Stephen Marche: America Came for Canada. We Said No.

Friday, Aug. 21, may go down in history as Canada’s Liberation Day. It was the day America came for us, and we said no.

The trade negotiations between the United States and Canada had been moving forward in the weeks after President Trump first threatened 50 percent tariffs on Canadian goods, but just before midnight, Prime Minister Mark Carney rejected the American proposal. “Last-minute changes in the U.S.-proposed terms were unfair, uneconomic and called into question the reliability of any deal,” Mr. Carney said in a statement. “Canada will match those tariffs dollar for dollar to protect our workers and businesses.”

It was a decision made, seemingly, on the spur of the moment, but the deep history of this country paved the way for this one, critical gesture — a historic “no.”  

Mr. Trump’s tariffs on some $20 billion of Canadian goods began immediately after his deadline passed. For Canada, the choice came down to either severe but temporary economic instability or binding itself to a pseudo-democratic fiscal basketcase of a nation, whose only apparent foreign policy objective has become domination for the gratification of its president’s slapdash vanity.

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Canada Defies Trump- Will Impose Retaliatory Tariffs

The U.S. imposed 50% tariffs on $20 billion worth of Canadian products early Saturday after last-ditch negotiations failed to resolve the latest strain in already tense relations between the historic allies. Canada's leader said it will retaliate beginning Sept. 8.

In a call with reporters late Friday, U.S. Trade Representative Jamieson Greer said Canada had declined to finalize the trade deal under the terms that had been agreed to earlier this week. He told Fox News on Saturday that there are "no new planned talks with the Canadians."

"We're moving forward with measures that respond to Canadian retaliation," Greer said, adding: "After a year of that retaliation, we've said enough, and so we've taken countermeasures. Our interest is in protecting American workers and protecting American supply chains. We've been offering to bring the Canadians along on that path, really to cut the tariffs on them, on steel, on tariff autos, even lumber, things that are sensitive for them, and they've always had the best deal, and they still would have an even better deal, but they didn't want that."

Canadian Prime Minister said Saturday in Ottawa that "in the coming days, we will release the details of these new tariff measures, which will come into force the Tuesday after Labor Day." The dollar-for-dollar retaliation would target steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.

He disclosed that Canada had been willing to drop remaining retaliatory tariffs on steel, aluminum and autos if the United States substantially lowered its own, and to encourage provinces to restore U.S. alcohol sales.

But he said Washington's final demands went too far, saying, "They asked too much and offered too little," Carney said.

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A Deep Dive Into Sino-American Trade

US-China Summit: Tactical draw (strategic win for China?)

When Donald Trump launched his trade war against China in April, threatening tariffs as high as 145%, the Chinese government said it would never bow to blackmail and vowed to “fight to the end”.

The question now is whether the consensus reached between Trump and Xi Jinping in Busan, South Korea, on Thursday means that the fight really has come to an end, and if so on whose terms.

Trump rated it as a 12 out of 10 meeting.

Both sides have taken some of their biggest guns off the table, but this appears closer to a truce than a durable peace setting stable boundaries for China’s relations with the US. Nevertheless the outline of a broader long-term diplomatic relationship is visible, with announced reciprocal visits by each leader within a year. That is very different to what China hawks in Congress were hoping when Trump came to power, and will set alarm bells off on both sides of the aisle.

One of the difficulties has been that Trump’s strategic objectives in launching the trade war were not articulated – the balance between protecting traditional US manufacturing, ring-fencing modern technology-based industries critical to US national security, punishing Chinese trade practices, or more broadly generally overpowering China as a competitive threat, were fudged. Gradually the battle morphed in some US administration minds from a trade war into a geopolitical trial of strength between the two world’s superpowers, a trial that left the whole world awaiting its outcome.

As a result it has been a turbulent six months, involving undulating tariffs, export curbs, threats, counter-threats, deferral and monopolies inquiries, interspersed with five rounds of trade talks ranging though Madrid, London, Geneva, Stockholm and Kuala Lumpur, culminating in two hours of direct talks between Trump and Xi, the first meeting between the two men since 2019.

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Federal appeals court largely rejects Trump’s emergency tariffs

A federal appeals court ruled Friday that most of President Donald Trump’s global tariffs are illegal, striking a massive blow to the core of his aggressive trade policy.

The U.S. Court of Appeals for the Federal Circuit, in a 7-4 ruling, held that the law Trump invoked when he granted his most expansive tariffs does not actually grant him the power to impose those levies.

