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Max Fisher of the NYT points out the unique approach taken by Canada in the U.S.-Canada relationship - to cultivate a grassroots network of Americans in legislatures, business, and at different levels of government. This has enabled the Trudeau government to build a relationship with president Trump, and at the same time have relationships at different levels of government and with business in the U.S. to tackle issues where the Trump administration has acted in ways unfavorable for Canada. Provincial governments in Ontario and Quebec lobbied against a New York state government provision for Buying American on state contracts worth over $100,000. By emphasizing the $10 billion in exports from New York to Ontario this lobbying persuaded the New York legislature to cancel the provision. Premier Trudeau's popularity helps and the proximity to the U.S. means Canadians can visit quickly and understand the U.S. as a close neighbor. Still Premier Kathleen Wynne of Ontario says Canadian businesses are nervous about the uncertainty from the Trump administration.   ...

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This analysis in the South China Morning Post shows that some of the nuclear options China has in a trade war with the U.S. are not as effective as they appear. Selling off China's huge Treasury holdings would lead to a situation where there are no buyers on the other side. It says private sector bond buyers would run a mile, and the lack of buyers, actions by the U.S. government freezing these assets could render them effectively worthless. The bond yields would jump but only for a short period as the Federal Reserve would step in to buy bonds, and yields would stabilize with the actions of central banks of U.S., Europe and Japan. A dent in the dollar would only make Chinese goods more costly in the U.S. exactly what U.S. tariffs are trying to achieve. A 10% devaluation of the yuan would have the effect of creating expectation of further devaluation, and lead to capital outflows from China on a large scale. A small devaluation in 2015 led to a large outflow. This would lead to a significant loss in foreign exchange reserves for China.  In this way China's deterrent would be less effective than it appears. ...

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Kenneth Rogoff, Harvard University economist, author of the well researched book on the 2008 financial crisis, "This Time Is Different," gives his thoughts on the economic prospects for the U.S under the new Trump administration. He says 4% GDP growth and 3% inflation is possible temporarily for a while with stimulus policies, less regulation, and increased private investment. After 8 years of not investing in much needed infrastructure because of concerns about the deficit, the timing is right for such investments, especially as the economic effects of the crisis of 2008 gradually fade.  This is about taking advantage of ultra low interest rates to invest in infrastructure. He says it helps that Trump policies are pro-business. He sees drawbacks as the stimulus program adds a 25% increase with extra debt, adding $5 trillion over 10 years, but adds that for many years Nobel prize winning economist Krugman and others have said that there is good reason to increase borrowing to invest, and this is now being tried. Inflation remains an uncertainty- if there are large quantities of underutilized and unemployed resources it would raise prices less than its effect to increase output. The reverse would apply if the U.S. economy is closer to full capacity. One factor that would help- increasing confidence for business and increasing investment. Against this what he calls optimistic view or spin, is the idea of mistakes under a Trump administration, errors made and a degree of incompetence which he says is a real possibility. Overall his view is that some risks are appropriate now, and from his deep study of financial crises sees the slow growth of the last 8 years a result of a financial crisis that now begins to fade, creating the possibility of higher growth under prudent policies.  ...

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Kessler in the WP corrects Obama's claim that he created 800,000 jobs. He says this is clever arithmetic as it takes a low point in Feb. 2010 following the financial crisis. Kessler points out that according to the Bureau of Labor Statistics, U.S. manufacturing jobs were 12.56 million in Jan. 2009 when Obama became president. In Nov. 2016, early estimates show there were 12.26 million manufacturing jobs, a loss of 300,000. This loss does not reflect the problems in the U.S. auto industry and older industries in the midwestern states as a result of trade and globalization that speeded up with the rapid industrialization of China. And led as Greg Ip pointed out in a recent WSJ report to a rapid acceleration of job losses in a decade that did not happen in the same scale during Japan's industrialization and urbanization in the sixties. This aggravated the situation in Michigan, Ohio, Wisconsin, Indiana, and Pennsylvania, and was met with a feeble response from Democrats. Even a economist like Krugman favoring the Obama administration's efforts came to the conclusion that TPP did not add much to gains from trade as most of the gains had already been realized. More of the gains went to tech and IT in California, at the expense of the auto industry based in the midwest. A report in WP show a president too close to IT in California and failing to grasp the situation in the midwest. Voters punish whoever is in power, regardless of being Conservative or Liberal, in Canada the hollowing out of manufacturing under Harper in Ontario and Quebec led to the win by Trudeau's Liberals.  ...

