USMCA - Don't go Girly-Men on Trade Just Yet

If Senator Chuck Schumer thinks that President Trump is praiseworthy for his actions with regards the new USMCA trade agreement that went down to the final wire due to Canada’s fussiness over protecting its dairy farmers (and a few other issues as well), then will the senator hold off on impeachment hearings until after President Trump signs the deal?

Just wondering.

How well do President Trump and Senator Schumer know each other from their many years as high-profile New Yorkers? It's reasonable to ask how much money then-Donald J. Trump-the-businessman donated to the senator's campaigns. But more importantly it's more than reasonable to ask how Trump's outspoken vision for trade - one that still infuriates or annoys most economists and foreign policy wonks - often dovetails with those of people like Chuck Schumer. And always has.

New York state apparently gets and has been getting electricity from Quebec for over a century now, with increasing grid connectivity and compatibility measures taken by Quebec. In order to sell more to yuge customers like the State of New York. Not sure how much Canadian cheese gets exported to the Empire State. I'm guessing they get a way better deal from places like Wisconsin.

So, Schumer has been quite aware of America's trade relations with its northern neighbor and yet has been frustrated by NAFTA and has been a past critic of the deal. It certainly could be that that also has something to do with Canada keeping its banks off limits to anything beyond a minority holding. All the while Canadian banks have been happily expanding into targeted markets like the Chicago area, New England, and the South East. And then there's its healthcare sector.

Ok, we'll leave that one for another time, shall we?

So, now we have a new deal, and while free-traders will moan - all the while playing footsie with China or remaining meekly silent on its serious and serial violations of many norms of international commerce, like, uh, property rights? - we seem to be turning a corner on the trade conflicts and confrontations that President Trump has undeniably sought.

Here's the Washington Examiner's Tom Rogan:

When it comes to China, for example, Beijing's rampant abuse of the global trade framework and its capricious absorption of U.S. intellectual property means that Trump is absolutely right to play hardball. Still, the USMCA offers Trump a success and a viable platform with which to agree new trade deals in other areas such as the Asian-Pacific, the Indo-Pacific, and with Europe. The markets will respond positively to Trump's realistic dealmaking here. In turn, if Trump can now follow up this agreement with other deals around the world he will inject new energy into the already booming U.S. economy.

Holy crap! You might think that the markets will start to recognize this administration's wins! Oh ... right. They have been since a few hours after President Trump was elected. People putting their money where their opinions are, financial markets in other words, have been telling the world that the American economy was going to get better. And they were right.

China, meanwhile, has been cutting selected tariffs on mostly lower-valued items, but cutting all the same, as Trump continues to up the ante. Trade experts cluck their tongues and warn of impending doom. Let's see what Trump negotiates next with China, before we go all girly-men on the trade forecast, shall we? Like Chuck Schumer, maybe.

Posted by Keeley at October 2, 2018 4:26 PM
Comment #432224

Well said Keeley. Actually, the naysayers, gloomer-doomers, and never-Trumpers are important to the nation. It reminds one that despite the forecast of rain, snow, sleet, the sun always shines in the end.

With President Trump, we are getting a bonus…a huge beautiful rainbow.

Posted by: Royal Flush at October 2, 2018 5:18 PM
Comment #432225

A couple things…
First, trade deficits will continue because the dollar is strong versus other currencies. That means US exports are expensive in other countries, while imports from other countries are cheap in the US.

Renegotiating NAFTA just happened for the 14th time in 20 years. It was only a few months ago Trump claimed he would do a unilateral deal with Mexico, and then another with Canada. Didn’t happen. Tweaks to trade deals are normal. Tariffs established by executive fiat are not. The bad news is that they can be imposed arbitrarily. The good news is that they can be lifted just as arbitrarily. The markets have remained flat, with the exception of a few big cap stocks on the DJIA reacting to the likely end of some tariffs.

Tariffs would work great if we could impose them, and not have the other side retaliate. But they always retaliate.

The US can, and has, hurt the Chinese economy a great deal with tariffs. In return, the Chinese have hurt us with retaliatory tariffs. So far, the Chinese are getting the worse of it. There’s just one other problem. Tariffs are not the only way another country can retaliate.

So the tax cuts for corporations and the 1% have been poured into the stock market. And why not? Bonds are not competitive, especially with interest rates rising. Real estate is slowing as interest rates rise. Companies were making record earnings even before the tax cuts, so there’s no point in investing in infrastructure. Meanwhile, the economy is at full employment, and yet… real wages year-to-date remain dead flat, with inflation wiping out the increases.

