Tuesday, February 26, 2019

Trump's Trade Strategy

RonDoids could not source the following document, 
We are posting it as is, for reader considerations.

I’m sure this strategy will be heralded by brilliant CNN “analysts” soon...

Interesting take on what has been going on and a short read to show how Trump is squeezing what the US needs out of our trading partners. Long overdue ….

♦ Squeeze #1

President Trump and Treasury Secretary Mnuchin sanctioned Venezuela and cut off their access to expanded state owned oil revenue. Venezuela needs more money. China and Russia are already leveraged to the gills in Venezuela and hold 49% of Citgo as collateral for loans outstanding. China and Russia now need to loan more, directly.
However China cannot engage in economic commerce with Venezuela or they risk losing access to the U.S. banking system. Therefore all current Chinese aid to Maduro comes in the form of IOUs. These ongoing loans are likely impossible to be repaid.

♦ Squeeze #2

China’s geopolitical ally, Russia, is already squeezed with losses in energy revenue because of President Trump’s approach toward oil, LNG and coal. Trump, through allies including Saudi Arabia, EU, France (North Africa energy), and domestic production has influenced global energy prices. Additionally, President Trump is demanding NATO countries, specifically Germany, stop supporting financial dependence on Russia.
Meanwhile, and directly connected, Russia is bleeding out financially in Syria. Iran is the financial reserve, but they too are energy price dependent and President Trump is now putting pressure on Iran vis-a-vis new sanctions and new demands on allies.

♦ Squeeze #3

In 2017 Trump and Secretary Tillerson, now Secretary Pompeo, put Pakistan on notice they need to get involved in bringing their enabled tribal “extremists” (Taliban) to the table in Afghanistan. Pakistan’s primary investor and economic partner is China.
The US. removed $900 million in financial support to pressure Pakistan toward a political solution in Afghanistan, China has to fill void. [NOTE: Last month the World Bank began discussions about a 
financial bailout for Pakistan.] Again, more one-way bleed for China.

♦ Squeeze #4 

China’s primary economic threat (competition) is next door in India. President Trump has embraced India as leverage over China in trade and pledged ongoing favorable trade deals. The key play is MFN (Most Favored Nation) trade status might flip from China to India. That’s a big play. It would have massive ramifications.

♦ Squeeze #5

President Trump launched a USTR Section 301 Trade Investigation into China’s theft of intellectual property. This encompasses every U.S. entity that does manufacturing business with China, particularly aeronautics and technology and also reaches into the financial services sector. In March of 2018 U.S. Trade Representative Robert Lighthizer completed a section 301 review of China’s trade practices.
Section 301 of the U.S. Trade Act of 1974 authorizes the President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. However, as talks with China progressed, President Trump shelved the 301 action to see where negotiations would end-up. The May and June, 2018, negotiations between the U.S. and China provided no progress.
The 301 review of China is now pulled back off the shelf, and President Trump assembles his trade-war strategy. The 301 tariffs/sanctions are currently being worked out with U.S.T.R Robert Lighthizer.

♦ Squeeze #6 

President Trump, Secretary Ross, Secretary Mnuchin and USTR Robert Lighthizer are dissolving NAFTA in favor of two bilateral agreements; one with Mexico and one with Canada. One of the primary objectives of
team U.S.A. is to close the 3rd party loopholes, including dumping and origination that China uses to gain backdoor access to the US. market and avoid trade/tariff restrictions. [China sends parts to Mexico and
Canada for assembly and then back-door entry into the U.S. via NAFTA.]

♦ Squeeze #7 

President Trump has been open, visible and vocal about his intention to shift to bilateral trade renegotiation with China and Southeast Asia immediately after Team U.S.A. concludes with NAFTA. [Current discussions with Japan are ongoing] 

♦ Squeeze #8

President Trump positioned the U.S. relationship with the E.U. as a massive potential loss for Europe (via Steel, Aluminum, and Auto tariffs) if they did not: (A) shift their trade relationship toward greater reciprocity; and (B) reconsider the size of their trade relationship with China. After initially trying to push-back, Europe

♦ Squeeze #9

President Trump has positioned ASEAN (Association of Southeast Asian Nations) as trade benefactors for assistance with North Korea. Last year the KORUS (South Korea and U.S.) trade deal was renegotiated, and
announced in March. The relationship between ASEAN nations and the Trump administration is very strong, and getting stronger. Which leads to....

♦ Squeeze #10

President Trump has formed an economic and national security alliance with Shinzo Abe of Japan. It is not accidental that North Korea’s Kim Jong-un fired his last missile over the Northern part of Japan. Quite simply, Beijing told him to. However…

♦ Squeeze #11 

President Trump cut-off the duplicitous Beijing influence over North Korea by engaging directly with Kim Jong-un. The open exchange and ongoing dialogue has removed much of the ability of Beijing to leverage the DPRK nuclear threat for their own economic benefit. This dialogue was as much, if not more, about dismantling the Beijing geopolitical influence as it was about denuclearizing the Korean peninsula. However, no-one caught on to that part of the strategy. Add all of this up and you can see the cumulative impact of President Trump’s geopolitical economic strategy toward China. The best part of all of it –as we previously stated– is the likelihood China never saw it, meaning the sum totality of “all of it”, coming…. at first.
Now they do, and, as Mr. Pillsbury notes from his travel and engagement, China is not quite sure how to respond.
Only President Trump could use economic leverage with such incredible insight and strategy toward achieving dual results benefiting the U.S. economy and U.S. national security position. It really is stunning when you stand back and look at how it has all played out…. in the open… and yet seemingly no-one saw what he was

… Just brilliant.

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