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This report by Peter Baker shows President Trump only reluctantly agreed to certify the Iran Nuclear Agreement. He opposed it in discussions with the Secretary of State Tillerson. It took the combined effort of Tillerson Dunford of the combined chiefs of staff, Defense Secretary Mattis, and of National Security Adviser McMaster, to get Trump to agree to go ahead with the deal. President Trump wanted a new strategy to counter Iran in the Middle East. The Iranian foreign minister Zarif has not yet met with Tillerson of the U.S. Zarif says Iran may withdraw from the deal if there is significant nonperformance by the U.S. Trump advisers are wary about the influence on Europe as the EU is not interested in taking a new look at the Iran nuclear deal. The EU sees things differently- that the issues of Iranian influence in the war torn Middle East is a separate issue from the nuclear deal, and that in any case a nuclear constrained Iran is better than one with nuclear weapons. Another factor is that the Middle East is now a complicated place with relations crisscrossing in different and even conflicting directions. The U.S. played a part on the Iranian side in the retaking of Mosul in Iraq with U.S. bombing strikes against Islamic State. In Iraq the U.S. is supporting the Abadi government which is mainly Shiite in its structure and is supported by Iran. The Trump position is that president Obama gave away too much in negotiating the deal and was not against the negotiating process.   ...

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Japan's governing LDP party wins over two thirds of the seats in parliament in a snap election called one year before the end of the term in office. Prime minister Abe's popularity by summer 2017 dropped to about 30%, and yet with a divided opposition he managed to win the election with a large majority. The opposition led by the Democratic Party and Tokyo Governor Mrs Koike fragmented with the formation of new parties, Yuriko Koike's Party of Hope, and the Consitutional Democratic Party. Mrs. Koike failed to keep the opposition united with some missteps including asking for a loyalty pledge from candidates. This election win makes it possible for Abe to get a third term as leader of the LDP and eventually becoming the prime minister with the longest term in office. Abe had a poor start during his first effort as prime minister when he resigned in less than a year. This is a comeback for Shinzo Abe from that difficult period. Yet the constitutional changes to support Japan's Self Defense Forces with the growing threat from North Korea are not getting the same level of support. Opinion remains divided on that issue.  One aspect of this election is that very few women candidates are running for parliament. In contrast to the election in Britain with more women running for office and getting elected, in Japan's 2017 snap election less than 10% of candidates elected are women. ...

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Galston of the Brookings Institution says globalization has hurt workers in manufacturing with job losses and declining incomes. It has produced outcomes that have favored some industries such as tech, and not others such as automobiles which in the past helped create the broad middle class by offering good paying jobs to people with less than a college education. Immigration has created an issue that political leaders outside of the main parties have appealed to in France, the U.S. and Britain. The result is a polarization in the voters that has rarely been seen to this extent before. The middle class in the period from the 1950's to the 1980's is not the middle class that we see today in Europe and the U.S. The 2008 financial crisis added to the problems with the slow and uncertain recovery for some groups such as white men, the less educated, students, and people on minimum wage. 

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This commentary in the WSJ says it is essential that the U.S. get back manufacturing of all technological goods back to the U.S. or its allies. The dangers of depending on China or other countries not clearly allied with the U.S. is quite clear especially after the pandemic. The U.S. and European supply chains need to be completely remade, restructured, to avoid dependence on China or countries that are not allies. This is what supply chain renewal is about. Yet initiatives alone with hundreds of billions of dollars price tag re not the answer to the problem. What is needed are specific targeted actions such government direct assistance to key sectors to ensure U.S. technological advantages in worldwide competition. Giving a hole range of incentives and direct financial support to industries making everything from electronic and computer components to high tech parts that go to defense and civilian production.   The U.S educational component in this puzzle is university students in all high tech courses which should be kept for U.S. citizens or from key allied nations at American universities. The manufacturing base would mean securing incentives and aid to manufacturing industries, component by component, part by part, to secure American leadership and distinct advantage.  Job losses have to be reversed and industries relocated back to the U.S. And only in cases where it is advantageous to manufacture overseas to relocate in allied countries India, Japan or South Korea. U.S. labor has to be brought into the picture as a key participant in the national interest and given an important role. R& D efforts have to be developed component by component, technological part by part, and technology by technology, so that a systematic plan can be followed to secure American leadership for the rest of this century, is what experts including this one say is required today. ...

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A German reporter questions the value of the G20 meetings following the violence on streets at the last Hamburg meeting. He says the first G20 during the global financial crisis was useful but later meetings have not lived up to the hope for discussion and search for solutions to world problems. Global trade is at the top of the agenda following the tariffs dispute between China and the U.S. Divergent interests of participants are a problem. Would going back to G-7 in private meetings be a solution asks this reporter.

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Ford is facing a sales disaster in the China market after lagging in coming up with new models and falling behind in adopting new technology in the hyper competitive Chinese market. Sales dropped from 1.27 million vehicles in 2016 to 752,000 vehicles in 2018. In 2018 sales dropped by 37%, when the Chinese market declined by 3%. In 2019 the car market in China shrank by another 12% in the first half.  The problems stem from poor management. Alan Mulally started the China project, his successor from a Michigan furniture company CEO Jim Hackett was unable to grasp the challenges in China with new technology a key feature of keeping abreast of the Chinese market. A succession of new executives in China from U.S. or EUropean operations compounded the problem each group lacking the touch needed with local Chinese conditions. Some experts say Ford is now becoming irrelevant in the Chinese market after being a late starter in coming to China and then investing billions in a catch up effort. GM and VW started much earlier. Ford reported loss of $1.5 billion in 2018. From 5% in 2015 its market share dropped to 2.1% in first quarter 2019. Ford was complacent and applied a global strategy in China when local Chinese car companies were moving with lightning speed. Ford was asked to locate in the far interior of the country as a late comer to China and its partner Chang'an Auto was more concerned about keeping car jobs than introducing the latest technology and models. China is obsessed with new technology and there is no way Ford could be allowed to get away with outdated models. ...

