Tag Archives: President Xi

Trump China Tariff Policy-Win-Win for the US!

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Watching the pundits and supposed political/business “experts” on TV would be comical if the stakes were not so high in the current US/China trade issues.  I would suggest to those TV talking heads that they should read Trump’s past books in order to “get it” and understand what Trump’s play is in this “trade war”.

Trump has two primary and simple objectives:

  • To rebalance our trade with China and eliminate the $500 billion trade deficit with China.
  • To eliminate the intellectual property theft by China from US companies doing business in China.

That’s it!  But, what is his strategy?  His tweets are confusing!  He seems to be jumping around with what he wants out of China from day to day.

Pay careful attention.   Here is the Win-Win:

  • Trump wins if China NEVER agrees to a trade deal!  Really?  Yep.  How?  Well, the US will collect about $100 billion per year in tariffs even if Trump does not raise them any higher.  That will reduce our trade deficit to $400 billion by itself (20% reduction).  During the ensuing months, US companies will have to find other countries, including the US, to produce their products.  This is the “revamping of the supply chain” that you hear about.  China will continue to lose manufacturing businesses to other countries and the US consumer will not see any significant price increases.  (July consumer price index rise was well below the FED inflation target!)  Why, because, until those companies leave China, China will have to keep devaluing their currency, negating the impact of our tariffs, as well as keep subsidizing its companies in order for them to compete with the tariff penalty.  China has to pay for the tariffs or risk losing manufacturing business even faster!  IF China continues to stonewall the negotiations, in time they will lose our business to other nations who are not subject to our tariffs.  Further, since our companies are leaving China, no further intellectual property theft will take place.  But the biggest prize Trump is seeking IS THE WEAKENING OF CHINA AND A WEAKENING OF THEIR MILITARIZATION POLICIES.  Without US trade, China’s cash flow will dwindle and they will be forced to reduce military spending just to keep their domestic base happy.
  • Trump Wins If China Agrees to a Trade Deal!  Trump will not back down on rebalancing our trade and eliminate our trade deficit with China as well as stopping China’s theft of our intellectual property.  He has no need to negotiate these away as he benefits that longer this drags on.  The only risk he is running is whether inflation, based on price increases due to his tariffs, starts hitting our consumers.  But, Trump is keeping pressure on oil producing nations to keep gas prices down (1 cent at the pump puts $1 billion back into our consumer’s pockets), all the while using the tariff income to subsidize our industries who may be suffering from China backing out of purchasing US goods. 

Trump is also betting that he has a second term as this trade war may not end, either way, during a single term.  China thinks that it has nothing to lose by waiting Trump out in the hopes that he is defeated in November of 2020.  Think again.  Trump will win again and at that point he will NOT need China to sign the deal.  He can merely wait them out until all of our companies have revamped their supply chains and abandon China altogether…  Then, Trump also wins the “cold war” with China in terms of its military build-up. 

Trump is already warning US companies to stop putting all of their eggs in China’s basket.  Apple is probably the most vulnerable as it relies almost 100% on China to product its products.  This would be a bad strategy regardless of the tariff war.  To give China that kind of power over your company is simply bad business.  Others are in a similar predicament.

All the talk about how strong China is economically is rubbish.  The US GDP is $21.5 Trillion while China is only $14.2 Trillion.  Looking at per capita GDP, the US in 2019 will come in at $65,062 per person while China will continue to lag behind at $10,099 per person.  The current “trade war” is hurting China and will continue to do so unless they come to the table.

When you hear the talking heads say Trump’s China policy is not effective, change the channel.  They clearly do not get Trump’s policy, economic or military.  

RD Pierini

@RDPierini

 

Trump’s G-20: Great Way to Get 19 Nations Together So He Can Negotiate With Them!

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During the G-20 that just concluded in Japan, President Trump used that forum to sit down with and meet with almost every leader of the G20 Nations.  Trump does not view G-20 meeting or its smaller counterparts as a way for the world to get together to solve problems.  He sees them as a way for him to have everyone he needs to meet with and negotiate with come to one place so he merely has to go from room to room to have one on one sessions.  The President learned early on that the “G” meetings were merely a forum to have large international meetings, most of which involved milking the US or criticizing the US, then issuing a document that basically said how great it was and that we shall do this again!  Trump does not meet for the sake of meeting!  Either you accomplish something or you don’t meet.  

