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Last Sunday in the UK, we had a Twitter trend about Lurpak butter.

Lurpak is excellent butter and it is Danish.

Foodies are now concerned about tariffs on EU products beginning in January 2021.

Environment Secretary George Eustice, who was a fruit farmer in his family’s business prior to entering politics, appeared on the BBC’s The Andrew Marr Show to discuss Brexit. When the topic of tariffs came up, he said that EU companies with factories in the UK would not have to pay them.

Lurpak lovers began to worry. Lurpak’s parent company is a large Danish dairy co-operative, Arla.

Someone tweeted a photo of his Lurpak butter dish. This was from a Christmas ad campaign several years ago featuring an animated trumpet player, if I remember rightly:

I hope that people saw the second tweet below. Adam Payne writes about Brexit for Business Insider. One quarter of Arla’s milk suppliers are British:

Arla is the third largest food company in the UK. Who knew?

Case closed.

My fellow citizens should not worry: Lurpak, along with other Arla products, will still be available in the UK post-Brexit.

If George Eustice was wrong about Arla, I surely hope he is right about Dominic Cummings, who left No. 10 on Friday afternoon, November 13 (!), carrying a box with his papers and personal belongings:

Cummings was the mastermind behind Brexit, even though Baron (Lord) David Frost has been leading the negotiations with Michel Barnier.

This is what Eustice told Marr on Sunday:

Given Boris’s odd behaviour after his bout with coronavirus in April, I hope very much that we will not get BRINO come December 31. As Theresa May so often said:

No deal is better than a bad deal.

She turned sour as milk and went back on her word.

Whatever happens, at least we’ll still have Lurpak.

My past two posts have been about the US, North Korea and China.

The first post discussed developments that immediately followed the US-North Korea Singapore Summit held on Monday, June 12, 2018.

Yesterday’s concerned Mike Pompeo’s meetings in North Korea and Japan early in July as well as the trade war between the US and China.

Today’s entry looks at events from the past month.

On July 19, news emerged that China was nearly doubling the amounts of crude oil they were sending to North Korea, possibly jeopardising UN sanctions. From OilPrice.com via South Korea’s Chosun Ilbo newspaper (emphases mine):

The surge in Chinese shipments to North Korea is raising additional concerns that China could undermine the international sanctions against Kim’s regime.

Pipeline volumes of between 30,000 tons to 40,000 tons are enough in the summer to keep the pipeline from China to North Korea unclogged, while this volume is around 80,000 tons in the winter, Chosun Ilbo’s source said. Although it’s summer, China has recently increased the oil flow to the winter levels, the source told the South Korean outlet …

If China sends 80,000 tons of oil to North Korea every month, this volume already brings the amount to 960,000 tons a year—above the 525,000 tons limit for a 12-month period in the sanctions, Chosun Ilbo argues.

US Secretary of State Mike Pompeo and UN Ambassador Nikki Haley met with the UN Security Council the next day. The crude oil shipments were one of Pompeo’s first topics. He reminded the UN of the collective responsibility member nations have in enforcing sanctions. From the State Department transcript:

Right now, North Korea is illegally smuggling petroleum products into the country at a level that far exceeds the quotas established by the United Nations. These illegal ship-to-ship transfers are the most prominent means by which this is happening.

These transfers happened at least 89 times in the first five months of this year and they continue to occur. The United States reminds every UN member-state of its responsibility to stop illegal ship-to-ship transfers, and we urge them to step up their enforcement efforts as well.

We must also crack down on other forms of sanctions evasion, including the smuggling of coal by sea, smuggling by overland borders, and the presence of North Korean guest workers in certain countries. North Korean cyber thefts and other criminal activities are also generating significant revenues for the regime, and they must be stopped.

President Trump remains upbeat about the prospects of denuclearization of North Korea. So do I, as progress is happening. It is the Trump administration’s hope that one day the DPRK could be in our midst here at the United Nations – not as a pariah, but as a friend. Imagine UN Security Council meetings in which the DPRK nuclear and missile programs were not the agenda time and time again. We’ll be able to focus our energy on so many urgent problems that face our world.

I believe this reality is possible, and so does President Trump. But it will take full enforcement of sanctions for us to get there. It will also take Chairman Kim following through on his personal commitments that he made to President Trump in Singapore. The path ahead is not easy; it will take time. But our hopes for a safer world for all of us and a brighter future for North Korea remains our objective, and that hope endures.

That day, President Trump signed into law House Resolution (HR) 2061, the North Korean Human Rights Reauthorisation Act of 2017:

At the end of the month, things began happening in North Korea, not all of which made sense.

On July 23, North Korea began dismantling key facilities at the Sohae Satellite Launching Station:

However, on July 25, Mike Pompeo said the country was still producing fuel for nuclear bombs:

Asked at a Senate Foreign Relations Committee hearing whether North Korea was still making bomb fuel, Pompeo responded to Democratic Senator Ed Markey by saying: “Yes, that’s correct … Yes, they continue to produce fissile material.”

