The mood in Asia is good as President Trump’s tour delivers important trade deals and national security ties. The stock market is going crazy as the Trump boom continues and the markets are in near melt-up mode. Profits are critical to the market, but peaceful trade agreements are useful. And when the dust clears, it could be the result of a tariff rate in the United States of around 15 percent, which is a pretty low number to boost profits and avoid retaliation from a trade war, at least in Asia.
Here’s an important point: the agreements with Vietnam, Malaysia, Cambodia and Thailand include transhipment provisions. This is intended to deter communist China from channeling its cheap exports through these countries to hide its unfair trade practices.
In Japan, Trump appears to be getting along well with the new Prime Minister, Sanae Takaichi, who has nominated him for a Nobel Peace Prize. Japan will buy a lot of Ford F-150 trucks and help America produce rare earth metals. And it appears that Japan’s $550 billion investment in the United States will happen in some form over time.
Peter Schweizer, president of the Government Accountability Institute, discusses China’s role in perpetuating the US fentanyl crisis and how tariff relief can ease tensions on ‘Kudlow’.
And then there is China. So far, the China story seems to be something of a return to the future. By that I mean that Secretary Scott Bessent’s so-called “framework” includes a suspension of China’s moratorium on rare earths, perhaps for a year, in which case Mr. Trump will likely suspend his 100 percent tariff surcharge. We don’t know this for sure, but it seems like this is in the cards.
China will resume purchasing soybeans, the market price of which has suddenly risen to $11 per bushel. And there are reports of some sort of new deal on fentanyl, but seven years ago Beijing was said to be cracking down on the export of chemical precursors that produce fentanyl.
I was at the G-20 bilateral dinner in Buenos Aires, Argentina, when Mr. Trump raised the fentanyl issue with President Xi Jinping as his first order of business. Mr. Xi says yes to stopping fentanyl, when the reality is that he will never stop using fentanyl. And are we going to believe him now? Mr Xi thinks he has influence over rare earths, but America has influence as the world’s largest economy. The United States has more influence because we just wiped out Iran and knocked China out of the Middle East.
‘Kudlow’ panelists Gerri Willis, Liz Peek and Mohamed El-Erian discuss stock market gains, President Donald Trump’s trade deals with Asia and possible interest rate cuts.
The United States has even more influence because the Chinese are being held back in places like Venezuela, Argentina and elsewhere in South America. For some reason, Mr. Xi thinks that Mr. Trump will relinquish the independence of the Republic of China on Taiwan, but don’t bet on that. Mr. Trump expects China to stop buying Russian oil that is financing the war in Ukraine. If they don’t, secondary sanctions will likely take all Chinese trade out of the dollar system. And I think TikTok is going to be sold, although it’s certainly not my favorite sell, because I see it as one big Chinese spy algorithm.
And finally, America will launch an investigation into the original Phase One Deal between the United States and China. Enough to investigate, because Beijing did not actually comply with it. That deal was signed almost six years ago. I was for that too. Can anyone ever trust or believe the Chinese Communist Party? Just ask.
