Playing Chess With World Trade

America has been on the wrong end of bad trade deals for a long time. We watched our manufacturing jobs leave America after NAFTA. We watched the steel industry disappear after being undercut by Chinese steel held up by subsidies by the Chinese government. President Trump is a businessman. As a businessman, he is trying to level the trade playing field. In some areas he is getting cooperation at home and abroad; in some areas he is not. China has been a difficult country to deal with regarding trade. The uneven playing field they have enjoyed for years has been very profitable for them. Because their economy is based on an uneven playing field, they are reluctant to make changes. Their economy is currently struggling, and if President Trump stands his ground, the Chinese economy could face serious challenges. That’s where we are. There is, however, some positive news about where we might be headed.

Ed Morrissey at Hot Air posted an article today about a possible breakthrough in the talks with China.

The article reports:

Did China finally blink in Donald Trump’s trade war? Trump himself seems to think so. At the G-7 summit, Trump told reporters that a statement earlier in the day from a top official in Beijing showed that China had finally expressed a real interest in redefining the trade relationship between the world’s top two economies. It’s “the first time” that Trump sees China acting in good faith, he said

The article continues:

After rapid-fire escalations in tariffs by both sides, China’s vice premiere called for “calm.” Liu He also declared Beijing’s willingness to conclude a trade agreement and called for talks to begin immediately:

“We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war,” Liu, who is President Xi Jinping’s top economic adviser, said, according to a government transcript.

“We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world,” he added.

U.S. companies are especially welcome in China, and will be treated well, Liu said.

“We welcome enterprises from all over the world, including the United States, to invest and operate in China,” he added.

“We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain.”

The last time we thought we had a deal, the person who made the deal was executed when he returned home. Hopefully this time will turn out better for everyone.

Laws Have Consequences

Yesterday The Conservative Treehouse reported that Toyota has announced the following:

  • By 2021, Toyota will now invest nearly $13 Billion in its U.S. operations with plans to add nearly 600 new jobs at American manufacturing plants
  • Hybrid versions of the popular RAV4 and Lexus ES to be produced in Kentucky for the first time
  • Production capacity increases and building expansions at Toyota’s unit plants in Huntsville, Alabama, Buffalo, West Virginia, Troy, Missouri and Jackson, Tennessee

The article states that this is a direct outcome of the NAFTA replacement USMCA trade deal; and the new 75% rule of origin within the Auto sector.

The article explains:

The guiding decision here relates specifically to the construct of the USMCA (NAFTA replacement).   Toyota was previously focused on multi-billion-dollar investments in Canada as they exploited the NAFTA loophole and procured component parts from Asia for North American assembly and shipment into the U.S. Market.  However, when they renegotiated NAFTA and created the USMCA President Trump and USTR Lighthizer closed closed the loophole.

The new USMCA agreement requires that 75% of automobile parts must be made in North America; and 45% must come from plants with minimum labor costs ($16/hr); or face tariffs to access the U.S. market with the finished good.  As a result Toyota has to either pay a tariff to continue importing Asian component parts, or move the higher-wage component manufacturing directly into the U.S.

Obviously, Toyota chose the latter.

The article explains that Toyota is not the first automobile company to respond to USMCA:

Keep in mind Toyota is not the first Auto manufacturer to respond with increased U.S. investment. Prior to the USMCA German auto-maker BMW began building a $2 billion assembly plant in Mexico. Under the old NAFTA plan most of BMW’s core parts were coming from the EU (steel/aluminum casting components, engines, transmissions etc.) and/or Asia (electronics, upholstery etc).

However, under the USMCA the Mexico BMW assembly plant has to source 75% of the total component parts from the U.S, Canada and Mexico; with 45% of those parts from facilities paying $16/hr.

The result was BMW needing to quickly modify their supply chain, build auto parts in the U.S. and Mexico, or they would end up paying a tariff on the assembled final product.

Like Toyota, BMW made the financial decision to open a new engine and transmission manufacturing plant in South Carolina…. exactly as Trump and Lighthizer planned.

And don’t forget Fiat Chrysler made a similar announcement in February: “The automaker says it will hire 6,500 workers and invest $4.5 billion by adding a new assembly plant in Detroit and boosting production at five existing factories.”

Like him or not, President Trump is a businessman who is doing things that are helping the American economy and the average worker.

