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.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ThirdWorldDude's picture

Oh, but we're already living your masters' neofeudalist dream; haven't they told you?

I thought an oligarch's mouthpiece would know better...

Putrid_Scum's picture

Do you include "me" in your "we" and "they". Because you shouldn't, I'm a completely independent intellectual.

I've never hidden the fact that I'm connected to a network of global capitalists. Not once. Not never. It's even stated explictly by The Saker in my first published article: www.thesaker.is/capitalism-requires-world-war/

And I'm not the mouthpiece of oligarchs...maybe Families? ;) And they're not Oligarchs.

Don't you appreciate the heads up I provide?

But still, I see no reason why that should be a source of hate.

Now, the situation is very grave, so name calling and petty arguments are not productive. 

The true problem is that there's no free will at the System Level...we are where we must be. And The System we all depend upon for our very survival is DEAD.

Putrid, protect yourself.

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

ThirdWorldDude's picture

Hey, why did you delete the part of your comment where you say you hope that capitalism will be replaced by feudalism? 

It showed your true face of a bigoted store clerk sent on a mission to spread more disinformation. 

Putrid_Scum's picture

Do I need a reason? 

Though I will entertain your question since you appear pugnacious:

I've discussed my preference for Feudalism over Fascist Capitalism with Hedgers before today, so no point repeating myself:

www.zerohedge.com/news/2017-06-17/trump-reports-income-594-million-net-w...

I'll let you know that I'm the resident Feudalist here at Zero Hedge and an authority on the merits of Feudalism :)

Post-Reset political economy will either be Feudalism or Hard-Fascism/Anarchy. 

Now I'm Irish, so what works for us may be different than where you're from.

Putrid

 

ThirdWorldDude's picture

Fair enough, to each his own...

Good luck with your serfdom!

Putrid_Scum's picture

Dude!!

I'll be the local lord playing with the stable girls ;)

Putrid

kommissar's picture

you and i may be the only ones on this board that know that.  i used to export semiconductor goods to china.

NoDebt's picture

Exactly right, Delmar.  Even without a "trade agreement" the import tax into the US only hovers around 5% (it varies based on a number of factors).  And, of course, if you're a NAFTA country it's zero.  So if China has a "free trade" agreement with, say, Mexico (they do), you import it into Mexico and then ship it into the US and pay nothing.

Why would China ever sign a "free trade" agreement with the US when they're at 20+% and we're at 5% as the starting point?

 

shovelhead's picture

People confuse "free trade" with fair trade.

 

halcyon's picture

Those who downvoted you, have no sense of history.

War is coming. War is a racket. Invest accordingly.

 

Putrid_Scum's picture

O I know, the average Zero Hedger has no idea how much danger he's in, here's an email I received a few weeks ago:

> I'll send a message.

Thank you.

> Maybe someone will talk, but these guys tend to be tight lipped these days. 

Because they are scared.

> I think they're planning something horrible. Depopulation. 
>

Yes, depopulation---you are correct. Letting hundreds of millions freeze 
to death, drown & starve. We are heading into an ice age, my dear friend.

peopledontwanttruth's picture

It's their only option left but struggle on how without destroying the planet they feel they own.

They didn't do the Georgia Guidestones for nothing

Putrid_Scum's picture

I think the World War option is off the table presently; we may still get a small war as cover for The Reset.

Though The Reset is going to be utterly horrible. People have no idea what they're wishin for.

Putrid

peopledontwanttruth's picture

Took the words right out of my mouth

peopledontwanttruth's picture

Up voted you. The truth hurts and most don't want it.

This great reset people are asking for will be a case of

"Be careful of what you ask for"!

Not easy realizing the world as you know it is dying.

PT's picture

Currency Wars --> Trade Wars --> World Wars.

But perhaps if you didn't trade in the first place, you wouldn't piss people off so much that they felt compelled to go to war in the first place.

The little puppy can only be bullied for so long.  Eventually he goes psycho to regain lost ground.  (Works with his siblings, not so easy when the power differential is large.)

Free trade falls over when people refuse to acknowledge that extortion exists ... or when a bunch of greedy cunts can direct others to do all the fighting while they safely live it up in their mansions thousands of miles away from the action.

drendebe10's picture

Chump is a stoopud fukn dumpster fire

Dancing Disraeli's picture

Yuan manipulation has been an ongoing one-sided trade war.

Kayman's picture

Evidence?  Giving away all your manufacturing technology results in hot wars.

UrbanBard's picture

This is an opening bid on Trump's part.

Exporting countries can choose to lower the subsidies that they give to exports. There is no free trade now. China and other exporting nations have internal VAT's which they eliminate for exports. The US could have corresponding import VAT's to compensate. 

This is an opening shot across the bow in a trade war which the US is losing now. 