“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the court said. “Tariffs are a core Congressional power.”

The appellate court paused its ruling from taking effect until Oct. 14, in order to give the Trump administration time to ask the Supreme Court to reverse the decision.

Trump later Friday attacked the appeals court as “Highly Partisan” and asserted that the Supreme Court will rule in his favor.

“If these Tariffs ever went away, it would be a total disaster for the Country,” Trump wrote in a Truth Social post. “If allowed to stand, this Decision would literally destroy the United States of America.”

“The President’s tariffs remain in effect, and we look forward to ultimate victory on this matter,” White House spokesman Kush Desai said in a separate statement.

Friday’s ruling is the second straight loss for Trump in the make-or-break case, known as V.O.S. Selections v. Trump.

The case was consolidated from two separate lawsuits, one filed by a dozen states and the other by five small U.S. businesses.

It is the furthest along of more than half a dozen federal lawsuits challenging Trump’s use of the International Emergency Economic Powers Act, or IEEPA, to impose sweeping tariffs.

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What's behind Trump's threat to reignite the Sino-American trade war?

The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.

The document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters.

In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation.

U.S. President Donald Trump responded in a tweet on Sunday vowing to raise tariffs on $200 billion worth of Chinese goods from 10% to 25% on Friday – timed to land in the middle of a scheduled visit by China’s Vice Premier Liu He to Washington to continue trade talks.

The stripping of binding legal language from the draft struck directly at the highest priority of U.S. Trade Representative Robert Lighthizer - who views changes to Chinese laws as essential to verifying compliance after years of what U.S. officials have called empty reform promises.

Lighthizer has pushed hard for an enforcement regime more like those used for punitive economic sanctions – such as those imposed on North Korea or Iran – than a typical trade deal.

“This undermines the core architecture of the deal,” said a Washington-based source with knowledge of the talks.

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Although I have been a sharp critic of this president, his decision to take a hard line on trade with China has been one of the areas where I support him. China has been getting away with economic murder, not for years, but for decades. And successive administrations from both parties have allowed it to go on. Enough. No deal is better than another bad deal.

Drop the hammer Mr. President.

Israel's Netanyahu seeks more trade partners citing Islamization and anti-Semitism in Europe

Benjamin Netanyahu risked opening a new rift with European leaders on Sunday by announcing plans to boost trade with Asia because Western Europe, its main partner, was experiencing "a wave of Islamisation, anti-Semitism and anti-Zionism".

The Israeli prime minister's comments at a weekly cabinet meeting came as he prepared to welcome Shinzo Abe, Japan's prime minister, who arrived in Israel accompanied by around 100 heads of leading Japanese companies.

"We definitely want to reduce our dependence on certain markets in western Europe," said Mr Netanyahu while advocating increased trade with Japan, India and China.

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Russia and China reach 30 year gas deal

BEIJING — China and Russia agreed to a major 30-year natural gas deal on Wednesday that would send gas from Siberia by pipeline to China, according to the China National Petroleum Corporation.

The announcement caps a decade-long negotiation and helps bring Russia and China closer than they have been in many years. The contract was driven to a conclusion by the presence in Shanghai over the last two days of President Xi Jinping of China and President Vladimir V. Putin of Russia.

...The deal was expected to be worth about $400 billion, said James Henderson, senior analyst at the Oxford Institute for Energy Studies.

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China Mafia-Style Hack Attack Drives California Firm to Brink

During his civil lawsuit against the People’s Republic of China, Brian Milburn says he never once saw one of the country’s lawyers. He read no court documents from China’s attorneys because they filed none. The voluminous case record at the U.S. District courthouse in Santa Ana contains a single communication from China: a curt letter to the U.S. State Department, urging that the suit be dismissed.

That doesn’t mean Milburn’s adversary had no contact with him.

For three years, a group of hackers from China waged a relentless campaign of cyber harassment against Solid Oak Software Inc., Milburn’s family-owned, eight-person firm in Santa Barbara, California. The attack began less than two weeks after Milburn publicly accused China of appropriating his company’s parental filtering software, CYBERsitter, for a national Internet censoring project. And it ended shortly after he settled a $2.2 billion lawsuit against the Chinese government and a string of computer companies last April.

In between, the hackers assailed Solid Oak’s computer systems, shutting down web and e-mail servers, spying on an employee with her webcam, and gaining access to sensitive files in a battle that caused company revenues to tumble and brought it within a hair’s breadth of collapse.