The tax cuts used an enormous amount of debt to stimulate the economy at a time when it did not need stimulating. With nowhere to go, all that magical money created by deficit spending has gone into the stock market. With inflation at the top of the Fed’s targeted range, and interest rates rising, why, what could possibly go wrong?

Posted by: phx8 at October 2, 2018 5:57 PM
Comment #432226

Is there anyone, anyone at all; who would take investment advice from our Liberal soothsayer Pal phx8? One has to be terribly depressed, out of touch with reality, or just plain contrarian to write such drivel as he does.

My money is in the S&P 500 index. It represents the total value of all shares of stock held by 500 of the largest U.S. companies.

My favorite business channel is Fox business news. It is simply astounding to see the increase in value of stocks during the Trump presidency. Is there anyone who would care to return to the failed Obama policies?

Federal Reserve Chairman Jerome Powell said on Sept. 26th that all four indicators the Federal Reserve watches are now showing growth in wages and benefits around 3 percent, which is a full percentage point higher than five years ago. “That’s a good thing,” he added.

Posted by: Royal Flush at October 2, 2018 6:32 PM
Comment #432227

Don’t worry, RF. It should take some time before the rising interest rates collapse the market.

Look at the S&P P/E lately? You comfortable with that?

The stock markets more than doubled under Obama. When the Trump administration hits @ 40,000 on the DJIA in eight years we can claim he did better than Obama.

Here is a nice chart of stock market performance by presidential administration.

Like I said, the Trump has to keep up this pace for another six years just to match Obama.

Wages are growing just under 3%. That’s a good thing. Inflation is running at just under 3%. That’s a bad thing. That is what ‘real wages’ mean- wage increase minus inflation. I’m surprised we have not seen more wage growth, wage growth outpacing inflation. But that just keeps bringing us back to the same issue of wealth inequality.

Posted by: phx8 at October 2, 2018 6:49 PM
Comment #432228

Luv your DOW report link phx8. Mickey Mouse could show fine returns if starting with a market loss of over 30%. The Obama years were the slowest and weakness recovery ever from a recession.

Again I will ask, Is there anyone who would care to return to the failed Obama economic policies of high taxes, hugely burdensome regulations, and special interest handouts of taxpayer money?

Posted by: Royal Flush at October 2, 2018 7:03 PM
Comment #432229
phx8 wrote: Renegotiating NAFTA just happened for the 14th time in 20 years.
That does not mean the changes in the new USMCA agreement are trivial or insignificant. That does not mean there were not significant changes that are better for the U.S.A? There is more to USMCA than that:
  • (01)USMCA raises percentage of content of vehicles made in North America from 62.5% to 75% to avoid tarrifs;
  • (02)USMCA mandates an increasing higher percentage of parts (up to 40% by 2023) to avoid tarrifs;
  • (03)USMCA mandates factories must pay an average of $16 per hour for production workers, which is about TRIPLE the current average wage in Mexico;
  • (04)USMCA grants the USA access for dairy products to Canadian markets, and Canada agreed to eliminate subsidies to Canadian producers;
  • (05)USMCA ends British Columbia-only wines, and allows USA wines;
  • (06)USMCA allows American financial services better access to Canadian and Mexican markets; and extends intellectual property protections of American pharmaceutical companies selling drugs in Canada;
  • (07)More about USMCA …
Sure, most of NAFTA still exists in USMCA, but significant changes were made to make it more fair. Why, no matter what, why do you try to trivialize and minimize accomplishments by the current administration? The USMCA is only one of many good accomplishments in the last two years, but you either conveniently trivialize and/or ignore the many accomplishemtns (below) by the current administration:
  • the push for fairer trade;
  • new trade agreement (USMCA) with Canada and Mexico;
  • lower taxes;
  • the economy; GDP is over 4% ;
  • lower unemployment;
  • defeating ISIS;
  • stronger border security;
  • decreased illegal immigration;
  • Supreme Court appointments;
  • decreased regulation and waste;
  • stock market up; confidence up;
  • re-investment in the U.S.A.:
    • SoftBank $50B
    • Exxon $20B
    • Hyundai $3.1B
    • Apple $1B
    • Chrysler $1B
    • GM $1B
    • Bayer AG $8B
    • Toyota $600M
    • LG $250M
phx8 wrote: The markets have remained flat, with the exception of a few big cap stocks on the DJIA reacting to the likely end of some tariffs.
Not true.