Pompeo declined to respond when asked whether North Korea was continuing to pursue submarine-launched ballistic missiles or whether its nuclear program was advancing generally.

He said he would be happy to answer the latter question if necessary in a classified setting, but suggested public statements on the issue would not help “a complex negotiation with a difficult adversary.”

The following day, a new North Korean military chief of staff was appointed:

On July 27, as North Korea pledged, remains of US soldiers from the Korean War landed in Hawaii. US Air Force veteran flying ace Chuck Yeager tweeted a tribute:

On August 1, Vice President Mike Pence presided over a ceremony and reception of the fallen soldiers’ remains in Hawaii, their return being part of the Singapore Summit agreement.

Meanwhile, interesting discussions took place between South Korea and China regarding the Korean War Armistice. Noon in Korea has an excellent Twitter thread from July 31, excerpted below:

Excellent news! The Korean War could finally come to an end!

Meanwhile, back in China — North Korea’s controller — an article on American Thinker excerpted another from the Financial Times, which says the Chinese think that President Trump is ‘a genius’. On July 29, American Thinker‘s Monica Showalter wrote:

Has anyone ever called the Chinese ‘stupid’? Not those guys.

So now they’re reading President Trump, and unlike the childish Eurotrash of western Europe, they see a shrewd, wily, chess-playing, Sun Tzu-grade genius, who could easily checkmate them, and they’ve got a lot of reasons for thinking so.

That’s the report from a European policy-domo, who actually went to Beijing and asked the local leaders what they were seeing.

Instapundit also has excerpts from the FT article, written by the European Council of Foreign Relations President Mark Leonard:

I have just spent a week in Beijing talking to officials and intellectuals, many of whom are awed by his skill as a strategist and tactician. . . .

Few Chinese think that Mr Trump’s primary concern is to rebalance the bilateral trade deficit. If it were, they say, he would have aligned with the EU, Japan and Canada against China rather than scooping up America’s allies in his tariff dragnet. They think the US president’s goal is nothing less than remaking the global order

In Chinese eyes, Mr Trump’s response is a form of “creative destruction”. He is systematically destroying the existing institutions — from the World Trade Organization and the North American Free Trade Agreement to Nato and the Iran nuclear deal — as a first step towards renegotiating the world order on terms more favourable to Washington.

Once the order is destroyed, the Chinese elite believes, Mr Trump will move to stage two: renegotiating America’s relationship with other powers. Because the US is still the most powerful country in the world, it will be able to negotiate with other countries from a position of strength if it deals with them one at a time rather than through multilateral institutions that empower the weak at the expense of the strong.

My interlocutors say that Mr Trump is the US first president for more than 40 years to bash China on three fronts simultaneously: trade, military and ideology. They describe him as a master tactician, focusing on one issue at a time, and extracting as many concessions as he can. They speak of the skilful way Mr Trump has treated President Xi Jinping. “Look at how he handled North Korea,” one says. “He got Xi Jinping to agree to UN sanctions [half a dozen] times, creating an economic stranglehold on the country. China almost turned North Korea into a sworn enemy of the country.” But they also see him as a strategist, willing to declare a truce in each area when there are no more concessions to be had, and then start again with a new front.

Why don’t Westerners view Trump the same way the Chinese do?

Nevertheless, China isn’t going to go down without a fight.

On August 4, Trump posted a series of tweets about the success his tariffs on Chinese goods. This was the first:

The Conservative Treehouse correctly predicted what lay ahead:

Do not be surprised if North Korea launches another provocative missile test soon. Watch China, not N.Korea. It’s Chairman Xi’s people in the DPRK who are taking action. Kim Jong-Un is an expendable proxy regime. The war is the U.S. -vs- China trade and economic confrontation. North Korea is the Potemkin backdrop for the Beijing puppeteer.

The following day, Reuters reported:

China’s state media on Monday lashed out at the policies of U.S. President Donald Trump in an usually direct attack, accusing him of “starring in his own carefully orchestrated street fighter-style deceitful drama”.

Trump’s wish for others to play along with his drama is “wishful thinking,” the ruling Communist Party’s People’s Daily newspaper said in an editorial.

The editorial said the United States had escalated trade friction with China, and turned international trade into “zero-sum game”.

“Governing a country is not like doing business,” the editorial said, arguing that Trump’s actions imperiled the national credibility of the United States.

The Conservative Treehouse explained what was going on:

Each time China takes aggressive action (red dragon) China projects a panda face through silence and non-response to opinion of that action;…. and the action continues. The red dragon has a tendency to say one necessary thing publicly, while manipulating another necessary thing privately.  The Art of War.

President Trump is the first U.S. President to understand how the red dragon hides behind the panda mask

It is specifically because Trump understands Panda is a mask that President Trump messages warmth toward the Chinese people, and pours vociferous praise upon Xi Jinping, while simultaneously confronting the geopolitical doctrine of the Xi regime.

In essence Trump is mirroring the behavior of China while confronting their economic duplicity.

