The actual announcement of KORUS (“KOR”+”U.S.”), the renegotiated U.S. and South Korea trade deal, has yet to be made by U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross and U.S. President Donald Trump.  However, more details are surfacing inside KORUS media leaks.  Fantastic job by Lighthizer!

TOP LINES:

• U.S. Gains twice as many exported vehicles into S-Korea (50k per manufacturer, per year).  [No word on possible Kia / Hyundai tariff or quota – RE: “unlikely”]
• South Korea drops ridiculous customs inspection barriers. [Trade trickery ploy]
• U.S. retains 25% Tariff on S-Korea pickup trucks with extension for 20 years.
• South Korea gets two year exemption from a 25% U.S. steel tariff, but must drop steel export level to 70% of prior two years shipments. (A controlled reduction of 30%).

(Via AP) The new deal doubles — to 50,000 — the cars each U.S. automaker can export annually to South Korea, reduces bureaucratic barriers to American products and extends a 25 percent U.S. tariff on South Korean pickup trucks by 20 years, through 2041.

South Korea escapes America’s new 25 percent tariff on imported steel — but must accept quotas on steel exports equal to 70 percent of its average annual shipments to the United States between 2015 and 2017.

The officials spoke on condition of anonymity in order to discuss the policy ahead of an official announcement.

The United States this month began imposing the steel tariffs, saying imports jeopardized U.S. national security. But it has been suspending the duties on allies like the European Union, Canada and Mexico.

The U.S. Treasury Department is also in talks on a deal to prevent Seoul from deliberately pushing its currency lower to give South Korean exporters a competitive advantage. A formal agreement on currency would be unprecedented — but it wouldn’t have teeth, because it would include no enforcement mechanism.

The U.S. trade deficit in goods with South Korea — nearly $23 billion last year — widened after the original pact took effect in 2012, one reason Trump has denounced it. Trade in autos has been especially lopsided: South Korea last year exported to the United States 929,000 passenger vehicles worth $15.7 billion. By contrast, the U.S. shipped to South Korea fewer than 53,000 autos, worth just $1.5 billion, according to the U.S. Commerce Department.

The United States says South Korea has used non-tariff barriers, such as rigorous customs inspections, to block U.S. products.

Trump’s complaints about South Korean trade practices have caused friction between the two allies at a crucial time, as he prepares for a meeting with North Korea’s reclusive leader, Kim Jong Un.

Unions at South Korea’s two-largest automakers, Hyundai Motor Co. and Kia Motors Corp., have already blasted the new agreement for blocking access to the fast-growing U.S. pickup truck market. “It is a humiliating deal that accepts Trump’s strategy to preemptively block South Korean pickup trucks,” Hyundai Motor Company’s labor union said in a statement.  (read more)

Commerce Secretary Wilbur Ross appears on Fox Business News for an extensive interview with Maria Bartiromo.  The interview covers a wide spectrum of important topics attached to the U.S. economy and ongoing trade deals.  Two great video segments for the interview will get you up to speed on ongoing initiatives:

♦Segment #1 outlines the upcoming announcement of KORUS, the South Korea and U.S. trade deal.  Additionally, Secretary Ross discusses the steel and aluminum tariffs and how they enmesh in the larger objective of the ongoing trade negotiations with China:

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♦Segment #2 outlines more on the aluminum and steel tariffs; ongoing trade talks with Europe; efforts to renegotiate NAFTA, and the possibility of a deal being reached; Saudi Arabian investment in the U.S. and the Commerce Department plans to bring back a citizenship question in the 2020 Census.

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Worth noting the reaction to Maria Bartiromo at 02:45 of the video centered around the question of the “lefty winning in Mexico“, etc. It would appear, based on hidden grinning, the trade team is anticipating a socialist victory in the Mexican election which would likely end up with Mexico wanting to cancel NAFTA due to loggerheads with the U.S.

It is additionally likely Canada’s Chrystina Freeland would lose her NAFTA cohort Mexican Foreign Minister Ildefonso Guajardo. Through seven rounds of NAFTA talks Freeland and Guarjardo have tag-teamed against Ambassador Robert Lighthizer (U.S.).