Just prior to the G-20 meetings, the President was determined to try to jump-start the negotiations with North Korea that have been stalled since February 28th, 2019.  He and Kim had corresponded several times since the President walked-out in Hanoi.  The President sees this relationship as one that is critical to world peace and stability.  Trump used his Twitter-Diplomacy to send an “official” request to Kim to meet at the DMZ, Kim accepted!  So much for State Department Protocol!

So, starting with the meeting with Kim in North Korea, let’s look at a couple of other substantial accomplishments that took place over the past few days in Japan, South Korea, and North Korea. 

Trump-Kim Meeting in North Korea:

Every literate person by now has seen, heard or read that President Trump met North Korean Leader Kim Jong-un in South Korea then crossed over into North Korea.  This is the first time ever that an serving American President has visited North Korea, ever.  

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There is no doubt that the Secret Service had to replenish their toilet paper supply following this meeting!  The DMZ is protected by heavily armed snipers and security on both sides.  NK Security on the ground was armed and within feet of our President.  Their snipers were trained on our President and the US and South Korean contingency the entire time.  If a firecracker had gone off, this scene could have erupted into a firefight of disastrous proportions!  As it was, there was a few confrontations with our press and the President’s communications staff.  Tensions were high.

To appreciate the gutsiness of this move by the President, remember that Kim may be the leader of this dark nation, but his reign is precarious as many of the old line communist generals and members of his own family would like to seize power.  What better way to take down the Kim regime than to assassinate the President of the US on North Korean soil!  Given the openness of this meeting, there was literally no way to prevent this from happening!  In the end, The President and Chairman Kim met for an hour and agreed to resume disarmament negotiations.  A big prize for merely having the guts to walk across a 16″ wide curb that separates South and North Korea!  Will disarmament come about?  Who knows.  There are a lot of variables at play and Kim is not totally secure in his role as Chairman. 

But, it proves that Trump understands that whether you are negotiating for a high rise in NYC or negotiating to disarm a nuclear nation, TRUST has to be built before any deal will be reached.  I have written in the past that Trump’s short term goal is to convince Chairman Kim that he can trust President Trump and that the US will live up to any security agreement that is made to ensure Kim’s long term survival!  Kim is the third generation that has stood against the US.  He and his ancestors have convinced the North Korean people that the US is an existential threat to their survival.  Now, Trump has to convince Kim that this is not true, then Kim has to convince his inner circles, his military and his people that a good relationship with the US would be good for North Korea.  Remember, Kim was educated in Switzerland and knows how the other half lives.  North Korean GDP is only $18 Billion a year.  Amazon’s annual sales in 2018 was $233 Billion and its EBITA (earnings before interest, taxes, depreciation and amortization was $25.5B, $7.5 billion higher that the total GDP of North Korea!

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The G-20 Itself

Turkey:

President Trump very simply laid out for the American People a very difficult situation that has arisen between the US, Turkey and Russia.  Remember that Turkey is a member of NATO, an organization that was founded to guard against advances by the old Soviet Union, and now Russia.  Turkey was an ally of the US against ISIS and agreed not to attack the Kurds in Iraq following the defeat of ISIS.  The Kurds and Turkey have been long-time enemies and much of the original Kurdistan was absorbed into Turkey to the chagrin of the Kurds.  In short, Turkey considers the Kurds terrorists and the Kurds consider Turkey confiscatory scum!  

The President succinctly laid out that during the Obama administration, Turkey’s President Erdogan asked that he be allowed to purchase the US Patriot missile Defence system.  Turkey wanted this defensive system to protect itself from any incoming missile attack.  But, President Obama refused the sale as he did not want to alienate President Putin of Russia In fact, President Obama stopped Patriot system installations in Poland and other nations as well.  Erdogan also wanted to purchase 100 of the new stealth F-35 fighter planes to upgrade his air defenses and to meet his NATO commitment to spend 2% of their GDP on defense. 

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During the F-35 negotiations, Erdogan went to Russia to see if he could purchase the Russian counterpart to our Patriot system, the Russian S-400.   Erdogan and the Russians made the deal and Turkey paid Russia for the S-400 system.  Why not?  The US had refused to sell its system to Turkey!  The Obama administration was furious and eventually offered to give Turkey the Patriot System.  It was too late, Turkey had already paid for the S-400 system and Russia was in the process of manufacturing it and installing it.  