On August 6, ZeroHedge confirmed Trump’s strategy in an article about the continuing decline of China’s currency, the renminbi: ‘China Is Now Left With Just Three Options, And They Are All Equally Bad’ (emphases in the original):

  1. intervene in currency markets to offset market pressures risking a new wave of reserve depletion;
  2. raise interest rates to defend the currency causing monetary tightening and risking economic weakness; or
  3. let the currency depreciate beyond the above critical levels along with market pressures risking capital outflows and a more abrupt move

It goes without saying that all three choices have severely adverse consequences for the market and the global economy, and yet Donald Trump would be delighted with any of the three. After all, recall what One River CIO Eric Peters … laid out what may be the best long-term foreign policy recommendation for Trump, or any other administration: crash China…

Engineering a decade of rolling Chinese financial crises would be the most effective foreign policy the US could run.” Forget about the South China Sea, don’t bother with more aircraft carriers, just let Beijing try to cope with their financial system.

“And we’re 80% of the way there – we instigated a trade war, implemented a massive fiscal stimulus, which created the room to raise interest rates. The combined policy mix makes capital want to leave at the same time it makes the dollar more attractive and effectively shuts down new investment inflows to China.”

On August 7, ZeroHedge discussed the aforementioned dismantling of the Sohae Satellite Launching Station and disparaged the lack of Big Media coverage on it, especially as the dismantling goes beyond what the US and North Korea negotiated:

activity at the launch pad appears to go beyond that commitment.

ZeroHedge said:

As we previously noted, these stories of supposed North Korean betrayal by NBC, CNN, and the Wall Street Journal are egregious cases of distorting news by pushing a predetermined policy line. But those news outlets, far from being outliers, are merely reflecting the norms of the entire corporate news system

As we concluded previously, a media complex so determined to discredit negotiations with North Korea and so unfettered by political-diplomatic reality seriously threatens the ability of the United States to deliver on any agreement with Pyongyang. That means alternative media must make more aggressive efforts to challenge the corporate press’s coverage... and today’s news seems positive (but we will see what spin it gets).

Last weekend, North Korea and the United States held working meetings in Panmunjom. Mike Pompeo was not there, although it is now thought he could be making another trip to North Korea.

On Monday, August 13, representatives from North and South Korea met in the city. It is now thought that a summit between the two countries could be held in September.

On August 15, Yonhap News Agency reported that South Korea’s:

President Moon Jae-in on Wednesday used his Liberation Day address to pitch his Korea peace drive, calling for railway, energy and economic cooperation with the North as a cornerstone for Northeast Asian peace and prosperity.

Speaking at a ceremony marking Korea’s independence from the 1910-45 Japanese colonial rule 73 years ago on the day, he renewed his commitment to end the division of the Koreas, saying “true liberation” can only be achieved when the two countries establish a lasting peace and economic community.

On August 16, CNBC reported that a fresh round of trade talks between the US and China could take place later in August. This was good news for the Dow Jones.

Coming next week:

These families have been separated for over 60 years.

All of these news stories lead to a conclusion best voiced by entrepreneur and media host, Jon Taffer:

I couldn’t agree more, Jon! This is an exciting, positive time in world history! What’s not to like?

My previous post discussed the 2018 tariff war, featuring the United States, China, EU nations, Canada and Mexico.

On June 1, President Trump levied tariffs against EU countries, Canada and Mexico.

The media said this was unfair. Trump took issue with one outlet:

Canada retaliated immediately with an incredible list of tariffs on various US products. Please read the National Post article for the full list and explanations. Excerpts and a summary follow.

American products include sleeping bags, affecting the manufacturers in California and Colorado.

Breakfast foods are on the list: fresh orange juice from Florida, strawberries for jam from California and, surprisingly, maple syrup (emphases mine):

Because a producers’ association in Quebec — what Conservative MP Maxime Bernier likes to call the “maple syrup cartel” — uses quotas to regulate the amount of maple syrup the province turns out, U.S. producers have been increasing their imports to Canada. Since the early 2000s, Quebec has experienced the slowest growth in maple syrup production of any syrup-producing market in North America — about 60 per cent, according to the Montreal Economic Institute. Meanwhile, Maine’s production grew 131 per cent and Vermont’s 254 per cent.

A tariff on felt pens affects Pennsylvania, the primary state of their manufacture. Also:

In one of his few decisions that didn’t break from White House norms, Trump is using the same type of pen for executive orders that Barack Obama and George W. Bush used. You guessed it: a felt pen.

A tariff on ketchup also affects the state:

As of Thursday, U.S.-produced mustard and ketchup are facing new tariffs. In the ketchup category, it’s no surprise that Heinz rakes in a big market share. Of the more than $264 million in ketchup that Canada imports from the states annually, $81.4 million comes from Heinz’s home state and congressional battleground state Pennsylvania

Wisconsin will be affected by tariffs on a number of products:

A long list of tariff categories announced Thursday seem to target the state of Wisconsin, farmers from which apparently inspired some of Trump’s harshest anti-Canada words when in an April 2017 speech in the state he called NAFTA a “complete and total disaster” for the U.S., taking particular aim at Canada’s system of dairy supply management.

