Trump "Overrules" Cabinet, Prepares To Unleash Global Trade War

Tyler Durden's picture

While one of Trump's recurring campaign promises was that he would "punish" China and other key US trade counterparties if elected, for taking advantage of free-trade by imposing steep tariffs and duties on foreign imports to "level the playing field", the President's stance changed drastically after the election, U-turning following his amicable meeting with China's president Xi Jinping in March, but mostly as a result of pressure by his ex-Goldman advisors to keep existing trade arrangements in place and not "rock the boat."

Now, all that may be about to fall apart.

According to Axios, behind the constant media scandals, "one of the most consequential and contentious internal debates of his presidency unfolded during a tense meeting Monday in the Roosevelt Room of the White House" where with "more than 20 top officials present, including Trump and Vice President Pence, the president and a small band of America First advisers made it clear they're hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports."

In other words, Trump - true to his campaign promises - is set to launch a global trade wars after all, one where then main country impacted would be China, however the collateral damage would extend to Canada, Mexico, Japan, Germany and the UK.

And what may be even more striking is that Trump overruled his cabinet, as "the sentiment in the room was 22 against and 3 in favor — but since one of the three is named Donald Trump, it was case closed." Axios adds that while "no decision has been made, the President is leaning towards imposing tariffs, despite opposition from nearly all his Cabinet."

Needless to say, if Trump follows through, the outcome would have a profound effect on U.S. economic and foreign policy; Trump will formalize his decision in the coming days.

What is also notable, is that this is the first time  - so far off the record - in which Trump has openly defied his Wall Street establishment advisors, while siding with the Bannon "populist" front:

In a plan pushed by Commerce Secretary Wilbur Ross, and backed by chief strategist Steve Bannon (not present at the meeting), trade policy director Peter Navarro and senior policy adviser Stephen Miller, the United States would impose tariffs on China and other big exporters of steel. Neither Mike Pence nor Jared Kushner weighed in either way.

 

Everyone else in the room, more than 75% of those present, were adamantly opposed, arguing it was bad economics and bad global politics. At one point, Trump was told his almost entire cabinet thought this was a bad idea. But everyone left the room believing the country is headed toward a major trade confrontation.

As Axios adds, the reason why Trump defied the guidance of his Wall Street-derived advisors is Trump's base "which drives more and more decisions, as his popularity sinks — likes the idea, and will love the fight."

This, more than anything, should send shivers down Wall Street's spine, because for all his bluster and outrageous media outbursts, Trump had largely been in Wall Street's pocket so far.

Not anymore, and with Trump's base hell bent on punishing the 1% (which includes Wall Street), if Trump indeed launches global trade war, his future decisions will become increasingly market unfriendly.

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realmoney2015's picture

Look who finds the political campaigns of every major race. Then you know who controls the puppets. Hint: they were too big to fail

PT's picture

Fuck free markets.  When your competitor works for sixteen hours a day for a bowl of rice and to sleep on the factory floor, you'll be doing exactly the same if you wish to compete.  Remember, they now have access to all the technology that you have access to.

And if you're still not sure, do you think you can compete against an idiot and his bailed-out bankster???  If you can't see past "free" "markets" then you are the Patsy.  May as well fantasize about benevolent kings and honest communists while you're at it.

Free Markets:  Some guy works his guts out to undercut the competition, buys them all out and now he can finally jack up his prices to the point where he can make a profit.  Which he will need to pay the divorce lawyers so he can get access to the kids that don't recognize him from the wife who hates his guts because he was never there or was otherwise too stressed out to be a pleasant husband.  And he's just about to make that long-awaited well deserved profit when some young guy realizes he can get ahead by undercutting the competition ...

Free Markets:  It's a great idea when you're winning, not so much when you run out of ideas.  Completely defenceless against a debt-embracing idiot and his bailed-out bankster.  And if you think you are participating in a free market then you are the patsy.

New life, replaces old life, unscarred by trials.
https://www.youtube.com/watch?v=KJ0bG_7L3Sw

peopledontwanttruth's picture

Good comment about undercutting each other.

