Trump Warns "It's Time For Change" In The Countries Responsible For America's Trade Deficit

Update: President Trump is showing absolutely zero signs of backing away from his trade tariffs plan and has just tweeted...

"We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. "

Which as the chart below shows is true. Trump has a warning...

"Sorry, it’s time for a change! MAKE AMERICA GREAT AGAIN!"

*  *  *

"It's not the economy, it's China stupid!"

While establishment globalists doth protest loudly of the Steel (and Aluminum) impositions that President Trump is proclaiming, it appears their memories of recent historic reality is gravely absent (or willfully being ignored).

On Friday, Peter Navarro, Trump's newly reincarnated foreign trade advisor, made clear that this is not a 'first strike' in the 'trade war', this is America's retaliation to years of abuse:

“I don’t believe any country in the world is going to retaliate for the simple reason we are the most lucrative and biggest market in the world,” Navarro told Fox News Friday.

“They know they’re cheating us. All we’re doing is standing up for ourselves.”

One look at the record US trade deficit, with both the entire world, (and more specifically China alone and Europe alone), and one could make the case that he is correct.

The US administration appears to be taking an increasingly aggressive stance on trade and the following chart is the breakdown of which countries Trump will - or should - be going after...

Source: BNP Paribas


As we noted previously, while many have been quick to slam Trump's strategy, at least one hedge fund believes that Trump is correct in his trade war stance. Here is Stephen Jen from SLJ Macro Partners:

  1. The US is the least protectionist large economy in the world, while China is the most protectionist. In our note on this subject a couple of weeks ago, we pointed out that the US, based on data from the WTO, is by far the least protectionist nation in the world (with the exception of a tariff-free city state like Hong Kong) — far more open than Europe, Japan, and especially China. And it seems a bit hypocritical to us that more protectionist nations are complaining about the actions of the least protectionist nation.

  2. Excess capacity in China. China has half of the world's steel production capacity, much of which is excessive and unnecessary, even Beijing would admit. The 2008-09 RMB4 trillion stimulus in China further boosted China's industrial capacity, including in steel and other sunset industries. This has led to a situation where Chinese steel production had to be exported to the rest of the world at very low prices. Some in the US, not surprisingly, consider this 'dumping'. Further, both the US and the EU share the verdict that China is still not a 'market-based' economy, because of the large and persistent explicit and implicit government subsidies, and other forms of support from the public sector, that make Chinese products unfairly competitive.

  3. Why is Europe not held to the same standard as the US? Europe is complaining about the US' latest policy. Investors should know that Europe has already imposed two dozen anti-dumping measures against Chinese steel exports. What then is the substantive difference between the anti-dumping measures imposed by the EU and what the Trump Administration is doing? Is Europe less protectionist than the US? If Europe were so open, what is all the fuss about Brexit and the inability of the UK to access the European market?

As Jonathan Ferro (@FerroTV) so eloquently tweeted, "hate to puncture some of the narratives out there. But... EU tariffs on US autos = 10% US tariffs on EU autos = 2.5%"


Winston Churchill RU4Au Sun, 03/04/2018 - 18:30 Permalink

So they're cheating when they supply real things to us and get paid for in money we just print ?


I think the legal term is extortion, and its us doing it.Doesn't sound like free and fair trade to me.

Could someone explain where I'm going wrong in my thinking please ?

I know critical thinking is hard, but I'm sure someone can answer my question and put me right.

Bueller, anyone......

In reply to by RU4Au

Winston Churchill new game Sun, 03/04/2018 - 19:21 Permalink

Pretty sure you're right.If this had been done twenty years ago it might have worked.There is no

domestic industrial base left to protect and nurture.You need 1001 different suppliers to just set up

production, let alone the suppliers you need for making that end product.

I would have to travel over a 100 miles to (maybe)find and engineering factor, and I'm sure that nearly all their

stock is foreign made anyway.

The rah rah crowd on here have no concept of whats involved,and the skill sets are retired or dead.

Two decades minimum, if you completely reformed the schools starting tomorrow.