GoldRulesPaperDrools's picture

Better grow a pair and get to the range and start praticing BITCHEZ.

xtremers9's picture

Stop the fear mongering. This problem will be contained. Trump isn't the first president to announce tariffs on steel. Obama did it, and the stock market DIDN'T tank.

 

http://bearmarket.net/stock-market-on-june-30-2017-thoughts-and-outlook/

IntTheLight's picture

We lost our edge when we willingly moved manufacturing to China. It allowed them to steal our technology. They built up their military and are in a position to militarily defeat us.

All due to foolish trade. It was wage arbitration.

And Chinese steel sucks as do their products.

oncefired's picture

Fuck It! What do we honestly have to Lose? Slap the Tariffs! Let them Come Begging!

Idiocracy's picture

MAGA, let's do this.  Time for drastic measures.

Rothbardian in Cleveland's picture

Because that Smoot-Hawley attempt at this worked out so well right?

Uchtdorf's picture

I can never understand why Americans want to pay more for something just so the government gets more money. The goal here should be to starve the beast, not feed it.

Newsreader: Today your tomatos cost $1.00, but tomorrow they'll cost $1.20.

'Murican: Now we're winnin'!

PT's picture

I bought these tomatoes from the internet becoz they woz cheap.
My local grocer used to work hard, make good munny and buy stuff from me but now he is dumb lazy unemployed.  Why do I have to pay his unemployment benefits?
Why does no-one in my town want to buy the stuff I am selling?
I can't sell anything becoz the internet sells it cheaper.

No-one will ignore reality just for the sake of your ideological bullshit.

If you know of a better way than tariffs then go for it.  But don't pretend the problem will go away if you do nothing.

How do you compete against those who are happy to make $40 per week?
You have to be happy to make $30 per week.
How do you survive like that if rent in your city is $300 per week?

And EVERYBODY has rent or mortgage - people on their houses, companies on their factories or supermarkets.  Ultimately the way to compete is to revalue the price of land to a point where the land can compete.  When the land is cheap enough, wages can go down to internationally competitive levels ... But then what happens to all the debt on that land??? he he he ... not so easy now, is it?  Oh, and what do you import?  Resources, energy, labour.  If you have those three then you should be able to get rich without trade.  Otherwise you need trade, and that is where the trouble starts.  Because the bully will always say "It woz a free market transaction" and refuses to admit that extortion exists, even long after the weaker one resorts to the one idea left after he has exhausted all other ideas.

'scuse the cringe-worthy choreography:

https://www.youtube.com/watch?v=B_3TlrZLpQ0&list=RDB_3TlrZLpQ0#t=11

or see if you can find the unedited version

Come on man, let's stand up all over the world
Let's plug a bomb in everyone's ass
If they don't keep us alive
We're gonna fight for that right
And build a wall with the bodies of the dead ...

I never liked that third line.  It sounds like a spoilt brat.  Until you realize that the "free markets" are a myth.  All there are, are bullies and their propaganda servants who justify the theft.  You find your little niche?  Good for you.  Oh, and good for that nice man who bought you out ... never mind where he got his money from.  Stay asleep little one.  All is well.  It's not your fault everyone else is "lazy" ... ha ha ha ha ha ha ...

As for the rest of it?  It's just that unpleasant part of the cycle.  It's nice to not be there.

Uchtdorf's picture

I'm sorry you think government is the solution. It's really just the opposite. If I can buy something for less then I have more money to spend on other things that I previously could not buy. The natural changes that would result in everybody having more money would benefit others in their community. Sure, over time, your grocer may need to make adjustments in his business. However, I have solved your rent issue without getting the government involved. I put more money in your pocket.

Relayer74's picture

Talk about shallow logic...

IntTheLight's picture

Housing is expensive because no one wants to live around Africans or other third world people. People want safe neighborhoods. They also don't want to live next to the Muslim with 4 wives in burqas. And that is a new reality. They don't want to live in a building with bed bug infestations due to Indian immigration.

PT's picture

Uchtdorf:  And how did that work out for you in the real world?  We've had plenty of time now.

Innovation was too easy when we had a manufacturing base so we thought we'd try to innovate without one.

Dancing Disraeli's picture

Propaganda.

Look at what the FED did to correctly understand the Depression.

MoreFreedom's picture

Starting a trade war would be disastrous for Trump.  And the political establishment that's against Trump wants it for that reason. 

Does anyone bother to look at the history of imposing tariffs, such as the 1930 Smoot Hawley Tariff Act?   When that happened, the US did the opposite of grow the economy.  In fact, US GDP fell by nearly half within 3 short years.  And Republicans Smoot and Hawley both lost their seats in Congress.  The establishment politicians know this, and really don't care if the US economy implodes because their personal economy/bank account is just fine.  But Trump would be gone for sure in 2020. 