This does not look flat.
Not ony a “few big cap stocks” are responsible for the last six months (see below):

  • Dow Jones Industrial Average for past 6 months:
  • 27,000 |————————————————o———
  • 26,000 |—————————-o———o——————
  • 25,000 |———o————o———————————-
  • 24,000 |-o————-o—————————————-
  • 23,000 |APR MAY JUN JUL AUG SEP OCT_of_2018
  • source:…0.0..0.144.397.2j2……0….1..gws-wiz.pbqlgvU-TD4

phx8 wrote: Real estate is slowing as interest rates rise.
Not true.

There is an upward trend in sales since 2011 (see below).
U.S. New-and-Pre-Owned Home Sales:

  • MILLION of homes:
  • 10.0 |———————————————————
  • 09.0 |———o———————————————-
  • 08.0 |——o——o——————————————
  • 07.0 |—o————o—————————————
  • 06.0 |o——————o——-o————————o-
  • 05.0 |———————-o—o-o————-o—o——
  • 04.0 |————————-o—-o—-o-o—————
  • 03.0 |———————————-o———————
  • 02.0 |———————————————————
  • 01.0 |———————————————————
  • 00.0 |__2000_2005_2010_2015_2018___YEAR
  • _______B U B B L E

  • New and pre-owned home sales:
  • 2019: 5.67 Million (predicted for 2019)
  • 2018: 5.50 Million (steady growth)
  • 2017: 5.51 Million
  • 2016: 5.45 Million
  • 2015: 5.25 Million
  • 2014: 4.94 Million
  • 2013: 5.09 Million
  • 2012: 4.66 Million
  • 2011: 4.26 Million
  • 2010: 4.18 Million
  • 2009: 4.34 Million
  • 2008: 4.12 Million (collapse of bubble)
  • 2007: 5.02 Million
  • 2006: 6.52 Million
  • 2005: 7.08 Million (bubble)

There is a housing shortage, so home sales are not expected to slow much (if any).
Above, the prediction for 2019 is a slight increase in new and pre-owned home sales.

  • source:

phx8 wrote:Meanwhile, the economy is at full employment, and yet… real wages year-to-date remain dead flat, with inflation wiping out the increases.
True, for APR-to-AUG-2018, but a slight improvement from the previous year. Actually, overal real wages have been flat for the 50th and 10th percentile since year 1979.
  • source:
And inflation is likely to remain a problem for a long time, as long as the federal debt grows and grows (already beyond nightmare proportions). The federal reserve has no choice but to try to shrink debt with inflation. The $21.5 trillion national debt is a serious growing problem.

The tax cuts were a good thing.
The corporate tax cuts (reduced from 35% to 21%) were necessary, because a 35% corporate tax was driving corporations and jobs out of the U.S.A., because the 35% corporate tax was much higher than the 20% global average.
Income tax revenues are up 9% as of JUL-2018.
The CBO admitted that the added growth would offset a significant chunk of the tax cuts.

  • source:

The real problem is spending.
Unfortunately, the more money the federal government gets, the more it spends.

phx8 wrote:With inflation at the top of the Fed’s targeted range, and interest rates rising, why, what could possibly go wrong?
The $21.5 Trillion national debt is the biggest on everything. That is not all Trump’s fault, and the debt won’t be solved by only one president. It would require many consecutive administrations and extraordinary discipline to pay down a significant portion of the national debt.

Unfortunately, in my opionion, I think the national debt problem will (realistically) eventually solve itself, the hard and painful way, in the not-too-distant future.

Aside from the massive federal debt, there is plenty of room for improvement, but there have been many good developments, and many things are, at least, headed in the right direction.

Posted by: d.a.n at October 2, 2018 8:19 PM
Comment #432231

“Again I will ask, Is there anyone who would care to return to the failed Obama economic policies of high taxes, hugely burdensome regulations, and special interest handouts of taxpayer money?”

I would guess anyone in southern Florida who buys prescription drugs. The drug companies received big corporate tax cuts. No one knows why, but if anyone here buys prescription drugs, go through a Canadian pharmacy. You can purchase a drug that might cost $300 for just $60.
As for burdensome regulations, deregulation in FL resulted in a red tide and blue green algae that wiped out FL wildlife. Too bad.

The markets are flat in the past few days, other than the DJIA. I was not referring to a six month period.