The day is here for many and coming for others, we'll be like the guy on the street holding the sign

Will work for food

Rothbardian in Cleveland's picture

Nice short sided take there.  Because Chong will work 16 hours a day for a bowl of rice then PT should just give up and embrace totalitarianism?  Who could fault that logic?

 

I'd say that maybe PT ought not try to compete with Chong on the basis of hours worked and cost per hour.  MAYBE PT ought to find a product, process, tool, technology that the market wants that Chong can't build.  Novel idea right?  In fact, you might even be able to buy Chong's cheap crap to input into your own solution.  Crazy I know.

Thom Paine's picture

This is a nonsense argument often trotted out. It works on day one, then bit by bit the idea fails...as the system reaches for equilbrium.  Yes chong and Bill end up eating the same bowl of rice.

Rothbardian in Cleveland's picture

Oh my bad.  Silly me.  You're right.  We need a giant government mechanism to enforce egalatarianism.  We should ensure PT's makes whatever he wants and that his procuct is priced accordingly and that as consumers we should be forced at the end of a gun to forego any other options but subsidizing PT's wage demands.  Of course, PT's motivation for innovation will be through the roof in this system too, so it's a win win.

 

/sarc

 

 

CNONC's picture

They love to ignore the human element, don't they?  We are all just pathetic cogs in a machine, our existence and will are but illusions created by a mechanistic universe. 

Rothbardian in Cleveland's picture

I find it simply amazing how you can go to a ZeroHedge message board and find so few laissez-faire capitalists.  Not only that, it is overrun with fascists, neocons, socialists, totalitarians, and generally blood thirsty neofeudal serfs.

 

I used to think that ZH was this cool place that by existing showed that there were others out there like me.  Now?  Anyhow...be well CNONC

CNONC's picture

Spoken like a true neoclassical.  Zip up, your DSGE is showing.  "System reaches for equilibium."  You have reified your model, and in so doing transferred volition from the animate and real actors to the inanimate and unreal model. 

BigJim's picture

As usual, you mercantalists only see one side of the equation.

If it's all a "race to the bottom", then how did the working classes become so much richer and better paid during periods when there was no minimum wage? How does Hong Kong thrive without import tariffs?

Chong is far, far better off now, and works far fewer hours, than he did 20 years ago. And he and his countrymen are churning out vast quantities of goods that you can buy incredibly cheaply, thus making your life better and cheaper. What, you want to work in a factory producing toasters?

The middle class in the USA has been strangled by the fact it issues the WRC (look up Triffin's paradox), minimum wage laws, social welfare systems that incentivise sloth and reproduction in its least productive members, and endless, changing regulations strangling the ability of its worker to compete. And an MIC that wastes a trillion a year, and The Fed holding interest rates low meaning endless inflation, bubbles, ponzi schemes and owners of financial assets benefiting from investors' desperate search for yield.

The Chinese are the least of your problems.

RallyRoundTheFamily's picture

Good post I had to upvote for " Triffin's paradox and social welfare systems that incentivise sloth and reproduction in its least productive members"

Filthy_Cerberus's picture

I see Chong as more of a Doritos kinda dude. 

PT's picture

Re " PT should just give up and embrace totalitarianism?":

Translation:  "PT sez the answer is not one, therefore the answer is zero.  No other numbers exist anywhere ever and even if they did then they always instantly tend back to one or zero."  Straw man argument.  The US already tried your way.  It didn't work.  Sticking your head in the sand does not make it work.  "Haul up the ladder, Jack!  I'm aboard!"

"MAYBE PT ought to find a product, process, tool, technology that the market wants that Chong can't build" - and how is that working out for you in the real world???  That Chong CAN'T build?????  LOL.  Your system "works" for a handful of billionaires therefore everyone else must suffer for you ideology.  "Works"???  Oh hang on, where do they end up building it all again???

Hint:  Have you ever seen a Pi-Phone?  No, not an iPhone.  a Pi-Phone.  Perhaps you should purchase one.  Just for the irony of you using it and still being clueless.

realmoney2015's picture

Forced tax payer Bail-outs are not free trade. The answer to not free trade is not even less free trade. The answer to not free trade is free trade. Can't have free trade with the fed and the manipulated dollar. End the fed first and foremost. 