Free trade makes for prosperity.  People also seem to ignore the fact that most imports are used as inputs to US manufactured products, so tariffs make their end products more expensive and less competitive globally.  Which is why (thanks to high US tariffs on sugar for the benefit of the billionaire Fanjul family of sugar growers that coincidentally contribute a lot of cash to politicians and mostly Democrats - look them up in Wikipedia and Opensecrets.org) Nabisco moved Oreo manufacturing out of the US along with the jobs.   The other thing tariffs do, is impose taxes on US consumers who buy products from overseas leaving them less money to spend.

Tariffs are just a tax on US citizens, not on foreigners.

 

 

 

Fred C Dobbs's picture

You can't use the term free trade when you are talking about a foreign government subsidizing certain industries, especially a dictatorship like China.  

shovelhead's picture

So the solution is to allow foreign imports with no tariffs while US exports get hit with tariffs that take them out of competitive pricing.

Brilliant.

The point is to strike an equitable parity in trade agreements using the only real leverage available.

It ain't rocket science.

Rothbardian in Cleveland's picture

Why is the government determinging what I'm allowed to buy?  Said another way, the solution is for men with guns to enforce my buying options and to tax my decision?  If that truly is the greater good, why stop at foreign goods?  Shouldn't this model be enforced domestically too?  I mean if company A lowers their prices and company B can't compete shouldn't we send in the goons there too?  After all, we've established throough less than rocket science logic that equitible parity achieved through the implied threat of force delivers the greatest good right?  And after all, our government was established with the sole purpose of delivering the greatest good for all.

PT's picture

You choose the economy in which you wish to operate.  If you are happy to compete with those in mud huts, do not be surprised when you also end up living in a mud hut.  But it seems a little backward to lose all that our ancestors built up for us ... for what?

When I first started babbling on ZH, one of my first questions was :  How much of our wealth is due to technology and how much is due to slavery?  ("Slavery"?  Okay, then call it "Geographic Wage Arbitrage" if you must.)  Still no quantitative answer to that question.

Technology pulls us out of the mud.  Slavery, or Geographic Wage Arbitrage leads to resentment and misery but I am sure you will just ignore that because everything is fine as it is, right?

Funny how China, the "evil Communist" country is also the "great Capitalist" country, depending on what is being discussed at the time.  But you refuse to acknowledge the mush that exists.  You continue to reduce the analogue to digital, the mess of colours to black and white.  In your writings it is all one or all zero.  There is no 0.15 or 0.746.  Everything must be whitest of white becoz there iz no better way!!! And you must suffer for the ideologies because you will be richer if only you were poorer and its all your fault for not innovating.  Funny thing about you guys is when you finally get it, you will never be able to explain it to your old acquaintances because they will never get it either.  I hope to see you in the mud.  Then you will get it and it will be too late for you too.

Doom and Dust's picture

Wage differentials do not equate to slavery, just wealth inequality expressed in currency pairs.

From 1970s Chinese peasant to 2000s Chinese laborer is a YUGE improvement believe it or not.

Relayer74's picture

Of course it is a Yuge improvement for those involved, but look at where they were starting from... In addition, something over 400 million Chinese peasants have been affected NOT AT ALL up to this point.

PT's picture

Believe it or not, there was no reason for the Chinese to drag us down while they lifted themselves up.  In fact it would have been better for the Chinese if they did not drag us down while they lifted themselves up.  But that requires knowing there is a third way.

null's picture

Actually, When the government was Established, its revenue consisted solely of Tarriffs.

Careful, history is a bitch ... and that is not even a debatable point.

hllnwlz's picture

Smoot hawley enacted 1930.  Hmmm....  what else was happening in 1930? You may recall the u.s. wad in the midst of the greatest leverage-binge debt deflation in its history.  People want to point to the tariff as the cause of a collapse in GDP when in reality it was the evaporation of billions in leveraged bets and debt defaults.  

peopledontwanttruth's picture

M--Making
A--Another
G--Great
A--Accident

All of us have "thought" we had things figured out in life only to realize later we didn't see all the ramifications later as one event triggered something we didn't or couldn't see.

Thus why the statement "hindsight is 20/20"!

This won't turn out like any can imagine

HRClinton's picture

Bring home the entire electronics and high tech industry!

Let's see Asians (Chindia) make great electronics, without us. Ha!

AVmaster's picture

Smart people will hedge accordingly.

Stupid people will pound their fists and take to twitter...

 

>_>

Doom and Dust's picture

No sense discussing this without knowing what his 36-year old Chabad Lunatic son-in-law thinks about it

He's the one in charge after all.

null's picture

Careful.
You are making people who would generally agree with your overall sentiment want to support the very thing you imply disagreement with.
They invented the term "over the top" just for this purpose.

It's almost like "you" want this to happen ... double bluff, wink, wink, perhaps?

buzzsaw99's picture

bring it. fuck "the market". there is no market, just a bunch of fascist maggots.

Lumberjack's picture

A rigged market....is no market....