from Tree House
Posted on 06/21/2018 6:08:57 AM PDT by MaxistheBest
This win needs to be sipped slowly for maximum enjoyment. First, we would draw your attention to May 23rd, when President Trump announced an instruction to Commerce Secretary Wilbur Ross to begin a Section 301 review of the auto industry a week prior to the implementation of the Steel and Aluminum tariffs.
At the time when all media were discussing other ‘matters’ CTH pointed out the strategy that was visible in the Auto-Sector. China, the EU (specifically Germany), and Canada were the strategic trade targets in the approach. About a week later, Canadian Foreign Minister Chrystia Freeland snarkily announced her “sisterhood in trade” with EU Trade Minister Cecilia Malström, and how together they formed a strategy and were going to block President Trump. They were very pleased with themselves (please watch).
Freeland and Prime Minister Justin from Canada, then strategized with Emmanuel from France and Angela from Germany on how they were going to use the G7 to embarrass President Trump on trade conflict issues via the summit; and subsequent use of media press conferences. The entire thing back-fired, bigly. President Trump announced the tariffs would continue until trade reciprocity improved.
It’s been two weeks since the best-laid-scheme was attempted. In the interim, the international audience has watched President Trump’s unrelenting approach toward China.
In the grand-trade-conflict; China is a big fight none of the sideline players would ever attempt. However, the downstream consequence of the international trade team watching intently is their realization that President Trump is not bluffing. You can hear the proverbial gulps from across the Atlantic; and the tremors up North.
Back to May 23rd, 2018, and remember the auto tariff proposal. President Trump has made it clear that he’s more than willing to use reciprocal trade tariffs against all trade partners in getting fair and balanced trade. He ain’t bluffing.
Well, guess what just happened?
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.
BERLIN—Germany’s leading auto makers have thrown their support behind the abolition of all import tariffs for cars between the European Union and the U.S. in an effort to find a peaceful solution to the brewing trade war.
The U.S. ambassador to Germany, Richard Grenell, brought the proposal for a broader industry trade pact to the Trump administration on Wednesday, according to people familiar with the situation.
That would mean scrapping the EU’s 10% tax on auto imports from the U.S. and other countries and the 2.5% duty on auto imports in the U.S. As a prerequisite, the Europeans want President Donald Trump’s threat of imposing a 25% border tax on European auto imports off the table.
[…] A French official said Paris was unaware of the proposal, and it wasn’t discussed during a recent summit between French President Emmanuel Macron and German Chancellor Angela Merkel in Meseberg, Germany. (Read more)
Too damned funny.
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.
Chancellor Merkel controls mini-brie Macron.
Emmanuel gets no respect (LOL).
What comes next?
How about the knee from Ms. Freeland’s “sister in trade“, Cecilia Malström:
WELLINGTON (Reuters) – The European Union is ready to engage with the United States to solve a trade row triggered by Washington’s decision to impose metal impose tariffs, E.U. Trade Commissioner Cecilia Malmstrom said on Thursday.
“We are always open to talk with the U.S. The whole EU is based on the idea that we talk,” she told a seminar. She described the tariffs as “illegal” as they contravened World Trade Organization (WTO) rules. She also said the WTO needs rules to address China’s subsidies and dumping of its goods in markets.
Oh, that winnamin is extra tasty….
The EU is now leaving Canada naked to the trade monster that is the indefatigable Trump. TTFN, it’s every snobby economic minister for themselves.
We must look at that video of Freeland again; just to savor the smugness of it all.
Now, the EU -Germany specifically- might seem like they are attempting to gain some leverage equity here; but really they don’t get any. U.S. automakers gain no short-term benefit from the EU dropping restrictive trade tariffs because Ford, and GM were forced to open plants in the EU to sell vehicles (prior best interests). The benefit to dropping the 10% tariff on American autos is really non-existent; it’s the threat of the 25% Trump tariff on German autos that has the entire sector panicked.
Jaw agape Merkel never thought vulgarian Trump would ever follow through on the 25% auto tariff, until she just saw Trump go from $50 billion against China to the whopping $200 billion tariff he just announced.
When you plant your tree in another man’s orchard, you might end up paying for your own apples; it’s a risk you take…
Gadzooks, that,…. that…. that Trump, he’s serious.
However, as mentioned, there’s no gained leverage for Germany in putting dropped tariffs on U.S. autos on the table. Almost all of the benefit is on the EU side of that proposal; and U.S. auto workers won’t gain. Fraulein Merkel better quickly start adding to her NATO defense funding and reconsider her opposition to the Iran deal withdrawal.
Commerce Secretary Wilbur Ross is the one handling the EU trade discussion; while Lighthizer and Navarro focus on NAFTA (all three involved in China). It is going to take much more equity on the table from the EU side for Secretary Ross to take a deal.
Hilariously, in response to Merkel’s proclaiming a zero tariff proposal; the CEO of Volvo, a Swedish brand owned by the Chinese, is well positioned to benefit because Volvo are about to launch production inside the U.S. with plans of export to the EU. Conversely, on the losing side, GM shifted to making cars in China (Buick Encore), and Trump is nailing them with a 25% tariff.
All foreign automakers with limited U.S. operations are seriously concerned that Trump’s auto tariff threats will hurt their sales and profits, and the only way to avoid losing market share is to shift production investment into the U.S; or back into the U.S.
Strategery.
Back to Canada, and the ill-fated, now back-fired, scheme of Justin and Chrystia; standing naked and alone, as the reality of national economic interests has their former anti-Trump trade allies headed for the exits to save their industries.
Yikes, amid all of Canada’s uppity antagonism and demands for gender equity in NAFTA trade negotiations now they’re seriously exposed and more vulnerable than ever to Godzilla Trump and his “killers’. The sight of a grinning Robert Lighthizer demands another slowly savored winnamin…. delicious.