So, fast forward to present day and President Trump at the G-20.  President Trump is livid that the US first denied the sale of the Patriot System to Turkey; then sold 100 F-35s to Turkey; then said Turkey could not have the F-35s, since Turkey bought the Russian S-400 Missile Defense Systems, AFTER THE US REFUSED TO SELL THE PATRIOT SYSTEM TO THEM!  Aren’t you glad that Obama was so smart and not in the back pocket of President Putin!  

Why is this a problem?  The F-35 is the latest US stealth aircraft that obviously incorporates highly sensitive electronics and advances weapons systems, including anti-missile defense capabilities from systems such as the Russian S-400!  Wouldn’t the Russians love to get their hands on the F-35 technology during the installation of the S-400 system so they can program F-35 interception capabilities into not only the S-400 system, but in all offensive and defensive systems they deploy!  

The US had officially suspended any further shipments of the F-35s to Turkey.  To date, only two planes have been delivered to the Turks but they remain in the US at training facilities.  Pentagon spokesman Charles E. Summers Jr. recently stated:

“The United States has been clear that Turkey’s acquisition of the S-400 is unacceptable.” Our important dialogue on this matter will continue, however, until they forgo delivery of the S-400, the United States has suspended deliveries and activities associated with the stand-up of Turkey’s F-35 operational capability,”

Presidents Trump and Erdogan met at the G-20 at length to discuss and try to resolve this situation that should never have been allowed to transpire in the first place.  The lack of commitment to NATO, and the sucking up to Russia by the Obama Administration created this fiasco.  As of this writing, it is unclear how Trump will resolve this,  If I were a betting man, I would bet that Trump will try to offset any loses by Turkey as a result of their purchase of the S-400 systems.  Russia will scream bloody murder but in the end we, the tax payers, will have to pay for Obama’s incompetence.  It is not acceptable to have our F-35 technologies exposed to Russia and to Russian defense technology.

China:

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The North Korean Meeting between Trump and Kim all but overshadowed the meeting between President Trump and President Xi of China.  This meeting was critical to restart talks between the two nations regarding tariffs and trade relations.  The Chinese economy is in decline and further US sanctions could further exacerbate this decline.  In order to mitigate the US tariffs so far, China has had to devalue their currency and give their industries who have been the target of the tariffs deep subsidies so they could continue to produce their products.  In the US, inflation has been at historical lows indicating that China is absorbing most of the cost of the US tariffs.  

The biggest takeaway from the Trump/Xi meeting was that trade talks would resume.  Trump agreed not to increase tariffs or impose new tariffs on about $300 billion dollars in US imports from China.  The US also is allowing our tech companies to sell component parts to the Chinese tech giant Huawei.  TRUMP DID NOT LIFT THE EMBARGO AGAINST HUAWEI, as some are reporting.  Huawei cannot sell its products in the US and the administration is continuing to pressure our allies to follow suit.

President Trump reiterated that he is in now hurry to get a deal with China realizing that China is hoping that Trump will lose his bid for re-election and that China will have an easier path with an incoming Democrat!  So, a comprehensive trade deal with China may not happen until after Trump’s re-election.  If China thinks Trump is tough now, just wait until he is re-elected!  This is not a good bet for China to make.

Other Advances:

Trump also met with many other leaders including those from France, Germany, Great Britain, Brazil, India, Mexico, Japan, South Korea, and Russia. 

His meetings with France and Germany were to discuss further trade talks between the EU and the US, Brexit, the Trump Middle-East Peace Plan, and Iran.  Trump will tackle the EU trade talks following the passage of USMCA and possibly the conclusion of trade agreement with Japan.  They also discussed the ongoing devaluation of the EU currency that is forcing the dollar higher making it more difficult to sell into the EU.  Iran was particularly critical given the Iranian aggression and the potential for oil supplies being cut off to EU countries from the Gulf.  President Trump also sought to stop these countries from interfering or circumventing with his sanctions against Iran.  Iran is at a tipping point and any propping up by the EU now would only prolong any meaningful dialog with Iran relative to their nuclear weapon program.

Trump’s meeting with Teresa May of Great Britain was a continued reassurance that the US is ready and willing to offset any trade loses that Britain may suffer when exiting the EU, either hard or soft.  The Iranian and Middle-East Peace Plan were also front and center.  May is basically a Lame Duck Prime Minister as recent elections have set up the formation of a new government.

The other main event featured a meeting between President Trump and President Putin of Russia. 

