican content… Instead both Canada and Mexico are arguing for higher imported content (China and Asia). Honestly, I cannot fathom why more people don’t see the inherent ridiculousness of NAFTA against the reality of Canada and Mexico arguing for more Chinese imports.
The reason Can/Mex are arguing for more imported material content is because both of their trade economies exploit the NAFTA loophole that allows European and Asian parts to be shipped into Can/Mex, assembled, and shipped into the U.S. market without duty.
It’s bizarre; yet this is the reality.
NAFTA is so completely flawed, it is against Canada and Mexico’s financial interest for them to agree to a North American trade agreement that is structured around North American trade.
When you ask a pro-NAFTA advocate why Canada and Mexico are arguing for less Canadian and Mexican manufacturing in their NAFTA position the advocate cannot answer with any intelligence…. because their pro-NAFTA entire premise is ridiculous, and based on structural falsehoods. Very frustrating.
Depending on which ideological broadcast or print media you review, there is a massive disconnect in their projected framework of optimism that a deal can be reached. Canadian media are desperate to find hope that any deal can be reached. Mexican media is ambivalent; and U.S. media is mostly driven by the position of multinational corporations who demand the exploitative nature of NAFTA be retained.
My gut, and the ongoing deep reviews of nuance therein, still lean heavily toward the inability of any deal to be possible because the underlying dynamic is so structurally flawed. It is against U.S. interests to stay in NAFTA. It is against Mexico and Canada’s interests to exit NAFTA. There is a massive amount of media manipulation between those polar opposite positions.
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Princess Rainbow Sparkles continues selling the Canadian position based on ‘feelings’ and ’emotion’…
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The US share markets opened lower on today as renewed fears of a trade conflict between the United States and China continued to top the excuses for a correction. This even surpassed the lower-than-expected March jobs data which they traditionally have focused on with respect to interest rate hikes. As always, there seems to be zero research into any of these fundamental issues that people hang their hats on to explain corrections or rallies. World trade, even in nominal dollars, peak in 2008. To think that a trade war will somehow reverse the trend is rather absurd.
When we look at world trade as a percentage of GDP in China, it has been declining since 2005 and will continue to decline into 2020 even in nominal terms. I really hate to burst everyone’s bubble, but (1) there has been a significant decline in world trade, and (2) China has been turning inward building its domestic economy.
Trade as a percent of GDP for the United States peaked in 2011. Trump has misread the trade perspective and has only focused upon domestic jobs. If we were to allocate trade according to the parent company, the United States dwarfs most everyone else. The USA also shows that trade is about 26.57% of GDP while in China it is now about 37.05%. This continues to demonstrate that the USA has the primary economy that is holding up the world. Canada is 64.3%, Japan 31.23%, Mexico 78.11%, United Kingdom is 58.02%, France 60.46%, Germany6 is 84.26% and Norway is 67.40% with Sweden coming in at 83.70%. The European Union as a whole stands at 82.62% and the Middle East as a whole stands ar 85.74%.
The higher the number the more dependent they are on world trade. The lower the number, the more resilient they are with a stro9ng domestic economy. All the bearishness on selling the dollar because of a trade war is exactly opposite of what the numbers show who will suffer.
President Trump will not be attending the White House Media Awards event again this year. According to Reuters:
WASHINGTON (Reuters) – U.S. President Donald Trump, who has feuded with several media personalities and organizations, will not attend the White House Correspondents’ Association annual black-tie dinner for the second straight year, the president of the group said on Friday.
[…] “The White House has informed us that the president does not plan to participate in this year’s dinner but that he will actively encourage members of the executive branch to attend and join us as we celebrate the First Amendment,” Margaret Talev, the president of the White House Correspondents’ Association, said. (link)
WASHINGTON – Attorney General Jeff Sessions today notified all U.S. Attorney’s Offices along the Southwest Border of a new “zero-tolerance policy” for offenses under 8 U.S.C. § 1325(a), which prohibits both attempted illegal entry and illegal entry into the United States by an alien. The implementation of the Attorney General’s zero-tolerance policy comes as the Department of Homeland Security reported a 203 percent increase in illegal border crossings from March 2017 to March 2018, and a 37 percent increase from February 2018 to March 2018—the largest month-to-month increase since 2011.
“The situation at our Southwest Border is unacceptable. Congress has failed to pass effective legislation that serves the national interest—that closes dangerous loopholes and fully funds a wall along our southern border. As a result, a crisis has erupted at our Southwest Border that necessitates an escalated effort to prosecute those who choose to illegally cross our border,” said Attorney General Jeff Sessions.