Among U.S. states, Wisconsin is the top exporter of handkerchiefs, tissues, tablecloths, soy sauce and fruit spreads (the category in which we are penalizing strawberry jam, specifically); it is the state from which we get the second-most yogurt and toilet paper.

The cherry on top: most of the soy sauce produced in North America comes from Kikkoman’s plant in the Wisconsin congressional district held by Speaker Ryan, who announced earlier this year he won’t be running again.

The gist of the article is that Canada’s tariffs could adversely affect the Republican Party’s chances of winning seats in this autumn’s mid-term elections on the assumption that voters will turn against Trump for his tariff policy which, in turn, brought new and wide-ranging tariffs from Canada. We shall see.

On June 5, The Hill reported that GOPe senators, led by Mitch McConnell (R-Kentucky), want to rein in Trump’s trade policy, including tariffs:

Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday that he will not bring up a free-standing bill to push back on President Trump’s trade agenda, but that GOP senators might be able to add it as an amendment to other legislation.

Support among Republicans has grown for legislation backed by Sens. Bob Corker (R-Tenn.) and Pat Toomey (R-Pa.) that would give Congress power to authorize or reject any new tariffs imposed because of national security concerns.

GOP senators say McConnell doesn’t want to risk a confrontation with the president but also wants to be responsive to the concerns of colleagues who think Trump’s trade agenda has run amok.

Then, the G7 took place in Canada, where tariffs were very much on the agenda:

The G7 countries were unhappy Trump had actually imposed tariffs. They had been given several weeks before then to negotiate …

The G7 communique became an issue. Justin Trudeau had been nice to Trump at the meeting. After Trump left early for the Singapore Summit, ‘Justin from Canada’, as Trump likes to call him, changed his tune:

An interesting dynamic had been in play between Canada and the EU:

By June 21, this had changed:

Trump wants these negotiations in order to achieve trade reciprocity. Until the US can reach truly fair trade deals with the countries affected, tariffs will remain in place.

Fox’s Lou Dobbs’s survey of June 19 showed that Americans largely agree with Trump’s policy:

Meanwhile, exemptions are being granted to certain US companies:

On June 21, The Conservative Treehouse reported on a Wall Street Journal story about Germany’s fending off US tariffs:

Yup, Germany, without consulting with Emmanuel from France, just unilaterally announce the EU is willing to drop all trade tariffs against U.S. auto manufacturers as part of their strategy to fend-off steel, aluminum and crushing auto tariffs

Don’t overlook Angela Merkel making this announcement without consulting with Emmanuel Macron. The German auto-sector is vital to the German economy. Lose the support of the auto industry in Germany and Chancellor Merkel is toast.

As Trump says:

Regardless of the media outcry, Trump’s trade plan will ultimately work to the benefit of all nations involved.

Whenever I think of tariffs, I am reminded of history class.

Tariffs are quite boring to most people, myself included, so I never really paid much attention to them and, with reference to history class, the subject never came up as a test question!

This is the reason tariffs are such a pervasive subject in US history class:

Bill Mitchell makes an excellent point.

More recently:

Jack Posobiec makes a great point, too.

Going back even further — to 1983 — Ronald Reagan raised the tariff on imported heavyweight motorcycles in order to protect Harley-Davidson.

President Trump has imposed tariffs on European, Canadian and Mexican goods in addition to those from China.

On March 5, 2018, Sky News reported (emphases in the original):

Donald Trump appears to have rejected Theresa May’s appeal over his plan to impose tariffs on steel and aluminium imports into the US.

On Sunday, the Prime Minister used a telephone call with the US President to express her “deep concern” at his proposal, which has prompted an escalating war of words between Washington and the European Union.

Mrs May told Mr Trump that “multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests”, a Downing Street spokeswoman said.

The article includes this tweet:

However, as The Conservative Treehouse pointed out when that news item appeared, the EU imposed anti-dumping duties on Chinese steel in 2017, so it’s not as if Trump has come up with anything novel or alarming.

On March 8, The Conservative Treehouse explained Trump’s tariff strategy on steel and aluminium in full. Excerpts follow (emphases mine):

This trade specific issue, and many more soon to follow, are important to this president. This is President Trump’s subject area of specific expertise. These trade policies are the issues he has been discussing for over thirty years.

♦ … the target of the tariffs is China.  The specific target has always been China; and POTUS Trump, Commerce Secretary Wilbur Ross, USTR Robert Lighthizer and Trade Policy Adviser Peter Navarro know to hit their target they have to get past the hurdle of trans-shipments of Steel to proxy nations by China to avoid the tariff.

So what does POTUS Trump do…. he takes the position of the tariff opponents and amplifies it.  Trump’s trade policy opponents, realizing something was going to happen regardless of their opposition, started demanding “targeted tariffs”; that is, tariffs applied against target nations.  POTUS Trump brilliantly spins their position and says: ok, let’s target by granting “exceptions” to the tariffs.

