Bill Owens: Confounding And Confusing Events 5/13/19

May 13, 2019

President Trump tweeted on May 5th, that he would impose increased sanctions on China, potentially up to 25% on all products imported from China, if a new trade agreement was not reached, presumably by Friday, May 10th.  i The tariffs were imposed and the talks ended on Friday afternoon. In addition to the tariffs, the Chinese were refusing to go along with the US positions on issues like forced technology transfers (in exchange for doing business in China) and other enforcement tools that the US is seeking.  The only surprise here is that the administration is surprised. 

Canada also recently announced that unless the US becomes cooperative and helps in solving the Huawei situation which is creating a confrontation between Canada and China, that Canada may stop being as cooperative on many fronts as the US would like.  Canada has been our consistent ally at the UN, in Afghanistan and Iraq, and going back half a century, to Viet Nam.  The Canadians were cooperative in the re-negotiation of NAFTA and have withstood many of Mr. Trump’s childish antics with dignity and composure. 

From the world of nature, the Earth’s Crust in the Atlantic Ocean off Portugal may be peeling in two with the bottom separating, potentially causing unknown consequences.  Please note this is a theory, not yet proven.  None the less, I thought you’d like to know that Europe may be coming closer.

Mr. Trump also tweeted over the weekend of May 4th and 5th, that the disqualification in the Kentucky Derby would “only in these days of political correctness” occur.  That is a real head scratcher, is the President really saying that if you cheat you shouldn’t be penalized?  It is hard for me to comprehend what political correctness has to do with cheating in a horse race.

In the last week, North Korea has launched apparently short and medium range ballistic missiles as well as an unidentified projectile, but not long-range ballistic missiles.  It was long-range ballistic missiles that the North Korean leader promised not to test again, which he apparently has abided by.  It is still not clear exactly what the response of the administration will be, but it is certainly not leading in the direction that POTUS has repeatedly promised.  On May 9th, we seized a Korean cargo vessel.  Both sides are escalating. 

Brexit has largely been quiet for several weeks.  Most recently, Mrs. May approached the Labor leader and, in an editorial, indicated that she wanted to make “a deal” using the classic language and expressions of this is not a partisan issue, but one that is important for all Britain’s’.  It appears that that approach has met with a lukewarm response from Labor, but some level of horror from her own party.  There is still a considerable time to go before the next deadline, so we will keep watching. 

Steel and aluminum tariffs are having an impact throughout the country, but in particular in the mid-west.  The duration of the tariffs is also becoming an issue, as many businesses anticipated that this would be of a short-term duration and were prepared to make a contribution to the country’s well-being.  It’s now starting to hurt and the pain will increase after the events of May 10th.

Does a defeat of the USMCA mean that NAFTA goes away?  POTUS has the first card to play by threatening to and/or tearing up NAFTA.  Congress has the second card to play by passing legislation rescinding that action.  Congress needs a veto-proof majority in both Houses, but it is hard to imagine that Congress would allow free trade to just vaporize as the economic impact could be dramatic as we head into 2020. 

The House held Attorney General Barr in contempt, but it is unlikely to go further unless the Sargent at Arms is dispatched to arrest him.  Imagine the TV coverage of that spectacle.  The most surprising political event was the subpoena by the Senate Intelligence Committee issued to Donald Jr. for further testimony on Russian interference.  I thought the Senate Republicans said they were done with this.

Mr. Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.

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