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Jane Perlez of the NYT describes the efforts of China to draw the new South Korean president Moon Jae-in away from close defense ties with the U.S. Moon Jae-In won the South Korean election in 2017 and favors better relations with China and North Korea. China's goal is to reduce deployment of the Thaad missile defense system the U.S. has installed in South Korea, which is seen as reducing China's nuclear deterrance because the system also protects against missiles launched from China. Economic ties are also affected in the dispute as China has promoted a boycott of South Korean cars, televisions and other products, and fewer Chinese now visit South Korea. 

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The campaign rhetoric for renegotiating NAFTA and building a wall at the border has had a sharply negative effect on growth in Mexico. Growth slowed in 2016 and is expected to be close to zero in 2017 with declining foreign investment in the economy. The uncertainty is leading to sharp decline in foreign direct investment of 24% in the first 9 months of 2016, according to the Bank of Mexico. Further declines can be expected in 2017. The decline in the value of the peso of 16% since May 2016 has led to 6 interest rate increases in the past year. Inflation on annual basis was at 4.72% in Jan. 2017 and is rising. As Mexico depends on exports for one third of its output growth, and 80% is sent to the U.S., there is a need to diversify with trade agreements made with the European Union and other countries. Mexicans now question the value of NAFTA trade agreement as average growth of 2.6 since NAFTA was signed is below the 4.6% in the 2 decades prior to that. And poverty level is the same with about 60% of people in the underground economy. In addition crime, drug trade, a weak education system, weak rule of law, political corruption, show that Mexico has not made the progress since NAFTA that it should have made. ...

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The commodities boom allowed Brazil under president Lula to commit to heavy state spending, subisidies, protection of favored sectors with large tariffs, that led to inefficiency and high debt. The policies continued under president Rousseff. Corruption scandals in the latter part of the Lula administration led to more populist policies for the Workers Party to stay in power, says Porter. Compared to Mexico and Chile, Brazil and Argentina under presidents Lula and Kirchner moved in the direction to closing up their economies to trade and foreign investment that would make corporate sectors more competitive and less dependent on the state for subsidies and favors. Mexico's economy other than the automobile sector is struggling, as mismanagement also plays a part as with the handling of Pemex and huge capital injections needed. Mindfulness and thoughtfulness is needed in setting policy direction, aware of the risks free of illusions about rosy scenarios, knowing that ideology plays less of a part than exercizing good judgement....

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The European Union Commission says Ireland must recover 13 billion euros in back taxes for giving tax preferences to Apple that are against EU rules. The EU Commission says Ireland allowed Apple to pay a corporate tax rate of 1% on its European profits in 2003, and .005% in 2014. The EU Commissioner says the use of Ireland as the place where Apple pays taxes on operations in Europe has no base in reality, as most profits are earned in other countries outside Ireland. Taxable profits of Apple "did not correspond to economic reality," according to Ms. Vestager, the EU Commissioner.  In the current environment where political upheaval is unsettling the democratic process in the U.S., Britain, Spain, France and Italy, as well as in Brazil and other countries in the developing world- because of deep recessions, and efforts to cut the deficits with deep cuts in state spending including in education and healthcare, basic services- the moves by companies to reduce taxes to these absurdly low levels such as .005% when other companies in the EU are paying 12.5%, is becoming increasingly unpopular. As pointed out in this BBC News article this sounds like the way Carnegie, Rockefeller and Vanderbilt operated during the late 19th century, and were seen as operating in a manner that was above the law. Janet Yellen pointed out at a Boston Fed Conference on inequality in Oct 2014 that the bottom half of the distribution or 62 million households in the U.S. in 2013, had a net worth of about $10,000, One quarter of these households had a net worth of zero dollars. The working class and blue collar workers in the U.S. provide much of the support at Trump rallies. Younger college educated people support Sanders, because of the situation of the working and middle class in the U.S., and a similar situation exists in Europe. It is for the sake of the democratic process and delivering services in education, healthcare, and other basic areas to all, that companies small and large need to pay their fair share of taxes, regardless of size, influence, or technological advantages. Today this is is seen by most leaders who draw public support as the right way forward for the U.S., Latin America, Europe and Asian countries, including proper allocation of resources to best serve the needs of working people. For example the 13 billion euros is equal to all of Ireland's healthcare budget, and 66% of its social welfare budget.    ...