What POTUS will announce is “targeted exemptions” to the trade tariffs on Steel and Aluminum.  Not “targeted tariffs”, but rather “targeted exemptions”.

The exemption approach puts more power in the hands of Team ‘America-First’ than targeting the steel dumpers directly. Team Trump will reward good behavior.

Any nation that acts like a Chinese proxy in the trans-shipment problem will not get relief from the tariffs. However, the nations that manufacture and trade honestly will be granted tariff relief. This allows Team Trump to evaluate the origin of the Steel used by countries that want to import their finished goods into the U.S. If they are using Chinese Steel, the tariff applies. If they are using their own manufactured steel, there is no tariff

No country will want to lose access to the U.S. market by engaging in the sketchy trans-shipping arrangement with China. POTUS Trump holds all the cards.

This approach also puts Mexico and Canada (NAFTA) on notice that if they use Chinese steel they will face a tariff despite our NAFTA agreement. Again, more leverage.

The stock market went up that day, and, on the next, there was more good news:

Trump discussed tariffs at his rally in Moon Township, Pennsylvania, on March 10, saying that the levies would help steel and coal return to the industrial heartland.

This is what happens when one country floods another with cheap goods. See the last two sentences (‘our’ should be ‘out’ and ‘works’ should be ‘workers’):

Then, there is the situation with the EU, as The Conservative Treehouse explained on March 11:

The protectionist EU hypocrites simply cannot afford to go toe-to-toe with the U.S. on trade.  The UK is in the process of formalizing their Brexit terms; the EU (essentially ‘Germany’) needs to find a way to make up for the lost revenue (billions in taxes) from the UK economy.  Currently the UK pays Brussels approximately a billion per month on a $2.5 trillion economy; that will stop.

Brexit reduces the overall EU GDP by $2.5 trillion.  German Chancellor Angela Merkel cannot -and will not- challenge President Trump.  In addition to being politically weak, Merkel has attached her economy to expansive environmental regulations (Paris treaty), though she is now attempting to pale down those regulations.  Chancellor Merkel cannot afford to run the risk of losing any access to the U.S. market.

A 25% decrease within the German auto sector alone would be enough to throw the entire nation of Germany into a recession; and functionally Germany is the EU.   President Trump holds all the leverage within the trade discussions with the EU…

…. WE ARE THE CUSTOMER in this equation.

Even the head of the AFL-CIO thinks Trump is doing the right thing:

A week earlier, Richard Trumka issued a statement on tariffs. The Hill reported:

The nation’s largest federation of unions on Thursday praised President Trump‘s plan to impose tariffs on steel and aluminum imports, even as GOP lawmakers in Congress and U.S. trade partners condemned the proposal. 

For years, we have called attention to the predatory practices of some steel exporting countries. Such practices hurt working people and cheat companies that produce in the U.S. We applaud the administration’s efforts today to fix this problem,” AFL-CIO President Richard Trumka said in a statement …

This is a great first step toward addressing trade cheating, and we will continue to work with the administration on rewriting trade rules to benefit working people,” Trumka continued.

On March 15, The Conservative Treehouse stated that perpetual trade deficits are bad for national security:

Another broad concern revolves around national security. A perpetual trade deficit is a statement about the competitiveness of the U.S. economy itself. By purchasing manufactured goods overseas for a long enough period of time, U.S. companies lose the expertise and even the factories to make those products; ex: try finding a pair of shoes made in … America. As the United States loses manufacturing competitiveness, we outsource more jobs, and our total standard of living declines.

Experts understand this:

As The Conservative Treehouse said, exemptions would be forthcoming:

On March 23, BT.com reported that the exemptions were temporary:

European Union member countries have been temporarily exempted from steel and aluminium tariffs announced by US president Donald Trump.

As well as the EU nations, six other countries – Canada, Mexico, Australia, Argentina, Brazil, South Korea – will also be free from the tariffs of 25% on imported steel and 10% on aluminium.

The White House said the levies have been suspended until May 1 this year, pending further discussions, as tariffs on other countries came into effect on Friday.

Mr Trump authorised the “pause” for the EU and other countries as Theresa May and European leaders were due to discuss the import duties on Friday.

European Council president Donald Tusk had said it was “time for politicians on both sides of the Atlantic to act responsibly”, while Mrs May had told Mr Trump of her “deep concern” over the plans.

US trade representative Robert Lighthizer had earlier signalled that the EU along with a number of other countries would receive temporary exemptions.

China immediately hit back with tariffs of their own against the US. At first, it was a threat. On April 2, it became a reality, as The Conservative Treehouse reported:

In retaliation for $50 billion in U.S. trade tariffs against Chinese imports, China laughably hits back with $3 their own billion tariffs against the U.S. According to most reporting Beijing has selected U.S. pork and scrap aluminum as targets for a 25% tariff, along with wine and fruit tariffs around 15%.

It should be emphasized the approach by China is rather ridiculous considering the Chinese government purchased the largest U.S. pork manufacturer Smithfield in 2013 for $5 billion; at the time the purchase price was 30% more than the company was worth.  Smithfield, now a Chinese company, represents 25% of all U.S. pork products.