President Trump Has Reached A Trade Deal With Canada And Mexico

America has not done well in trade deals in the recent past. Our manufacturing sector has suffered for a variety of reasons–high taxes, bad trade agreements, energy costs, etc. The Trump administration has begun to address these issues, sometimes more successfully than others.

This past weekend, Fox Business announced that the United States and Canada confirmed that they had reached a deal on a “new, modernized trade agreement,” which is designed to replace the 1994 NAFTA pact.

The article reports:

In a joint statement the two nations said the new deal would be called the United States-Mexico-Canada Agreement (USMCA).

Canadian Prime Minister Justin Trudeau said following a cabinet meeting, “It’s a good day for Canada.”

…The agreements reportedly boost U.S. access to Canada’s dairy market and protect Canada from possible U.S. autos tariffs.

Trump’s administration has said Canada must sign on to the text of the updated NAFTA by a midnight Sunday deadline or face exclusion from the pact. Washington has already reached a bilateral deal with Mexico, the third NAFTA member.

If Canada did not sign a new deal, Trump had threatened to impose steep tariffs on all automotive imports.

…Trump blames NAFTA for the loss of American manufacturing jobs and wants major changes to the pact, which underpins $1.2 trillion in annual trade. Markets fear its demise would cause major economic disruption.

Negotiators from both sides spent two days talking by phone as they tried to settle a range of difficult issues such as access to Canada’s dairy market and U.S. tariffs.

As part of any agreement, Canada looks set to offer increased access to its highly protected dairy market, as it did in separate pacts with the European Union and Pacific nations.

Access to Canada’s dairy market was one of the sticking points of the negotiations. Canada places high tariffs on imported dairy products in order to protect its dairy farmers.

This agreement is another indication of the Trump administration’s desire to protect the interests of America. America is simply looking for a level playing field in trade agreements. This treaty is one more step in that direction.

Good News For American Workers

The Washington Examiner posted an article today stating that a trade deal has been negotiated with Mexico. The deal did not include Canada, President Trump has indicated that he wants to cut a separate deal with Canada.

The article reports:

The main aspect of Monday’s deal with Mexico was raising to 75 percent, up from 62.5 percent, the amount of North American-made parts a car or truck must have to qualify as duty-free under NAFTA. The change will make it less economical for manufacturers to rely on supply chains that extend into Mexico. The Trump administration has long sought to force more manufacturing back into the U.S. Deal also requires at least 40 percent of auto content to be made by workers earning at least $16 per hour.

The article concludes:

The deal will likely increase pressure on Canada to agree to U.S. demands when three-way talks resume, mostly likely after López Obrador takes office.

“Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement,” Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, told Reuters. “We are in regular contact with our negotiating partners, and we will continue to work toward a modernized NAFTA. We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”

America has made some bad trade deals in the past. NAFTA is one of them. It looked good on paper (to some people), but hurt American workers. I applaud President Trump’s efforts to protect the jobs of American workers and bring jobs back to this country.

Good News For America

American trade agreements have not worked in our favor. Many of our current agreements put American manufacturers at a disadvantage and cost American consumers money. One of the goals of the Trump administration is to level the playing field so that American goods compete on an equal level with foreign goods. President Trump has taken a lot of criticism for moving in this direction, but it seems as if he has made some very good moves.

The Conservative Treehouse posted an article today about some recent changes in some of our trading practices with our allies.

The article reports:

…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. 

The article further explains:

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’.

This is definitely a ‘get out the popcorn’ moment.

It Is About Time Someone Said This Loudly And Clearly

Donald Trump gave a speech yesterday in Dimondale, Michigan. I don’t know how much of it the mainstream media will report, so I am posting some highlights. The full text can be found at Heavy.com.

Here are a few highlights:

…But to achieve this New American Future, we must break free from the bitter failures of the past – and reject the same insiders telling us the same old lies.

No group in America has been more harmed by Hillary Clinton’s policies than African-Americans. If Hillary Clinton’s goal was to inflict pain on the African-American community, she couldn’t have done a better job.

Tonight, I am asking for the vote of every African-American citizen in this country who wants a better future.

The inner cities of our country have been run by the Democratic Party for 50 years. Their policies have produced only poverty, joblessness, failing schools, and broken homes.