National Trade Council Director Peter Navarro appeared on CNBC, prior to today’s massive U.S. stock market increase, to discuss ongoing trade initiatives.

U.S.T.R. Robert Lighthizer is currently conducting simultaneous bilateral trade negotiations with South Korea, Philippines, Vietnam, Australia, China (way-points), Japan, Mexico/Canada (NAFTA) and the European Union.

The passage of the defense spending portion of the Omnibus bill ultimately means there will be increased demand for U.S. steel and aluminum within new defense equipment. The contracts within the procurement process will predictably require the use of U.S. parts.

Add the increase in defense spending with the pending global tariffs on steel imports, and the environment is created for foreign investment in domestic steel and metal manufacturing…. Then add into the mix the geopolitical economic relationship developed between India’s Prime Minister Modi and President Trump… And you discover the backdrop for this announcement from India owned JSW Steel:

(Reuters) – India’s JSW Steel Ltd said on Monday it would spend $500 million to build out its U.S. operations in Texas, amid heightened global trade tensions following U.S President Donald Trump’s decision to pursue steep import tariffs.

The company has signed an agreement with the Texas governor’s office, under which the governor has approved a grant worth $3.4 million to the company’s unit, the steelmaker said in a statement here.

The unit, JSW USA, sells high-quality carbon plates to the energy, petrochemicals, defense and other heavy equipment industries.

The company will use $150 million of the funds to improve and modernize its plant in Baytown, Texas, while the rest will fund a new facility, it said.  (read more)

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Remember, a key part of MAGAnomics is changing the investment dynamic where the ‘best play’ is to invest in the U.S.

The entire landscape of modern geopolitics is an assembly of various nations specifically focused on their economic interests.  Fundamentally, the economics of a nation is the cornerstone for their ability to hold, advance, influence and present their ideology.

Without the underlying economic capability to provide sustainability and stability, the nation, any nation, cannot maintain itself regardless of the underlying political outlook.  In short, as the old verse presents: “money makes the world go ’round“.  Everything boiled down to it’s essential core – is about economics.

The shock to the system of modern multinational financial interests was created by an earthquake known as Trump; which created a seismic shift via the 2016 U.S. presidential election outcome.

The tectonic political and economic shift was so unsettling to the global elites -who created a decades-long system of global financial interests- they have been thrashing around desperate to regain footing ever since.

All modern political alliances are based on this economic reality, and every single action taken by every member within each grouping is based on their affiliated and interconnected self-interest in the underlying economic equation.

At first, every nation positioned themselves to push-back against a realignment in geopolitical power based on the nationalistic economic shifting created by U.S. President Donald J. Trump.  However, as time progresses, and the clear strategy of President Trump begins to take shape, allies and adversaries have begun to accept that POTUS Trump is not going to retreat.  Access to a $20 trillion U.S. market is the biggest economic leverage in the world.

It doesn’t matter which continent you point to. If you pull back to the larger view and overlay the economic maneuvering you will find the reason behind the strategic relationship always revolves around economics.  War or peace, it’s all about the economics within the equation.

If you scale market economies on a linear continuum according to freedom (size of government in their economic market), and line up the individual nations as flags according to their political outlook on the same linear scale, you will quickly see how the groups cluster in both political ideology and similar economics. [Big government communist nations cluster together; big government socialist nations cluster together; and smaller government fair markets cluster together.] It has always been thus.

The scale of market freedom, in direct proportion to the wealth of the individual within each nation, is the one constant in an ever changing universe.

This is the essential issue with global trade agreements which seek to enjoin free/fair market nations within larger trade deals that also encompass more socialistic political forms of governance. It simply doesn’t work. Generally speaking the free/fair market nations get screwed because they are forced to acquiesce to the insufferable dictates -and rules- of the big government institutional nations. (TTIP and TPP examples)

President Trump has assembled economic SME’s (Subject Matter Experts)to deal with this geopolitical dynamic.  Each person specifically skilled to navigate this complex network of internal interests.  Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, Trade Rep. Robert Lighthizer, AG Secretary Sonny Perdue, Energy Secretary Rick Perry, and more recently Trade Adviser Peter Navarro.