PT's picture

We were doing fine before we enslaved half the world.  Now we have two problems:
1.  The cheap slaves can not afford to buy that which they produce.
2.  The expensive slaves are losing their jobs to the cheap slaves while being unable to compete due to the higher cost of land and the levels of debt behind that land.

3.  A bunch of idealists have closed their eyes and are screaming, "There is no better way" at the top of their lungs.  Well, the larger populace is suffering and will continue to suffer for a long time so don't be surprised when they ignore your rantings that they must continue to suffer for your ideology.

Okay, so that was three problems.  I can't count.  But neither does your ignorance of the suffering of the masses.

BigJim's picture

 Free Markets:  Some guy works his guts out to undercut the competition, buys them all out and now he can finally jack up his prices to the point where he can make a profit. 

Strange how that theoretical endpoint this never actually happens, isn't it? Have you noticed there is more than one restaurant, one supermarket, one car manufacturer, one farmer, etc, etc? Here's why: though you can buy "the competition" what you are actually buying is competitors. You can't buy competition, because once you jack up your prices and start price gouging, in a free market there's nothing stopping someone setting up in competition and undercutting you.

Try again.

PT's picture

I was trying to compete against the car manufacturers by manufacturing my own cars.  I don't think it will happen in my life time.
It's a shame, because I also think it is way past time to build a better computer to compete against the computer manufacturers.  I might not have a problem with the hardware side but the software really sucks.  I don't think I'll manage to achieve that in my life time either.  But it's all free markets and we are all free to compete so who knows?  Maybe one day I'll get lucky ...

 

 

 

... and find myself an undiscovered population of 1.4 billion slaves ... hey!  Parts of Africa are still unexplored, right?

PT's picture

You know you can stick your finger in a socket and not get electrocuted?  Your body's resistance is half a million ohms.  240v / 500 000 ohms = 480 micro Amps.  Less than half a milliAmp ain't gonna hurt anyone, right?  Or perhaps there's a point where the theory breaks down and we have to think a little harder?

Or perhaps there's a point where the theory breaks down and we have to consult some other theory.

DaBears's picture

There are plenty of 3rd world nations out there that's willing to work 20 hours a day and sleep on the factory floor while acting as a human bench for the guy who is rotating in  AND MUCH CHEAPER THAN CHINA. The least we can do is diversify from China, they aren't as special as they think they are and far from unique.

Lordflin's picture

The world is not a free market, and trade wars have been going on for years now with the US bending over to take it from every swinging dick with something to sale, or excess labor to employ.

So far as Wall Street is concerned, they are as anti free market as they can be.

But I absolutely concur with your desire to end the Fed... drive a stake through that suckers heart and then nuke it from space just to be sure...

BigJim's picture

Tariffs reduce trade and hurt the countries that impose them as much as the countries trying to export to them.

They act as a subsidy to inefficient dommestic producers, meaning locals are obliged to expend more resources buying domestic goods than foreign produced ones. This means they have less money to spend on local goods and services, harming producers in those areas that are not being protected.

In other words, tariffs wind up benefiting some domestic companies at the expense of others. It incentivises inefficient companies to lobby their politicians to impose more tariffs, increasing scope for graft and corruption.

Dancing Disraeli's picture

The USA became the world's largest economy by utilizing tariffs.

China's growth has been supported by its currency manipulation which is a de facto tariff.

Lordflin's picture

Duties and tariffs were the principle source of government revenue prior to the imposition of an income tax... they worked just fine... great even... truly interesting how history is changed by those controlling the narrative... in this case a bunch of borderless banker scum and their lap dogs. On the other hand, we are heading to world war no matter what as those same borderless scum will take us there, and while the population is waking up... even my neighbor who owns the farm above me... an undereducated mechanic who frankly is not all that bright (no, I don't think all mechanics are low IQ and undereducated) was telling me of the importance of sound money. I got into a discussion with a young cab driver a few weeks back who also understood the principle of sound money... it is too little too late I suspect, as war is imminent. After that it likely won't matter what we do with the economy.