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While both sides have been relatively quiet about the meetings,  included in their discussions were the situations in Iran, Syria, Venezuela, and Ukraine.  Putin has indicated that he is withdrawing his support for Maduro in Venezuela and is cooling to any real future involvement with Iran in Syria.  The Ukraine/Crimea situation is sticky and any real solution to the Ukraine/Crimea crisis will not happen soon.  Once Obama allowed Russia to invade Ukraine and Crimea and annex portions of these lands, only military intervention by the US would probably change the status on the ground.  Trump does not see this as his highest priority, nor as a winnable, problem.  Trump did agree to visit Russia on the 75th anniversary of V-Day to celebrate the defeat of Nazism with our then ally, Russia.

I will cover some of the other meetings as results from those meetings unfold and current events add to their story.  Let it suffice to say that President Trump is dominating the world stage and drawing lines in the sands of many topics with other world leaders.  Our media’s and the left’s constant domestic attacks on him do not help but he is undeterred in his seeking of world peace, and rebalancing US trade to be reciprocal and free.

RD Pierini

@RDPierini

Hat Tips

US suspends F-35 deliveries to Turkey over S-400 purchase from Russia

Understanding Why Trump Is Taking His Time with Kim Jong-un!

See the source imageFor those pundits who have always misunderstood and incorrectly reported on “why” Trump does certain things I suggest you read “Trump, The Art of the Deal” It is amazing that these leftist and RINO detractors don’t take a couple of hours to read Trump’s own words so they could at least stop embarrassing themselves by underestimating President Donald J. Trump and attributing a deliberate process to incompetence.  (Question, how many of you leftist and RINOs of the intelligentsia are worth 10 Billion Dollars!)

The Kim Regime Legacy:

On July 27th, 1953, The US, North Korea, and the Chinese People’s Volunteer Army (PVA, China’s Army deployed for the Korean conflict), signed the Korean Armistice Agreement, ending the Korean war hostilities.  A peace agreement was never achieved to this day.  North Korea, and South Korea were separated by a demilitarized zone (DMZ) that still stands today. 

North Korea was led by the first of the Kim family, Kim Il-sung starting in 1948, followed by his son in 1994, Kim Jong-Il, then to the current leader Kim Jong-un in 2011.  Kim Jong-un was his father’s third son.  The Kim Regimes are communist and the family is akin to a royal family.  The hallmark, and key personality attribute of the Kim rulers is their deep-seated insecurity and distrust of the United States.  They are curled up in a fetal position with communist China who they rely on for their very economic survival.

The Kim family ruled as an absolute and ruthless dictatorship in the model of the most ruthless Chinese and Soviet dictators.  The 3 Kim leaders share in their absolute distrust of others in the family that could state a coup, an absolute distrust of the US (some deserved), and an absolute isolationist mentality.  These 3 levels of paranoia were reinforced from one generation to the next.

The Kim paranoia of the US and distrust of US motivation regarding North Korea was, and still is, the primary roadblock to an agreement between the US and the Kim regime.  If I were to say that the Democrats were going to confiscate your guns and tell you to trust them, your reaction would be similar to that of North Korea when the US asks them to voluntarily give up their nuclear weapons and TRUST THE US!  

Enter President Donald J. Trump:

Before President Trump took office, President Obama warned Trump that his biggest challenge and imminent threat was from North Korea.  Kim Jong-un had been conducting underground atomic and nuclear tests along with a plethora of missile tests.  Since 1953. countless American Presidents have attempted to negotiate with the Kim’s only to be rewarded with treachery by the Kim regimes.  Despite numerous failed attempts using a “carrot” approach, multiple US administrations continued to follow this unsuccessful tactic.

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President Trump approached the North Korean problem totally different from his predecessors.  First, he viewed the Korean problem as a “China problem”, first and foremost.  He knew that he had to create and maintain at least the outward appearance of détente with the Chinese Leader Xi.  Trump accomplished this by first hosting Xi and his wife at Mar-a-Lago then maintained telephone diplomacy with Xi directly thereafter.  This was important as Trump would have to squeeze North Korea with sanctions in order to get Kim’s attention.  China controls 95% of North Korea’s trade and North Korea would not exist if not for China.  The President knew that he would never be able to totally separate Xi and Kim but he could use his public relationship with Xi to at least get China to participate in some level of sanctions and public pressure on Kim to talk to the US. 