Interest rates are rising and they are likely to continue rising. Anyone who thinks it is a good idea to wait to take on a mortgage right now is out of their mind. Rates are going to keep increasing 1/4% each FOMC meeting until the market falls. That is the inevitable sequence that was sparked by the current stimulus, a boom and bust process, instead of the steady growth we enjoyed under Obama. It is terrible to mislead people into thinking they will be better off waiting to buy real estate right now. Anyone suggesting it is doing a real disservice to people.

One thing we do agree on: the capital gains rate should match tax brackets.

Addressing the debt should be done in good times. Now is the time to raise taxes and pay down the debt. Incurring more debt now will just make the consequences that much worse in the next recession.

When Trump took office, I commented on WB that all he had to do was not mess up a good thing.

There have been two significant economic developments: 1) tax cuts, and 2) the Trade War. The tax cuts have undermined the steady rate of recovery and started us on the boom/bust cycle. The Trade War is unpredictable. Just about everyone would agree something needs to be done about bad behavior on China’s part. But too much of the Trump agenda has been nothing more than undoing what Obama did- TPP, the Iran deal, the Paris Climate Accord, and more. We end up in more or less the same place when Trump restores NAFTA under a different name and pretends that was a great accomplishment.

Posted by: phx8 at October 2, 2018 9:52 PM
Comment #432232

“All the while Canadian banks have been happily expanding into targeted markets like the Chicago area, New England, and the South East.”

Forever Young, what era are you even talking about? The Bank of Montreal acquired the Harris Bank in Chicago, 7th largest US bank, in 1984. Conversely, in the same year, in Florida, The Royal Trust Bank was merged into a series of 5 successor banks that were ultimately acquired by Wells Fargo.

Tariffs are a form of taxation that have been advocated by fringe elements for many decades. Our system of taxation has been altered by professional gamblers who represent a very small percentage of the population. The burden of taxation on prosperous people without great wealth is gradually becoming so great that there won’t be any support for continuing this kind of system. Hence the resort to consumption taxes, which ultimately reduce consumption, and slow down the economy.

Thanks to the efforts of the right wing party here and their more than forty year plan to Make China Great Again, China has been expanding around the world, but is now getting resistance in some places, and is even starting to get resistance at home from actual communists. They bribed governments, but some of those governments have changed and don’t want to continue the same deals. The Belt Road Initiative New Silk Road on land is going to come to a standstill at the border of russia, which is not interested in participating in any investment in their own country. They’re busy getting looted assets out of their worthless country.

Most significantly, the rest of the world is now looking for an alternative currency to the dollar. This is only really happening because of lack of confidence in the current US government.

Posted by: ohrealy at October 2, 2018 10:16 PM
Comment #432235

Bandar Togel

Posted by: siska at October 2, 2018 11:21 PM
Comment #432249

I challenge phx8 to reveal facts supporting his claim that Floridians are paying more for prescription because Obama left office.

I challenge phx8 to reveal his source as proof for writing; “deregulation in FL resulted in a red tide and blue green algae that wiped out FL wildlife.”

“We end up in more or less the same place when Trump restores NAFTA under a different name and pretends that was a great accomplishment.”

phx8 is obviously getting some erroneous information from his handlers. The wise man waits until the meal is finished before commenting on the taste.

Obviously, the strong resistance from both Canada and Mexico to changes in NAFTA was merely play acting by them since no significant changes were made. Sure phx8…good spin.

Posted by: Royal Flush at October 3, 2018 3:58 PM
Comment #432251

Royal Flush,
Unfortunately. there are some people that are so, SO politically biased, based on an ideology (a system of ideas, values, and philosophies, especially those that forms the basis of an economic or a political theory and/or policy), instead of reality and evidence.

When reality and evidence threatens their long-time, deep-rooted ideology, the ideologists start looking for all kinds of rationalizations to reinforce their ideology, because admitting that their ideology is erroneous is too much to face. You have probably witnessed that many times on many blogs.

Ideology is not always a bad thing, except when the facts don’t support the ideology. Some peoples’ ideologies evolve over the years and decades (as they should). Ideologies should be constantly tested and re-evaluated. However, some people cling to their ideologies, as if brainwashed, despite mounting evidence and reality that those ideologies are failing.

I have had ideologies that I have abandoned, and had to admit were wrong. Sometimes, those ideologies twisted me into a pretzel while trying to reinforce those ideologies. The point is, there are some people who can’t grow, and can’t periodically re-examine their ideologies. And, for those people, no amount of evidence will change their mind. You have probably witnessed that also, many times on many blogs.

What we are seeing here is what always seems to happen, depending on WHOEVER is the current IN-PARTY and OUT-PARTY.
The IN-PARTY often portrays most (if not all) things as rosy-and-wonderful.
The OUT-PARTY often portrays most (if not all) things as gloom-and-doom.