So far as graft and corruption... no system designed by man is perfect... would there be winners and losers... sure... would it favor domestic enterprise... I believe that is the idea... kill this global monster before it kills us... do we have a current system free of graft and corruption, void of private concern lobbying for favors...

Surely you jest...

Debt-Is-Not-Money's picture

"I got into a discussion with a young cab driver a few weeks back who also understood the principle of sound money..."

Before we can have 'sound money' we must have money! As all of our currency (bills and computer bits) are loaned into circulation at interest it is all DEBT, and Debt-Is-Not-Money. Money is a purchasing medium that is free of debt. Money is what is used in honest society to pay down and extinguish debt.

I think it was Henry Ford, way back when, that asked "the government can issue money directly - why does it need a middleman?"

The answer is we don't NEED a middleman, the Federal Reserve System has taken a constitutional obligation of the Congress unto itself. This was unconstitutional as the Congress can't assign its powers to others as it violates the Principle of Non-Delegation (look it up).

Lordflin's picture

Ah.... sound money refers to silver and gold, or silver and gold backed instruments. I am not overly sanguine of the latter as they invariably pave the way back to fiat, but in this modern world of ours, with the need to move money quickly, probably unavoidable.

I will admit that the 'greenback' as it was called is a huge improvement over currency derived from debt as you say, the latter being nothing more than a Ponzi... but it does not impose the same fiscal responsibility that by necessity derives itself from sound money.

If you are not familiar with the greenback do a search for money issued to pay for the American Civil War...

Debt-Is-Not-Money's picture

Thanks,

The US Note (red seal) is a version of the Lincoln Greenback. I have carried one in my wallet for over 35 years ($2.00 denomination, 1963). It is fiat but it is none-the-less real money as no interest is owed on it.

Endgame Napoleon's picture

Offshoring millions of jobs does Not work for the middle class, not in terms of livable wages that cover major expenses like rent, not in terms of mass underemployment in temp and churn jobs, nor even in terms of the social programs that we all must contribute to at approx. 7.5% to 15% from every penny earned up to $127,000 in yearly income. One reason why the Social Security fund might fall short is the fact that American companies offshored millions of jobs to countries with low-cost labor and, in turn, offshored millions of SS contributions.

They have gutted their own country with so-called free trade. And, no, $5 off on a shirt, a plastic container or a plastic toy at a big-box store does not reduce the main expenses in life, like shelter and food, at all unless you are a single mom, working the welfare reform-required 20 hours per week in a low-wage office or service sector job and getting all of your main bills paid by taxpayers: EBT-free food, reduced-cost or free rent, cash assistance by the month, almost free daycare, energy assistance and yearly Child Taxfare Credits ($3,337--$6,269).

You can live on the rigged service sector economy if you occupy a low-wage, churn job while producing multiple kids you cannot afford outside of marriage. Otherwise, the savings on a cheap, imported toy does not offset all of the losses from the rigged system of free trade.

peopledontwanttruth's picture

I won't click on your site but you may want to bank that money if it will matter because if these trade wars go into effect you'll probably making a lot less.

EddieLomax's picture

I'm glad you can earn that $7k a month, but for me I just couldn't spend all month sucking dicks no matter how much money they paid me.

Debt-Is-Not-Money's picture

The title of this report is wrong.
Trump will be reacting to the various trade wars started by our 'trading partners' over the past many years, not starting one!
Our many developed technological advantages have been given away (have you ever seen NASA Techbriefs?), sold (HRC's many deals and others) and we carry the load to "defend" them (recent Trump stand at NATO, S. Korea, etc.) against enemies largely of our own making. Our Patent & Trademark office has been gutted (Dana Rohrbacher) which allows foreigners (and others) access to patent applications so that they can modify same to supercede the original inventor.
Our 'representative' government has been representing others at our expense for way too long, it's time to bring it home!
Before 1913 our Country survived very well by the use of "excises, imposts and duties" time to return to the tried & true?