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HT: MG

Taking Harder Stance Toward China, Obama Lines Up Allies

WASHINGTON — The Obama administration, facing a vexed relationship with China on exchange rates, trade, and security issues, is stiffening its approach toward Beijing, seeking allies to confront a newly assertive power that officials now say has little intention of working with the United States.

In a shift from its assiduous one-on-one courtship of Beijing, the administration is trying to line up coalitions — among China’s next-door neighbors and far-flung trading partners — to present Chinese leaders with a unified front on thorny issues like the currency and its territorial claims in the South China Sea.

The advantages and limitations of this new approach were on display last weekend at a meeting of the world’s largest economies in South Korea. The United States won support for a concrete pledge to reduce trade imbalances, which will put more pressure on China to allow its currency to rise in value.

But Germany, Italy, and Russia balked at an American proposal to place numerical limits on these imbalances, a step that would have further upped the ante on Beijing. That left the Treasury secretary, Timothy F. Geithner, to make an unscheduled stopover in China on his way home from South Korea to discuss the deepening tensions over exchange rates with a top Chinese finance official.

Administration officials speak of an alarming loss of trust and confidence between China and the United States over the last two years, forcing them to scale back hopes of working with the Chinese on major challenges like climate change, nuclear nonproliferation, and a new global economic order.

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It's not often I have something positive to say about this administration. But this seems like a good move to me.

W.T.O. Rejects Chinese Claims in Dispute Over Duties

A World Trade Organization panel on Friday largely rejected Chinese claims in a dispute with the United States over additional duties on Chinese goods, which Washington argued were priced at below cost and subsidized.

United States Trade Representative Ron Kirk welcomed the ruling as a win for American businesses and workers affected by unfairly traded imports.

The case involved treatment of goods from a country that is not a market economy, where the state sets or influences prices.

The ruling backed the right of an importer to set duties on goods from such economies to compensate for unfair pricing and for subsidies — something that a United States court had struck down.

The two-year-old dispute turned on duties imposed by the United States on imports of Chinese steel pipes, off-road tires and woven sacks.

The panel did back some Chinese complaints and called on the United States to bring its measures in line with W.T.O. rules where they breached them.

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Rare and Foolish

Last month a Chinese trawler operating in Japanese-controlled waters collided with two vessels of Japan’s Coast Guard. Japan detained the trawler’s captain; China responded by cutting off Japan’s access to crucial raw materials.

And there was nowhere else to turn: China accounts for 97 percent of the world’s supply of rare earths, minerals that play an essential role in many high-technology products, including military equipment. Sure enough, Japan soon let the captain go.

I don’t know about you, but I find this story deeply disturbing, both for what it says about China and what it says about us. On one side, the affair highlights the fecklessness of U.S. policy makers, who did nothing while an unreliable regime acquired a stranglehold on key materials. On the other side, the incident shows a Chinese government that is dangerously trigger-happy, willing to wage economic warfare on the slightest provocation.

Some background: The rare earths are elements whose unique properties play a crucial role in applications ranging from hybrid motors to fiber optics. Until the mid-1980s the United States dominated production, but then China moved in.

“There is oil in the Middle East; there is rare earth in China,” declared Deng Xiaoping, the architect of China’s economic transformation, in 1992. Indeed, China has about a third of the world’s rare earth deposits. This relative abundance, combined with low extraction and processing costs — reflecting both low wages and weak environmental standards — allowed China’s producers to undercut the U.S. industry.

You really have to wonder why nobody raised an alarm while this was happening, if only on national security grounds. But policy makers simply stood by as the U.S. rare earth industry shut down. In at least one case, in 2003 — a time when, if you believed the Bush administration, considerations of national security governed every aspect of U.S. policy — the Chinese literally packed up all the equipment in a U.S. production facility and shipped it to China.

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I rarely agree with Dr. Krugman about anything. If he told me it was sunny and 75 out I would grab an umbrella and my over-coat. That said I think he nailed this one.

China halts exports of some rare minerals

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of some of those same materials to the United States and Europe, three industry officials said on Tuesday.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further ratchet up already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese officials are willing to use their growing economic muscle.

“The embargo is expanding” beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity for fear of business retaliation by Chinese authorities. They said Chinese customs officials imposed the broader shipment restrictions Monday morning, hours after a top Chinese official had summoned international news media Sunday night to denounce United States trade actions.

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