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Second, the President, began a campaign of harsh rhetoric against the North Korean Leader himself using Tweets to demean him as “Little Rocket Man” and worse.  Every time Kim would respond in the media or via Twitter, Trump would double down “see his tweet and raise him two tweets”!  This went on for months.

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Third, while the Twitter Storm raged on daily, the President was talking to the Chinese President Xi about North Korea as well as using South Korea to open some dialogue with the North using the South Korean Winter Olympics as the pretext and platform from which to begin opening North and South relations.  The President used China to tell Kim that he should at least consider direct talks with the US while South Korea worked with Kim on the Olympics and also conveying the notion to Kim that he should consider talks with the US.  Kim had to be somewhat confused with Trump bashing him daily on Twitter while Xi and the South Korean President Moon Jai-in telling him that the US is willing to talk!

Trump’s Trump Card-Patience:

President Trump outlined many strategies in his “Art of the Deal” book and underlying many of the strategies was the need to have whoever you are trying to negotiate with READY AND WILLING  TO NEGOTIATE.  In the case of North Korea and Kim Jong-un, the President knew that he had to alleviate Kim’s distrust and fear of duplicity on the part of the US.  Kim had been spoon-fed hatred and distrust of the US by his father and all members of his family and military circle.  

The President also trusted his own negotiating and interpersonal skills more than anyone he could send to meet with Kim directly.  He also know that even though a US President meeting directly with a miniscule country the size of North Korea (North Korea’s GDP is smaller than any of the US States including Washington DC and Puerto Rico)  was frowned on by the deep state diplomatic and intelligence gurus.  Was it a risk for President Trump to meet directly with Kim and take the chance that Kim would walk away from the talks?  Sure.  But as Trump says time and time again in the “Art of the Deal”, think big, be bold, and always have at least a Plan B or even C. 


The goal of his direct talk strategy was to begin to chip away at Kim’s loathing and distrust for the US.  Period!


Where we are Today

The President has just announced the 2nd Summit with Kim Jong-un on February 27th and 28th.  So, in less than a full year, President Trump and Chairman Kim will meet for the second time.  Since the first Summit, President Trump has been careful to praise Chairman Kim and continue to voice our appreciation for the Chairman’s abandoning of testing and development of nuclear warhead and missile delivery technology. 

Trump has been careful to frame a potential détente agreement between the US and North Korea as one that would see great economic benefit to North Korea and make Kim the hero to his people.  Remember, not only has Kim been indoctrinated against the US, but the North Korean People, and the military, have been as well.  South Korea’s joint meetings with their counterpart in the North has also been used to ease North Korean fears into the position where they could cautiously somewhat “trust” the US.  President Trump has to be careful and ensure that Kim is not taken out by an internal revolt just because he is talking with the US.  A dead Kim would most like usher in a hard-liner from the family and military ranks.

Summit #2:

The second summit between President Trump and Chairman Kim will be a continuation of Trump’s campaign to convince Kim to be a willing and even an enthusiastic party to a new negotiated détente between the US and North Korea.  All of the so-called intelligence experts, who have been wrong since 1953 on how to negotiate with North Korea, keep saying that Trump has to get Kim to disclose all of the locations of their weapons and military installations.  (One would hope that these brilliant experts already know where these are!)  While the President may convince Kim to begin hard steps towards denuclearization, the more like outcome will be baby-steps and a continuation of dialogue.  Trump knows how big the stakes are and time is on our side, and not the side of North Korea given the ongoing sanctions.  As long as Kim keeps his arsenal in the holster, Trump believes he is managing the threat.  

Trump’s long-game is his full first term to accomplish the denuclearization of the Korean Peninsula.  He probably sees at least two more top-to-top meetings taking place before real progress is made.  If it takes less of an effort, that is even better.  Read the President’s chapter on “The Elements of the Deal” and “Trump Tower: The Tiffany Location” to get a better feel for his approach.  

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In order to truly appreciate the President’s approach to North Korea and his use of China as a lever, just consider how complicated Trump’s relationship is with Xi. Trump is bashing them in trade talks, intellectual property theft, even prosecuting the head of a Chinese State owned company, all the while courting Xi to help him with North Korea and to stop violating the sanctions?  Talk about HUTZPAH!

R Pierini

@RDPierini

Hat Tips

https://en.wikipedia.org/wiki/Kim_dynasty_(North_Korea)