 

Cardinal Fang's picture

Well thought out argument. Thanks.

I am familiar with NASA tech briefs and a lot of them are 'big science' so that even nation states such as china won't pursue the lot of them and probably can't take advantage.

Until there are millions of garages and sets of hand tools and fiery imaginations in China or the rest of the world, the US is safe from wholesale innovation around the globe. On the contrary, our biggest risk is that creeping socialism and cultural Marxism will change us into the mediocre cesspool the rest of the world has become.

What I think is going on here with Trump, is that he knows that talking about tariffs going into negotiations is productive, not counterproductive, as many commenters here argue.

Akzed's picture

Before 1913 our Country survived very well by the use of "excises, imposts and duties" time to return to the tried & true?

 

Yes indeedydoo, once there is no more direct taxation of citizens by the Feds, as was the case pre-1913.

A constitutional govt could afford to live on these revenues alone; the current govt, not so much, not to mention new tarriffs etc on top of wage taxes. One or the other, not both, preferably the Founders' option.

Putrid_Scum's picture

We're headed to disintegration of the global economy.

Putid

cstu7011's picture

Perfect... bring down the shit show.

Secret Weapon's picture

Can't say you did not try to warn them. 

peopledontwanttruth's picture

Yup nailed it. Not many grains of sand left to fall through the hour glass

Babylon is fragmenting again.

Mustafa Kemal's picture

"Long overdue...."

Shooting wars?

no, weve been having those for some time. But it could get much hotter, where we have to fight countries which actually have armies and navies.  Imagine that

Secret Weapon's picture

What happens if China and Japan decide to dump their T Bills all at once in a coordinated fashion, in response to trade sanctions?  Gotta think a couple of moves ahead with these boys. 

GunnerySgtHartman's picture

Yes.  Time to blow up the WTO and all of the other globalist trade institutions that are accountable to nobody but themselves.

HRClinton's picture

Part of a trade war is closing the open faucet that is the H1B visa program, and reducing it to a drip.

Educated, highly skilled and experienced Americans are being replaced with lower paid workers from India, China and Korea. Places like Vietnam and the Philippines provide less skilled workers. 

It's all part of Globalism, to drive US wages down to Developing world wages, while executives give themselves ever better compensation packages. 

Rodders75's picture

This is all about pressuring China to get movement on N Korea. Will they call his bluff? Unlikely ahead of leadership reconfirmation for Xi in November. Xi will do anything not to rock the boat. Art of the Deal and all that.

whatsupdoc's picture

Funny thing here ... It just might be easier to drain the swamp if you do the Samson defense.  Perhaps he figures that a trade war will break mainly those whom he despises and also those who the red team want hanged.

Rather than the slow processes of government and endless legal fights perhaps a quick trade war upsetting the already tight money flow is also the quickest way?

chubbar's picture

Trump also needs to get that wall built and stop the influx of refugees and immigrants, both legal and illegal. We don't need anymore people in this country, we can't take care of the ones we do have and there aren't enough jobs as it is.

overbet's picture

His own man. Go Trump

peopledontwanttruth's picture

Yeah the wall could be built out of stacks of hundred dollar bills that no other country will use but has been "printed" Trillions of dolllars goes a long way. He could build the whole way around the country and not just the southern border. Here's the figures.

The height of a stack of 100,000,000,000 (one hundred billion) one dollar bills measures 6,786.6 miles. A column of bills this high would extend 28 times higher than the orbiting International Space Station.

The height of a stack of 1,000,000,000,000 (one trillion) one dollar bills measures 67,866 miles. This would reach more than one fourth the way from the earth to the moon.

The height of a stack of 100,000,000,000,000 (one hundred trillion) one dollar bills measures 6,786,616 miles. This would reach from the earth to the moon and back 14 times.

delmar Jackson's picture

We are already in a trade war. The taxes China imposes on our goods are no different than a tariff.

Putrid_Scum's picture

O World War Three started years ago...it's just the adults didn't tell the peasants.

It's about to get worse too. Imagine what society will be like after The Reset.

Putrid

www.beforethecollapse.com/2017/05/23/the-reset