Each cabinet member has a role within the larger dynamic that is a policy of economic patriotism benefiting the U.S.A.

New trade deals are being negotiated; NAFTA (Canada and Mexico), Vietnam, South Korea, Australia, ASEAN nations, and then China and the EU [with U.K. coming as soon as Brexit negotiations are complete].

All of the currently visible political alliances, like those witnessed within the G20, are based on their positioning for these upcoming trade deals.  Every supportive or antagonistic expression by each of these nation states is directly tied to their positioning for trade leverage and negotiation with the U.S.

The MSM will sell visible and spoken differences of opinion, differences of political ideologies, and newly formed alliances around a narrative of nations being anti-Trump.  The media like to focus on the cult of personality to create their discussion segments; but that’s nowhere near the full measure of what’s behind international alliances. The actual motives are the underlying economic determinations within each nation.

It has been so long since U.S. economic power was used to the benefit of the U.S., there’s an entire generation that has no concept of this underlying reasoning for national friendliness, or lack thereof, toward each other.  We have given away so much national economic wealth many people have forgotten how to accumulate or compete for it.

The ‘We-Are-The-World‘ type leftist globalism (fair share economics) has been pushed for so long, that many people have completely forgotten what it looks like when nations look out for their own unique economic best interests, and actually strive to achieve them.

Heck, many younger Americans may never have seen the competition at all.

Economic competition, territorial economics, is what drives each nation to excel and innovate.  The unexpected aspect, buried by almost all media, is how President Trump is empowering all nations to reevaluate their trade status by confronting a global trade system that was diminishing sovereignty.

And the WINNING is the best part of M.A.G.A !

“KORUS”

Perhaps as early as this week we should anticipate hearing about completion a significant trade agreement with South Korea.  The deal is known as “KORUS” (KOR+U.S.), and has been in negotiations for over a year.

Part of the recent agreement within the auto-sector of the deal, between Moon Jae-in and President Donald Trump, via Lighthizer and Ross, is an exemption of U.S. steel tariffs for South Korea in exchange for a doubling of U.S. auto exports; from 25,000 to 50,000 American made cars, per U.S. automaker, per year.  (link)

The results within KORUS exhibit the intended outcome of the global tariff proposal from President Trump as leverage to enhance the administration policy of reciprocity.  The world is taking notice, and China is now beginning to signal their understanding of President Trump leading the international discussion of reciprocal trade.

The unspoken background is that all nations, who have acquiesced to the overwhelming demands of China’s trade position, are now beginning to reassess the value of President Trump confronting the equation head-on.  Ultimately it is beginning to sink-in that all nations can benefit from correcting a trade imbalance within their own position.  In essence, U.S. President Trump is moving the entire global trade dynamic.

The timing for a U.S. leveraged KORUS deal could not be better.  On the geopolitical stage President Trump, through his sheer will, has thrown open the doors to a denuclearized Korean peninsular and is about to engage in direct discussions with North Korean leader Kim Jong-un.

The ramifications for peace on the Korean peninsular, and the economic outcomes therein, are seismic for South East Asia.  Thus we see today stunning reports of Kim Jong-un heading to Beijing for discussions of unknown substance.

There is no doubt both Kim Jong-un (DPRK) and Chinese President/Chairman Xi Jinping must engage in talks about the ramifications.  China has long used the DPRK as a proxy province for their own geopolitical strategy against the U.S. and western interests.

POTUS Trump using economic leverage to break down the walls of totalitarian regimes is a stunning position for two nations (China and DPRK) who must have thought such an action would be unconscionable a mere eighteen months ago.

Incredible times of jaw-dropping consequence.  Because, ‘His Excellency’ Trump.

The Era of the Economic Titan is Back!