It takes work and an open minde to find the truth.
And, many (if not most) humans, often don’t like work.
It depends on how much a person really wants to know the truth.

Posted by: d.a.n at October 3, 2018 5:28 PM
Comment #432252

Thanks for your observations on ideologies d.a.n.

I learned early in my school life about empirical evidence (the record of one’s direct observations or experiences) by becoming an avid reader of “The Hardy Boys” and “Nancy Drew” book mysteries.

As I matured, I concentrated on quantitative and qualitative analysis to test my beliefs. As you described d.a.n., I too found that some beliefs couldn’t withstand critical analysis and were cast aside. Some were childish religious beliefs and others were erroneous expectations of adult behavior.

I find little critical thinking on WatchBlog and even less among the general public. The term “sheeple” comes to mind when addressing political understanding.

It takes time and diligence to scour sources for truth. One must always guard against ascribing truth to a source simply because of agreement with that source.

And, the very first thing anyone must understand about politics, and politicians, is to only believe their behavior and actions. Political words and promises are a very cheap commodity and mostly meaningless.

Posted by: Royal Flush at October 3, 2018 6:00 PM
Comment #432268
ohrealy wrote: Most significantly, the rest of the world is now looking for an alternative currency to the dollar. This is only really happening because of lack of confidence in the current US government.

Well, the world will most likely be looking for many more years, because, currently, the U.S. Dollar accounts for about 63% of world reserve currencies, the EURO accounts for 20%, and then all the rest around the world accounts for the remaining 17% (combined).

The U.S. Dollar has never fallen below 61% over the last 15 years.
The Chinese Renminbi is only 1.23% as of 2017.

Nobody declares which is the major global reserve currency.
The level of popularity of the individual reserve currencies is result of decisions by people in individual countries, and it is a result of the U.S. Dollar being the most stable.

However, the primary reserve currencies could change, and the one thing that could possibly cause that is IF and WHEN the U.S. federal national debt (currently: $21.6 Trillion) becomes untenable.

Unfortunately, in my opinion, I think the national debt problem will (realistically) eventually solve itself, because we may never have consecutive administrations with the necessary discipline to reduce the federal national debt.

Some economists say a “little” inflation is a good thing, by forcing people to invest their money, or watch it shrink due to incessant inflation.
Infation is a good thing for reducing debt (if not excessive, or incessant).
However, how much is a “little” inflation, and is it really ever a good thing?

IF the U.S. federal debt becomes untenable, the federal reserve will create more money, and make it easier to borrow, which could be the first red-flag of what is yet to follow.

At the moment, the current borrowing rate for banks is 2.5%.
However, IF the debt becomes untenable, the debt and the federal reserve could get out of control, which usually leads to hyperinflation (”>hyperinflation).
That is, since money is created as debt, and IF there were insufficient borrowers to take on more debt, the money system could collapse like an inverted pyramid-scheme, and the final solution that many countries resorted to was to create more and more new money out of thin air, resulting in hyperinflation (similar to what is going on now in Venezuela, Suriname, and South Sudan; all with over 100% inflation).

The $21.6 Trillion national debt is a drag on everything, and the U.S. would be wise to start addressing it now.

Posted by: d.a.n at October 3, 2018 7:59 PM
Comment #432310

Bandar Judi Togel Online

Posted by: siska at October 4, 2018 10:49 PM
Comment #432335

So let me get this straight. First Trump squashes the TPP. Then he “re-negotiates” with Canada and Mexico the same things that were part of the TPP. Then he renames NAFTA, USMCA. Then all our conservatives friends thinks this is the greatest thing ever done. To the point they talk about “I concentrated on quantitative and qualitative analysis to test my beliefs.” and call others sheeple!

So now Trump gets to tell the sheeple he got rid of NAFTA and our conservative friends, so deep into quantitative and qualitative analysis, buy into it and shout from the roof tops about the sun being out….really guys?

Posted by: j2t2 at October 5, 2018 10:36 AM
Comment #432346

Sorry what I wrote was too nuanced and philosophical for your understanding j2t2.

Posted by: Royal Flush at October 5, 2018 4:07 PM
Comment #432398

Really Royal it was silly blathering that came to mind whilst reading your comment in the context of this thread. But you keep diverting away from the issues addressed in my comments under the guise of ” nuanced and philosophical”, Royal, realize thou you are only fooling yourself.

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Comment #432571

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