Do you really think China is going to not import its own pork products… or subject them to a domestic tax?  Think about it.  It’s ridiculous.  China knows they have ZERO leverage in a trade-dispute with the U.S., they cannot afford to lose access to the U.S. market.

The example of Smithfield foods is exactly what we have outlined in how China cannot sustain itself and needs to control the assets of foreign countries.  Hence, their one-road/one-belt program for securing products and raw materials.  China is a dependent economy, they need to exploit global trade to surviveChina cannot feed itself. This is the inherent flaw within their short-sighted authoritarian government-controlled economic model.

On April 5, Trump upped the ante:

By March 9, China had backed down:

On the other hand, trade negotiations were going very well with South Korea. The Conservative Treehouse explained:

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)

This trade deal also has a role in talks with North Korea. The Singapore Summit hadn’t yet taken place at this point:

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.

There is more about KORUS here and here, including videos.

The other contentious areas of tariffs concern the US’s NAFTA partners Mexico and Canada.

On April 17, The Conservative Treehouse explained:

This Reuters article is framed around Mexico making a surprise announcement they will support the U.S. steel tariff against China by shutting down the NAFTA back door on that specific trade segment….  However, the bigger story is Mexico’s admission/concession to the U.S. trade position that Canada and Mexico structure access to the U.S. market inside their trade deals with other nations

By shipping parts to Mexico and/or Canada; and by deploying satellite manufacturing and assembly facilities in Canada and/or Mexico; China, Asia and to a lesser extent EU corporations, exploited a loophole.

Through a process of building, assembling or manufacturing their products in Mexico/Canada those foreign corporations can skirt U.S. trade tariffs and direct U.S. trade agreements. The finished foreign products entered the U.S. under NAFTA rules.

Why deal with the U.S. when you can just deal with Mexico, and use NAFTA rules to ship your product directly into the U.S. market?

This exploitative approach, a backdoor to the U.S. market, was the primary reason for massive foreign investment in Canada and Mexico; it was also the primary reason why candidate Donald Trump, now President Donald Trump, wanted to shut down that loophole and renegotiate NAFTA.

This loophole was the primary reason for U.S. manufacturers to relocate operations to Mexico. Corporations within the U.S. Auto-Sector could enhance profits by building in Mexico or Canada using parts imported from Asia/China. The labor factor was not as big an aspect of the overall cost consideration as cheaper parts and imported raw materials.

All nuanced trade-sector issues put aside, the larger issue was always how third-party nations will seek to gain access to the U.S. market through Canada and Mexico. [It is the NAFTA exploitation loophole which has severely damaged the U.S. manufacturing base.] That’s why this trade admission by Canada and Mexico is stunning.

Once truly fair trade deals are struck, this is what happens:

On May 31, Reuters reported that tariffs against the EU countries, Canada and Mexico would begin on Friday, June 1:

The United States on Thursday said it was moving ahead with tariffs on aluminum and steel imports from Canada, Mexico and the European Union, ending a two-month exemption and potentially setting the stage for a trade war with some of America’s top allies.

U.S Commerce Secretary Wilbur Ross told reporters on a telephone briefing that a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from the EU, Canada and Mexico would go into effect at midnight (0400 GMT on Friday).

This is the background to what happened in June, to follow tomorrow.

Who knew tariffs could be so interesting?

The G7 took place this month in Charlevoix, Québec.

Vladimir Putin has not been invited in recent years, something President Trump took issue with. Obama’s Susan Rice objected to Trump’s stance.

These are the participating countries:

This is another important fact:

Prior to the summit, G7 ministers met in Whistler between May 31 and June 2:

… G7 Ministers responsible for development cooperation met in Whistler, Canada, to discuss their shared priorities on some of the most pressing global development and humanitarian challenges, including advancing gender equality and the empowerment of women and girls.

But there was a more pressing subject, as The Conservative Treehouse (CTH) pointed out on June 2:

… as the G7 finance ministerial sessions wrapped up today, all the talk centered around their collective, and stunningly hypocritical, angst at new United States trade policy; specifically the imposition of Steel and Aluminum tariffs on imported goods.

France, Canada, the United Kingdom, Germany, Japan and Italy all have trade tariffs and trade barriers far higher than the U.S. Each of the G7 nations has exploited the overwhelmingly one-sided access to the U.S. market for decades. As President Trump demands “reciprocal and fair” trade agreements – those same nations now balk at the same rules and duties they impose on the U.S. now being imposed against them.

CTH cited a Reuters article:

Finance leaders of the closest U.S. allies vented anger over the Trump administration’s metal import tariffs but ended a three-day meeting in Canada on Saturday with no solutions, setting the stage for a heated fight at a G7 summit next week in Quebec.

U.S. Treasury Secretary Steven Mnuchin failed to soothe the frustrations of his Group of Seven counterparts over the 25 percent steel and 10 percent aluminum tariffs that Washington imposed on Mexico, Canada and the European Union this week.