It is time to hold Democratic Politicians accountable for what they have done to these communities. It is time to hold failed leaders accountable for their results, not just their empty words.

Look at what the Democratic Party has done to the city of Detroit.

Forty percent of Detroit’s residents live in poverty. Half of all Detroit residents do not work.

Detroit tops the list of Most Dangerous Cities in terms of violent crime.

This is the legacy of the Democrat politicians who have run this city. This is the result of the policy agenda embraced by Hillary Clinton.

The only way to change results is to change leadership. We can never fix our problems by relying on the same politicians who created our problems in the first place.

…By contrast, the one thing every item in Hillary Clinton’s agenda has in common is that it takes jobs and opportunities from African-American workers. Her support for open borders. Her fierce opposition to school choice. Her plan to massively raise taxes on small businesses. Her opposition to American energy. And her record of giving our jobs away to other countries.

…Hillary Clinton’s plan would bring in an estimated 620,000 refugees in her first term – at a lifetime benefit cost of some $400 billion dollars, according to the U.S. Senate Immigration Subcommittee. She wants to be America’s Angela Merkel. By the way, for the price of supporting 1 refugee in the United States, we could support 12 in a safe zone in the Middle East.

The improved refugee screening standards I have proposed will save countless billions of dollars. We will invest a portion of the money saved in a jobs program for inner city youth.

The African-American community has given so much to this country. They’ve fought and died in every war since the Revolution. They’ve lifted up the conscience of our nation in the long march for Civil Rights. They’ve sacrificed so much for the national good. Yet, nearly 4 in 10 African-American children still live in poverty, and 58% of young African-Americans are not working.

…Michigan lost more than 1 in 4 of its manufacturing jobs since NAFTA. As you know, NAFTA was signed by President Bill Clinton. It was supported by Hillary Clinton. Right here, in this community, you’ve lost 1 in 7 manufacturing jobs since Bill Clinton put China into the World Trade Organization – another Hillary Clinton-backed deal. Detroit lost more than 1 in 3 manufacturing jobs following the NAFTA and WTO agreements supported by my opponent.

No industry has been hurt more by Hillary Clinton’s policies than the car industry. It’s been a total disaster.

According to the Bureau of Labor Statistics, before NAFTA went into effect, there were 285,000 auto workers in Michigan. Today, that number is only 160,000.

In 2014, GM announced plans to double its investments in Mexico by 2018.

In April 2016, Ford Motor Company announced plans to invest $1.6 billion constructing an auto plant in Mexico.

That same month, Fiat Chrysler announced 1,300 layoffs. Lear Corporation launched plans to build two new factories in Mexico.

…Look at the world before and after she became Secretary of State.

Pre-Hillary, in early 2009, Iraq was seeing a reduction in violence.

Libya was stable.

Syria was under control.

The group we know today as ISIS was close to being extinguished.

Iran was being choked by sanctions.

Now, fast-forward to present time.

After Hillary, here is what the world looks like:

Iraq is in total chaos.

Syria is in the midst of a disastrous civil war and a refugee crisis now threatens Europe and the United States.

ISIS has been unleashed onto the entire world.

Iran – the world’s top state sponsor of terrorism – has been put on the path to nuclear weapons, and was given a $400 million ransom payment, something which has now been confirmed after President Obama’s lies.

This is the legacy of Hillary Clinton: death, destruction and terrorism.

America deserves a better legacy. All of you deserve a better future. I am the change agent. Hillary Clinton is the defender of the status quo.

This speech reminds us of our recent history. It also highlights the fact that President Obama’s Administration has not been good for either the black or white community. The only people who have truly prospered under President Obama are the cronies that have been subsidized by the government–for example the green energy companies (some of which have gone bankrupt). President Obama has forced the closing of coal mines, and indications are that Hillary Clinton will continue in the same direction.

I have previously stated (and will continue to do so in the future) that Donald Trump is not a perfect candidate, but in this election cycle we do not have perfection. If he does what he says he will do in the speech he made yesterday, America will be better off. It is high time that Americans look at what forty or more years of Democrat control has done to some of our cities. If cities are a laboratory to experiment with economic policies, it is obvious that the economic policies applied have failed. I realize that there are multiple reasons for that, but the governing party has to share a large part of the responsibility. It is time for a change in our country and time for a change in our major cities. Donald Trump represents that change.