In reply to by new game

tion Winston Churchill Sun, 03/04/2018 - 21:34 Permalink

Unfortunately many processed materials will still need to be imported for awhile in many industries. Some industries will need to move backwards with reshoring supply chains. US consumers don’t even want to value an end of chain manufacturer’s labor as on par with their own, let alone everyone through the materials chain. In some goods that would require maybe even a tenfold+ increase in price. Foreign slave labor wages were quite the drug eh.

In reply to by Winston Churchill

Quantify Winston Churchill Sun, 03/04/2018 - 19:06 Permalink

They don't get paid in just paper money. Who has benefited from the invention of Aircraft, electricity, telephones, satellites, global weather forecasting, global navigation, computers, mass producing, fiber optics, antibiotics....I could go on.  

Capital goods are the most successful export category. That's because U.S.-based corporations understand the needs of other multinational firms. Of the $533 billion in capital goods exported, 64 percent is from six categories.

  1. Commercial aircraft ($121 billion), produced by Boeing and Lockheed-Martin.
  2. Industrial machines ($57 billion), employing 1.3 million Americans.
  3. Semiconductors ($48 billion), primarily Intel and Qualcomm.
  4. Electric apparatus ($43 billion), mostly GE.
  5. Telecommunications ($38 billion).
  6. Medical equipment ($35 billion). Unlike most other U.S. export leaders, more than 80 percent of medical device companies are small businesses.

 The oil-based exports include these four categories.

  1. Chemicals ($77 billion). This segment is strong thanks to U.S. patent protection. One out of five patents are chemistry-related. Most of them are by-products of oil.
  2. Fuel oil ($38 billion). This is oil burned for fuel that's heavier than gasoline.
  3. Petroleum products ($71 billion). Exxon-Mobil, Chevron, and Conoco-Phillips are America's largest producers of oil.
  4. Plastic ($34 billion). This is a by-product of oil. The industry employs 900,000 workers.

Its called trade for a reason.

In reply to by Winston Churchill

css1971 Winston Churchill Sun, 03/04/2018 - 19:12 Permalink

We're all in this together now are we? Who exactly, is this "us" and "we" you are talking about?

Because the effects of a large trade deficit affect different parts of the domestic population in different ways. Some benefit enormously. Some lose enormously.

If the "us" and "we" you're talking about are the executives, shareholders, the bondholders of multinational corporations, the government contractors, the congressmen. Then yes you're correct. They benefit enormously, as you can see in the charts of total GDP vs median wages.…

GDP takes off, meanwhile the peons are kept in their place.

In reply to by Winston Churchill

Stuck on Zero Clint Liquor Sun, 03/04/2018 - 19:56 Permalink

Watch over the next six months as billions of dollars in influence money flows to the US from our trading partners for influence. Every "free trade" think tank, news pundit, and economics department in every university will suddenly get on the horn and scream about unfair and Smoot Hawley. In particular the mercantilists will slam the door on loud-mothed US industries so that they squawk very loud. Look for Boeing and Lockheed to get hit. They are all crocodile tears.

In reply to by Clint Liquor

Davidduke2000 Savvy Sun, 03/04/2018 - 21:09 Permalink

At $15 minimum wage, the us cannot produce products at the price the consumers are paying for now.

For Australians and Canadians with lower dollars , they are not affected by any tariffs because the extra 25% is the difference between the us and the australian and Canadian dollars.

China would cause more problems for the us because their products are irreplaceable even with triple the price and the us is not equipped to manufacture what China does and export.

We can expect cars from Japan , south Korea and Germany  to be shipped to Canada directly from the original countries and not from the us where they have been manufacturing these cars for a while as Canada is pissed at trump .

Bought last year a BMW that was made in south carolina, the next car has to be made outside the us for me to purchase

In reply to by Savvy

dirty fingernails bigkahuna Sun, 03/04/2018 - 19:12 Permalink

What is produced can't just be something the world wants, they have to be able to pay or trade for it, too. When the dollar loses reserve currency status, it won't be a smooth transition for any fiat currency.  US shale oil has ~4 years and then the pain really comes home( and that's while cranking out low interest debt). It'll be a whole flock of black swans for more than just the US and the knock-on effects will be devastating.

In reply to by bigkahuna