At the moment President Trump triggered the public announcement, U.S. Trade Representative Jamison Greer was testifying to congress.
President Trump is not a jerk. Donald Trump would not put a top executive Greer in that optically vulnerable position if USTR Greer was the tip of the spear, it’s just bad business form.
The timing and background indicate something more substantial. For what we are calling ‘the BIG UGLY’ Treasury Secretary Scott Bessent is the point, Greer is a functionary. It’s a shift from the Term-1 approach, because the global trade reset is magnitudes bigger and more substantive.
This approach would also explain why Robert Lighthizer was not reenlisted in Term-2. If Lighthizer was in Greer’s chair in front of congress at the moment of the public announcement, he would have been furious and rightly so. Lighthizer and Wilbur Ross were the tip of the spear in term-1, Lighthizer facing the region of Asia and Ross facing Europe; but the same strategy is not present in term-2.
In the Term-2 trade reset, the entire globe is being targeted simultaneously. Enter, the U.S. Treasury Secretary in a bigger, more substantive, and much more prominent role due to the scale of the trade reset.
This trade approach is much bigger, obviously. As the nuclear-level detonation takes place, Secretary Bessent is in control of both the financial market response and the core finances of the USA as it relates to the reverberations.
♦ In essence, President Trump detonates, Bessent controls the immediate aftermath. Commerce (Lutnick) and USTR (Greer) come in after, with the granular details and legal structures for reciprocity compliance. President Trump then reenters deciding the sequencing of inbound contacts, status in the que, bilateral talks with the executive principals and then a later review of free trade agreement (FTA) contracts, details, with I’s dotted and T’s crossed before signatures.
This bigger sequencing, the priority of the strategy, explains all of Scott Bessent’s comments in the aftermath of the April 2nd “liberation day” trigger. Bessent warning the impacted nations not to react with retaliation. Some did, some did not. Those who retaliated go to the back of the que (¹geopolitical needs of Trump not withstanding).
President Trump basically wiped decades of global free trade agreements off the books; many of those FTA’s were not bilateral which is the favored approach for President Trump on a nation-by-nation basis.
As a consequence, I would not look for too much emphasis on the EU as a collective trade partner because the assembly just represents too many interests. I would anticipate President Trump framing FTA’s for each nation within the union and then letting the predictable and internal bitch-fest in Brussels stew; let them work it out.
Yes, throughout this global detonation China is the big target. Without doubt, Beijing is trying to strategize how they can best position, with their previous influence within each “independent” nation now in a new framework. The tentacles of the ‘Belt and Road’ initiative have been simultaneously hit.
As Bessent has noted, the Beijing economic model is established to produce, produce, produce, regardless of purchases for their production. If Beijing does not get purchase orders, China just discount’s the product created and dumps it into any market that will purchase it (insert my trip to Russia witnessing this firsthand). European Commission President Ursula von der Leyen, acting as spokesperson for France and Germany, is extremely worried about this happening in the EU.
The China dumping becomes problematic within the global reset because nations can take the cheap discounted Chinese goods and transship them to U.S. customers at substantially steep discounts that wipe out any protective tariff approach.
President Trump will factor this issue in any agreement with individual nations (hence, bilateral FTAs). If [XXX Nation] tries to transship discounted Chinese goods or components into the U.S. market, Trump will tariff, block or embargo that nation. The result means USA retaliation will cover all national manufactured or produced goods from that nation, not just the transshipped Chinese crap.
These pressure points upon China, from the EU (their own protective self-interest) and various nations who want to have preferred entry status to the U.S. consumer market, are critical. China is a production economy, cut out the purchases and they are in big trouble. This outcome is what can seriously impact President Xi Jinping.
This approach is why Beijing is quiet, trying to game out how to work around this global trade detonation.
¹ The only thing that can change a nation’s position in the trade negotiation cue, is a very specific geopolitical need from President Trump. Example, the EU position toward Ukraine and Russian sanctions.
As noted by President Trump in the XO signing session yesterday, he believes geopolitical events can be folded into the trade discussions if there is great value within them. Even though President Trump is approaching each country individually, the NATO group in Europe may get a better trade outcome if all the NATO members agree to President Trump’s peace outline in Ukraine.
This approach doesn’t replace or remove the issue of confronting inequal trade restrictions and relationships, it merely becomes one facet that can smooth the ink distribution from the reluctant EU hand holding the pen used in the trade agreement.
[ps. I’ll eat a plain rice cake if AMLO did not advise Mexican President Sheinbaum to keep her mouth shut. If only the Snow Mexicans had an AMLO to advise the insufferable Poilievre. ????]