“To those who wish to challenge the Trump Administration’s commitment to public safety, national security, and the rule of law, I warn you: illegally entering this country will not be rewarded, but will instead be met with the full prosecutorial powers of the Department of Justice. To the Department’s prosecutors, I urge you: promoting and enforcing the rule of law is vital to protecting a nation, its borders, and its citizens. You play a critical part in fulfilling these goals, and I thank you for your continued efforts in seeing to it that our laws—and as a result, our nation—are respected.” (read more)
NEC Director Larry Kudlow defending President Trump’s trade policy:
National Economic Council Director Larry Kudlow appears on Bloomberg News to discuss U.S-China trade confrontations, the use of tariffs, and the potential for negotiations between the two nations:
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Obviously – with the ongoing issues surrounding NAFTA, and China’s exploitation of the fatal flaw therein, in combination with President Trump confronting the dragon behind the false Panda mask, the fight for MAGAnomic America-First policy execution is entering a new phase….
The multinational interests who benefited from the prior U.S. global trade approach are increasingly desperate. There are trillions at stake.
Kudlow
Bernie Sanders is probably the only Democrat who has been honest enough to admit that the Democratic Party has been a complete failure. It’s focus on Marxism and creating class warfare has been a serious issue that will fuel civil unrest as the Socialist agenda continues to implode. Sanders recently said: “The business model, if you like, of the Democratic Party for the last 15 years or so has been a failure. People sometimes don’t see that because there was a charismatic individual named Barack Obama.” When we look at the total seats held in both the Senate and House by each party, the bear market in the Democrats becomes obvious. The Democrats actually peaked with the first election of Franklin D. Roosevelt in 1932. They have been gradually declining ever since.
Bernie pointed also to the Democratic Party’s many state legislative losses to Republicans. He has pointed out that the Republicans control most of the state legislatures throughout the country. What Bernie fails to grasp is that government is far too corrupt to actually govern and provide any true improvement in the lifestyle of the average person. The entire Socialist agenda has been devastating on absolutely every front. The introduction of Social Security shifted the focus away from inter-family security being replaced by the state. Kids no longer save to take care of their parents for that is the government’s job. Eastern Europeans still rely upon the family as you also see in China. In the USA, an amazing amount of children are still living with their parents into the 30s all because of taxes.
On top of that, the tax burden upon people has steadily risen. During the 1930s, it took just one person to earn a salary to support a family. It was the Democrats who imposed the income tax all the way down creating the Payroll Tax. They changed the definition of the rich from $5 million to $250,000 just to collect more taxes. What they have done is not just caused more children to be living with their parents into their thirties, but young families cannot survive unless the wife also works. That may be great for the Women’s Liberation Movement, but it has also robbed women of even the luxury to stay home and raise their children during the formative years. It now takes two incomes to sustain what one used to do before the income tax.
The Democrats also seriously altered the black family, which was once stronger than even the white community because they needed each other. With the introduction of welfare, they began to pay girls for the number of children they had and created an incentive not to get married. Similar programs in New Zealand provided total care for a girl if she had no idea who the father of the child was. Even the white community found the number of women who had no idea who the father was rose dramatically because they received free housing. The guy just ran out the back door when the social worker arrived. The ethnic background or race does not matter – it is economic incentives to undermine the family structure. Today, the black family has fallen to the bottom compared to whites and Hispanics all because of decades of economic incentives not to have a family structure. Studies now show the net effect of such social policies. “The United States shows striking racial and ethnic differences in marriage patterns. Compared to both white and Hispanic women, black women marry later in life, are less likely to marry at all, and have higher rates of marital instability.” Instead of blaming race, we need to look closer at the failure of Socialism.
The only message of the Democrats is also the same – vote for them because you are the victim of the rich. Instead of being like King Midas where everything he touched turned to gold, everything they have touched has crumbled to dust. Have Democratic policies ever worked? Communism failed. Behind the old Iron Curtain, the people as a whole learned the hard way that government is not something you can trust. Unfortunately, Europe and North America must learn the same lesson. The first major reform is not to simply lower taxes, but to prohibit direct taxation as was originally set forth by the Founding Fathers until the Marxists amended the Constitution and have ever since been destroy our culture. One of the primary reasons corporation have moved offshore is not because they will pay wages that are cheaper. The number one reason is for consistency. It is always a battle over taxes. How can you invest in a plant and assume your profit margin will be XYZ, and then the Democrats raise the taxes when they get back in. Other countries office 25-year tax guarantees NOT to raise their tax rate. Would you sign a lease for an apartment that said if the landlord needs money, he can raise your rate any time he desires and if you refuse to pay he can throw you in prison? Welcome to the American tax system.
I have created this site to help people have fun in the kitchen. I write about enjoying life both in and out of my kitchen. Life is short! Make the most of it and enjoy!
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