The other six G7 member countries asked Mnuchin to bring to President Donald Trump “a message of regret and disappointment” over the tariffs, Canadian Finance Minister Bill Morneau said at a press conference after the end of a three-day meeting in the Canadian mountain resort town of Whistler, British Columbia.

On June 6, two days before the G7 began, Trump’s National Economic Council (NEC) Chairman Larry Kudlow held a press conference to discuss the upcoming summit. Kudlow is a friendly economic face who can explain Trump’s strategy clearly to those with no background in finance. He has had a high-flying career in the financial industry, has written four books and has hosted his own television and radio shows. When asked about challenges with trade among G7 members, he said:

Well, look — we’re talking everything through. There may be disagreements. I regard this as much like a family quarrel. I’m always the optimist. I believe it can be worked out. But I’m always hopeful on that point. This is a G7 meeting, and the presidents and heads of state will get together.

Let me add one thought to that, though. The President — President Trump is very clear with respect to his trade reform efforts that we will do what is necessary to protect the United States, its businesses, and its workforce. So that we may have disagreements, we may have tactical disagreements, but he has always said — and I agree — tariffs are a tool in that effort. And people should recognize how serious he is in that respect.

When pressed on trade and tariffs, he explained (emphases mine):

Here’s the President’s key thought on this: reciprocity. And one of the problems, one of the reasons for the breakdown of the trading system — the world trading system, as I described, which the President is trying to fix — in the last 20-some-odd years, we’ve seen a lack of discipline; tariff and non-tariff barriers have gone up. There has been a lot of protectionism.

The United States, by the way, we have the lowest average tariff in the world. And if you go down a laundry list of industries, you will see we are much lower. Our tariff rates are much lower than our competitors.

So his point is we should all have a level playing field. He calls it “reciprocity.” I think it’s a very apt description. And that’s the problem. If you bring down the barriers, and you equalize the level of the playing field, then we’ll let nature take its course, we’ll let markets take their course, and we will see.

But I think the products we make here have improved enormously and will continue to improve enormously. And that’s really the message of this economic recovery.

So we’ll wait and see on that, but that’s the mechanism. As I said to the other question, the way you lower your trade gap, the way you increase your exports is lower the barriers.

And again, I want to say, other Presidents, in both parties, have paid lip service to this issue of the lack of reciprocity and China’s particularly bad behavior, but nothing ever comes of it. This President has the backbone to take the fight, and he will continue to make the fight because he believes it is in the best interest of the United States and also the rest of the world.

Some trade initiatives — GATT — and organisations — the WTO — were fine during their time, however, circumstances have changed over time:

Don’t blame Trump. Blame the nations that have broken away from those conditions. Very important point. All right? I’m not here at the podium to call out countries and individual names and so forth. But you know from our own work, Trump is trying to fix this broken system.

It was a good system — I agree with you — and it lasted for a bunch of decades. But that system has been broken in the last 20 years-plus. The World Trade Organization, for example, has become completely ineffectual. And even when it makes decisions, even in the rare moments when it makes decisions, important countries don’t even abide by them.

So you’re right about that framework from the mid-1940s on. I think it worked beautifully. I think free world trade is a very good thing indeed. But it is broken, and President Trump is trying to fix it. And that’s the key point.

Incidentally, Larry Kudlow suffered a heart attack a few days later. Fortunately, he’s now out and about:

Now onto the G7 summit. Before his arrival in Charlevoix on Friday, June 8, Trump tweeted:

The tension about Russia’s exclusion — and tariffs — mounted. That day, BT.com reported:

Donald Trump has dealt another blow to G7 unity after calling for Russia to be readmitted to the group – a call rejected by Theresa May.

The Prime Minister said Vladimir Putin’s Russia – thrown out of the group of leading industrialised nations in 2014 – should not be readmitted until it could demonstrate a change of course.

Mr Trump was already at odds with the rest of the group – the UK, Canada, France, Germany, Italy and Japan – over the imposition of tariffs on steel and aluminium.

His comments on Russia – backed by Italian Prime Minister Giuseppe Conte – added further to the tensions at the summit in La Malbaie in Canada.

Mr Trump said: “Russia should be in the meeting, should be a part of it.”

But Mrs May told the BBC: “I have always said we should engage with Russia but my phrase is ‘engage but beware’.

“We should remind ourselves why the G8 became the G7, it was because Russia illegally annexed Crimea …

“So we need to say, I think, before any such conversations can take place Russia needs to change its approach.”

The article says that Prime Minister May met formally with every other leader except President Trump:

The US president is expected to depart the two-day summit early on Saturday, leaving the rest of the group behind.

Asked if Mrs May believed she had been snubbed, a Downing Street spokeswoman replied: “No.”

But the Prime Minister twice refused to say whether she had requested a formal bilateral meeting with Mr Trump.

Trump arrived that day (videos of arrival at Canadian Forces Base Bagotville here and here; arrival in Charlevoix here).