PS. A U.S./South Korea trade deal enhances the backdrop, and leverage, of U.S. position toward NAFTA. Canada and Mexico have aligned with the TPP multilateral trade deal.  POTUS Trump is negotiating bi-lateral deals with nations within TPP (Japan, Australia, Vietnam, South Korea all ongoing).

Oh, here we go. Fox News owner Rupert Murdoch has a decades-earned nickname, “Mr. Wall Street”, Chris Wallace is the insufferable media mouthpiece for the financial interests of the guy who signs the front of his paycheck.  This is Wall Street -vs- Main Street.

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When Main Street economic principles are applied Wall Street will initially lose. There’s no way for this not to happen. Most of Wall Street is built on the Multinational platform of economic globalism. Weaken the grip of the multinational corporations and financial interests on the U.S. economy and Wall Street will drop… this is not difficult to predict. This is also necessary.

U.S. stocks, centered around U.S. domestic companies, will go up. U.S. stocks, centered around multinational companies -invested heavily overseas, and dependent on exploitation of the U.S. trade deficit- will go down.

As Secretary Wilbur Ross, U.S.T.R. Robert Lighthizer and U.S. President Trump have previously affirmed, they are going to restore the U.S. manufacturing base or lose office trying.

Additionally, the U.S. GDP is measured by deducting the value of imports from the value of everything produced domestically.  Therefore, initially as the economy expands, and as more Americans have more money to buy more stuff, lots of the things they buy will come from overseas.  This increase in purchasing of imports drives down the GDP despite the overall economic activity expanding.

I hope everyone has been prepared with prior information on how the economic system works so we can understand this weird and predictable dynamic.  Increased consumer spending can actually drive down the GDP if the stuff we are buying is imported.

National Trade Council Director Peter Navarro appears on Fox News with Maria Bartiromo for a discussion of ongoing trade initiatives.

Keep in mind, while simultaneously confronting China head-on, USTR Lighthizer has current trade deals, centered around reciprocity, being negotiated with: NAFTA [Mexico and Canada (round #7)], the EU, South Korea (almost done), Vietnam, Philippines, Malaysia, Australia and Japan (almost done).

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A rolling stone gathers no moss.

Maria Bartiromo has an interview with Devin Nunes encompassing multiple topics from China and Trade to the FBI/DOJ investigation.

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HPSCI recommendations below:

https://www.scribd.com/embeds/374810422/content?start_page=1&view_mode=&access_key=key-GIc3EXLab0ZWrW92UfKg

Author of “The Coming Collapse of China”, Gordon Chang, discusses the effect of President Trump’s tariffs on China and the epic battle ahead.  Last night China announced their feeble retaliatory actions – SEE HERE.  A professionally nervous Maria Bartiromo, frames a series of questions from the perspective of Wall Street.

Fortunately Gordon Chang understands the Red Dragon, and more importantly understands Chinese Chairman Xi Jinping’s geopolitical goals through economic conquest. Mr. Chang is one of the few people who appear regularly in media and know the truth behind the Panda Mask.

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People often talk about the ‘strength’ of China’s economic model; and indeed within a specific part of their economy -manufacturing- they do have economic strength.

However, the underlying critical architecture of the Chinese economic model is structurally flawed and President Trump with his current economic team understand the weakness better than all international adversaries.

China is a central planning economy.  Meaning it never was an outcropping of natural economic conditions.  China was/is controlled as a communist style central-planning government; As such, it is important to reference the basic structural reality that China’s economy was created from the top down.

This construct of government creation is a key big picture distinction that sets the backdrop to understand how weak the economy really is.

Any nations’ economic model is only as stable (or strong) as the underlying architecture or infrastructure of the actual country.

Think about economic strength and stability this way: If a nation was economically walled off from all other nations, can it survive?  …can it sustain itself?

In the big picture – economic strength is an outcome of the ability of a nation, any nation, to support itself first and foremost.   If a nations’ economy is dependent on other nations’ for it to inherently survive it is less strong than a nation whose economy is more independent.