Yup, the Canadian reality is beginning to sink in.
Stay With It:
What Canadians are only just beginning to realize is that Trump doesn’t bluff; he really means this stuff… Trade equity is part of President Trump’s DNA profile.
So we should keep an eye on Justin and Chrystia… My guess is, given the political stunt the Canadian duo just pulled at the G7 – President Trump is not inclined to take the lumps out of this one. It is increasingly likely that POTUS might quietly remove those 1 million imported Canadian autos from their manufacturing base and deliver them to Michigan, Pennsylvania and Ohio.
Actions have consequences.
Leverage; he is the master at it.
As an Albertan in Western Canada, I say bring the pain! I love it. Ultimately, it will lower my cost of living, and I don’t care where they’re made. I’m actually boycotting made in Canada right now and only buying made in USA because I don’t support my retarded government and Trump has been doing a phenomenal job. God bless you President Trump.
I think this is more along the lines of calling Trump's bluff. Germany is willing to drop all tariffs on U.S. cars if the U.S. is willing to drop all tariffs on imported cars. Right now Detroit enjoys a 25% tariff on imported trucks and vans and a 2.5% tariff on imported cars. Dropping that will not make them happy.
So much precious American money and goods already lost. Trump has been on overdrive making up for lost time/money/power.
Watch the videos and you will quickly learn what amateurs Trump and his henchman (and women) are up against. It’s like the 1985 Chicago Bears vs. the JayVee team LOL!
China is not amateurs.
Kiddie Sox Justine and his female Sec of State and trade negotiator are pure amateur hour. lol Trump is really going to rack it up against these lib-PC clowns.
from Tree House
Regardless of what it was used for, the big three auto makers now get the bulk of their profits from pickups and SUVs. Drop the tariff on those and they are not going to be happy.
US will gladly take conservative Alberta and Saskatchewan into the Union and we will give Canada, NY, California, Washintoon State.
Well, Washington state is pretty nice in places. Perhaps just punt the useless eaters out.
I’d actually like to put a group together to go visit the President on this very topic. I’ve been conversing with the local MP office to get a hold of Harper and his team. He’s in Calgary right now. He’s a recognizable name, and I think he’d be on board too.
When I ask people if they’d rather separate or become the 51st state. It’s about half and half between separation and becoming part of the union. After I explain the logistics of currency and markets and military, most say it makes more sense to join the US. The real takeaway is that nobody thinks it’s working as it is.
The big 3 might actually be forced to start building compact pickups again, rather than forcing everyone who needs a light duty pickup truck occasionally into a $45,000+ over-optioned monster.
To be fair, the emissions regulations don’t make compact pickups easy to build. Hopefully the automakers will point this out and the Trump Administration will fix, or better, elminate the standards.
No money in it for them.
Yet Trump still has disapproval ratings in the high 50% because Americans are weak and soft. They can’t see all the good Trump is doing for their economy and country. No they’re all upset over Trump becuase he’s “mean to migrant children, a racist, a xenophobe, a sexist, he wants walls not bridges...blah, blah, blah”. Americans don’t even want a country anymore. The want that Socialist utopia the left promises but can never be.
We don’t desrve a country and certainly don’t deserve a fighter like Trump.
Sad.
Yet Trump still has disapproval ratings in the high 50% because Americans are weak and soft. They can’t see all the good Trump is doing for their economy and country. No they’re all upset over Trump becuase he’s “mean to migrant children, a racist, a xenophobe, a sexist, he wants walls not bridges...blah, blah, blah”. Americans don’t even want a country anymore. The want that Socialist utopia the left promises but can never be.
We don’t desrve a country and certainly don’t deserve a fighter like Trump.
Sad.
We’ll take those two and boot out the Left Coast - not those entire states, just the coastal strip.....side note: maybe BC can be salvaged if Vancouver alone is booted out.....New England and that strip going down to and including Occupied Northern Virginia as well as the 3 counties of Miami and of course Chicago and Detroit. Those must go.
I assume Yukon and Ontario outside of Toronto might be worth saving.
It is hard to believe how lucky we got ending up with Trump, almost like ending up with a gift sent from heaven. As we could have just as easily ended up with corrupt and crooked Hillary continuing with the policies of this leftwing predecessor, moooslim sympathizing misfit leading us further down into the abyss of absolute disaster.
At times I feel that something “Out there” had its fingers in it and did not want this Great Experiment what the US had become to miserably fail. As the US has become the final bastion and defender of freedom, endeavors and achievements. Where else is humanity going to turn to when everything else around us is disintegrating and beginning to fail, mostly due to dumb and ignorant people, many of them still under the impression that socialism is the next best thing to sliced bread.
It does not appear this administration limits its’ scope when it come to trade, most certainly not a single sector.
They are using “whole nation” power to balance it.
A whole nuther level of mercantilism.
Trump is attacking the macro numbers...what is the trade balance?
If another nation/bloc has a large surplus, he will use all commercial sectors, diplomacy and military power to balance it.
The US is, by far, the largest market in the world. Countries that want access must do whatever is necessary to ensure balance, or the US will act unilaterally.
This upends the entire post-war order.
They should count themselves blessed the goal is not a massive US trade surplus.
That’s fine from a macro viewpoint, but the subject of this is the EU, led by Germany, calling Trump’s bluff and offering zero tariffs for U.S. cars exported in exchange for zero U.S. tariffs on vehicles imported. Will Detroit stand for this?
“Will Detroit stand for this?”
They won’t have to.
The US will not accept that deal in isolation.
It could be an element of a much broader deal, but only if the broader deal brings balance.
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