‘Justin from Canada’, as Trump refers to Premier Trudeau, looked rather weak:

Trump’s grandfather, a German immigrant, built a hotel in the Yukon as a young man. That was during the time of the Gold Rush:

The two leaders met privately then answered questions from the press, which ended with this:

Q Prime Minister, are you disappointed the President is leaving early?

PRESIDENT TRUMP: No, he’s happy.

Strangely enough, that day:

Trump also met with French president Emmanuel Macron in the early evening:

PRESIDENT MACRON: I wanted to thank President Trump. I think we had a very open and direct discussion this afternoon. We always have this kind of discussion.

And I think, on trade, there is a critical a path, but there is a way to progress altogether. We had a very direct and open discussion. And I saw the willingness on all the sides to find agreements and have a win-win approach for our people, our workers, and our middle classes.

We will have, this evening, a group discussion on North Korea — and you will have a very important meeting in Singapore — on Syria, on Iran, obviously. But I want to say that sometimes we disagree, but we always speak and share, I think, common concerns and common values. And we share the willingness to deliver and get results together.

So I wanted to thank you for that, once again.

Their meeting had been rescheduled from earlier that day, as Trump was delayed in leaving the White House.

There was the usual handshake and friendliness, but Macron had issued a warning to Trump the previous day via the press:

The Hill reported Macron’s remarks from Thursday, June 7:

French President Emmanuel Macron on Thursday delivered a stark message to President Trump, promising to resist “hegemony” and warning that no leader lasts forever.

Asked whether Trump did not care about “being isolated” from other world leaders, Macron responded, “Maybe, but nobody is forever.”

Macron’s statement comes as leaders from the Group of Seven prepare to meet at the G-7 summit in Canada on Friday — a meeting where Trump’s trade policies are expected to take center stage. 

Macron could reasonably apply his views on Trump to his own good self, as he has been lording it over the French for over a year now.

This is the reality of Trudeau and Macron:

This is what happened on Day 1:

This is a rather nice video summarising Friday’s events:

CTH has a meatier summary of what took place:

French President Emmanuel Macron responded to Trudeau’s plea and arrived two-days early to coordinate the strategic message.  Together they were looking for leverage in advance of Godzilla Trump’s arrival.  Germany’s Angela Merkel, and U.K. Prime Minister Theresa May even brought non-G7 members European Council President Donald Tusk, and European Commission President Jean-Claude Juncker as back-up.

Apparently the six-against-one plan was considered unfair to the six, so they added two moreUnfortunately for Canada, France, Germany and the U.K., Japanese PM Shinzo Abe and Italian Prime Minister Giuseppe Conte are not foolish enough to take on Godzilla.

As an entirely predictable outcome, President Trump won again.  It’s just so darned funny to watch this play out.  The era of the titan is back, and deliciously the titan is an American President, Donald J Trump.  He’s one guy, and he has them all surrounded; and he’s laughing the entire time.  He’s impenetrable, sharp, funny as heck and monolithic in stature making all of his opposition look decidedly less-than.

This video of everyone gathering around the table is interesting:

Photographs from June 9 lent further credence to CTH‘s summary:

Trump made a new friend at the G7, who also wants Russia re-admitted to the summit in future:

Trump held a press conference before leaving the G7 for the Singapore Summit:

Among his messages were:

Economic Security is National Security

CNN is “Fake News”

Then it was time for him to depart for Singapore:

Trump later instructed US representatives at the G7 to reject the summit’s communique:

This is because he thought Justin from Canada was being disingenuous with him after he left (see Trudeau’s closing press conference):

On Sunday, June 10, BT.com reported more on that and the rest of the summit, excerpted below:

The summit in Canada was marked by the US president’s controversial trade policy which has put him at odds with the rest of the G7 leaders.

He warned that retaliation against metal tariffs – 25% on imports of steel and 10% on aluminium from countries including the UK and the rest of the European Union – would be a mistake after previously calling the EU approach to business “brutal”…

During the meeting, Mr Trump accused other states of “robbing” his country through their trade policies and proposed scrapping tariffs across the G7.

But Theresa May hit back, branding the tariffs “unjustified” and saying the EU would respond – although she warned against further tit-for-tat escalation.

Despite the tensions at the gathering in Canada, Mr Trump rated his relationship with their leaders as a “10” – naming Germany’s Angela Merkel, French President Emmanuel Macron and Mr Trudeau, but not the UK Prime Minister.

As well as criticising the tariffs, Mrs May also opposed Mr Trump’s call for Russia to be readmitted to the group of leading industrialised nations.

But Mr Trump insisted it would be an “asset” to have Vladimir Putin back at the summit table.

That day, White House Trade Policy Adviser Peter Navarro told Fox News that Trudeau had made a huge mistake — the ‘biggest miscalculation in Canadian political history‘ — and more:

Of course, as Trump was in Singapore, he couldn’t readily tweet about the G7 until he returned to Washington. On Friday, June 15, he had a few points to make:

He also told Fox & Friends that the leaders had wished him a happy birthday on June 14, Breitbart reported.

More on tariffs to follow.

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