You might not realize it, but China is an extremely dependent nation.

When the central planning for the 21st century Chinese Economy was constructed, there were several critical cultural flaws, dynamics exclusive to China, that needed to be overcome in order to build their economic model.  It took China several decades to map out a way to economic growth that could overcome the inherent critical flaws.

Critical Flaws To Exploit:

♦Because of the oppressive nature of the Chinese compliant culture, the citizens within China do not innovate or create.  The “Compliance Mindset” is part of the intellectual DNA strain of a Chinese citizen.

Broadly speaking, the modern era Chinese are not able to think outside the box per se’ because the reference of all civil activity has been a history of box control by government, and compliance to stay (think) only within the approved box.  The lack of intellectual thought mapping needed for innovation is why China relies on intellectual theft of innovation created by others.

American culture specifically is based around freedom of thought and severe disdain of government telling us what to do; THAT freedom is necessary for innovation.  That freedom actually creates innovation.

Again, broadly speaking Chinese are better students in American schools and universities because the Chinese are culturally compliant.  They work well with academics and established formulas, and within established systems, but they cannot create the formula or system themselves.

♦ The Chinese Planning Authority skipped the economic cornerstone.  When China planned out their economic entry, they did so from a top-down perspective.  They immediately wanted to be manufacturers of stuff.  They saw their worker population as a strategic advantage, but they never put the source origination infrastructure into place in order to supply their manufacturing needs.   China has no infrastructure for raw material extraction or exploitation.

China relies on:  importing raw material, applying their economic skillset (manufacturing), and then exporting finished goods.  This is the basic economic structure of the Chinese economy.

See the flaw?

Cut off the raw material, and the China economy slows, contracts, and if nations react severely enough with export material boycotts the entire Chinese economy implodes.

Insert big flashy sign for: “One-Belt / One-Road” HERE

Again, we reference the earlier point: Economic strength is the ability of a nation to sustain itself.  [Think about an economy during conflict or war]  China cannot independently sustain itself, therefore China is necessarily vulnerable.  China cannot even feed itself.

China is dependent on Imports (raw materials) AND Exports (finished goods).

♦The 800lb Panda in the room is that China is arguably the least balanced economy in the modern world.  Hence, China has to take extraordinary measures to secure their supply chain.  This economic dependency is also why China has recently spent so much on military expansion etc., they must protect their vulnerable interests.

Everything important to the Chinese Economy surrounds their critical need to secure a strong global supply chain of raw material to import, and leveraged trade agreements for export.  China’s economy is deep (manufacturing), but China’s economy is also narrow.

China could have spent the time to create a broad-based economy, but the lack of early 1900’s foresight, in conjunction with their communist top-down totalitarian system and a massive population, led to central government decisions to subvert the bottom-up building-out and take short-cuts.  Their population controls only worsened their long term ability to ever broaden their economic model.

It takes a population of young avg-skilled workers to do the hard work of building a raw material infrastructure.  Mine workers, dredge builders, roads and railways, bridges and tunnels etc.  All of these require young strong bodies.   The Chinese cultural/population  decisions amid the economic builders precluded this proactive outlook; now they have an aging population and are incapable of doing it.

This is why China is now dependent on their position as an economic trade bully.  They must retain their supply chain: import raw materials – export finished goods, at all costs.

This inherent economic structure is a weakness China must continually address through policies toward other nations.  Hence, “One-Belt / One-Road” is essentially a ‘bully plan’ to ensure their supply chain and long-term economic viability.

This economic structure, and the reality of China’s dependency, also puts China at risk from the effects of global economic contraction.

♦U.S. President Donald Trump and the U.S. economic team understand this dynamic and fully understand the inherent needs of China.  When you are economically dependent, the ‘bully plan’ only works until you encounter a ‘stronger opponent’.   A stronger opponent is an economic opponent with a more broad-based stable economy, that’s us.

President Trump, Commerce Secretary Ross, Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer, represent the first broad-based national team of economic negotiators who know how to leverage the inherent Chinese economic vulnerability.