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US DJT administration using Section 301 creates the tariffs the US Supreme Court struck down- the EU, Mexico, Canada at 10%, Japan,, India China at 12.5%- June 2 2026. These countries are not doing enough to control the importation of products made with forced labour. This only goes to show what was said at that time and which the SCOTUS itself said the DJT administration could do, find other laws by which the same tariffs could be imposed. By the time the US Supreme Court reviewed the case it was already clear that all these countries had accepted DJT tariffs, and most had negotiated fair deals with the US including making up for past abuses by these countries of the international trading system. The US Supreme Court its shortsightedness ignored this or did not quite grasp this as Justices legal knowledge of facts does not mean grasp of the facts of commerce, trade and business and the history underlying it. Jamieson Greer interviewed at the Council of Foreign Relations this week and Robert Lighhizer in Foreign Affairs (covered and summarized on these Lyrarc pages this week as found rarely in other places) have documented these abuses in detail leading to the US losing $20 trillion in wealth shifted to these countries and its manufacturing dependent communities devastated by loss of over 5 million jobs through the shortsightedness of Bush/Obama adminstrations who let this happen, and these countries that took advantage with reckless disregard for these communities in the US, on a scale unknown in history.  ...

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Billie Jean King whose effort and persistence created the game of Women's Tennis, is alive and well with some words of encouragement, advice. Billie Jean King Commencement address at California State University Los Angeles, where she graduates in history in 2026, sixty two years after letting go college to play tennis. She grew up in Long Beach, with her brother, her parents a fireman who played basketball and a mother who was a teacher. For those who remember she comes from the period of Arthur Ashe, Stan Smith and in Australia Rod Laver, in the seventies. Stadiums are named after her at the US Open Tennis championships, and it was Billie Jean who helped create women's tennis. Some of her advice- "We can never understand inclusion unless we have been excluded." (the first African American player Althea Gibsen is celebrated in a postage stamp yet African Americans barely made it into the sport during her time. Billie Jean asked why it was all white dress, white people, white clubs.) "I like completing things. Finish what I started." (Sixty two years after postponing college in 1962 Bille Jean completes her history degree at Cal State LA in 1986). Billie Jean in another interview says history is so important and the only way to effect change that is good is to know what happened before and why. This is true for another pioneer for women a law student at Stanford named Sandra Day O'Connor of Arizona ranch territory that in those days stretched endlessly on all sides. Gandhi would agree. Hind Swaraj could not be written in 1909 by Gandhiji on a steamship to South Africa from London without asking about history and what had happened to create the Empire in India for the British East India Company traders, with warehouses and private armies, one that extended to Shanghai and Hong Kong in China. Gandhi says in 1909 "English merchants were able to get a footing in India because we encouraged them. When our princes fought among themselves they sought the assistance of Company Bahadur. That corporation was versed alike in commerce and war. We created the circumstances that gave the company control over India." Billie Jean gives some perspective on life and its lessons-"Wherever we are in life we can connect and we can impact change." "At 82 I have learnt about perspective and a few life's lessons- Champions practice their strengths. Concentrate on what you are strong and practice it." "Anything you do winning or losing, good or bad, its feedback not failure. Don't take things personally." "Don't let others define you. You define yourself." "Pressure is a privilege and champions adjust or adapt." "Just remember legacy is what others think about you, what is important is the value of the contributions you make." "Three principles for inner and outer success. Relationships are everything. Relationships with yourself, your family, your loved ones, your faith, and your friends. No. 2- Keep learning and keep learning how to learn. Be a problem solver and a innovator. Our decisions, our actions, our voices will shape what comes next. Have fun. Be fearless and make history." ...

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New Commerce Secretary, Gary Locke, has contacts with the Chinese leadership, and has years of experience on China trade issues. He was Governor of Washington state, which has about a third of its jobs dependent on foreign trade and looks west to the Asia Pacific region for growth. He is the country's only Chinese-American governor, as governor of Washington state from 1997 to 2005.

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The role of the former Rhode Island governor Gina Raimondo, as Commerce Secretary. She pushed forward the CHIPS and Science Act through Congress securing votes from 17 Republicans and all except one Democrat in the House of Representatives. She is committed to moving fast on issues such as investments in America. Gina Raimondo believes that "the most important thing to do to compete with China is to invest in America." She says in an interview that America needs to dominate in certain areas of technology, including critical materials, electric vehicle batteries, semiconductors, artificial intelligence. This report looks at her role at the Commerce department and her relationships with president Biden, Congress, and foreign leaders including Piyush Goyal who is Minister for Industry in India.
 

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Canada's Carney gives up on USMCA renegotiated deal with US as he makes deal with China Jan 2026. No date is set for USMCA renegotiation. Carney stepped up the criticism of the US and suggested middle powers find their way by makiing deals of their own. This has drawn criticism from DJT, Luttnick and Scott Bessent, the Commerce Secretary and Treasury Secretary. Canada's economy has some fragile points in its dependence on the US and this may not be the wise course of action for Canada at this time. Germany, Italy, are meeting on February 12 and Europe may follow a different course of action of working with the US, India is close to a trade deal, so that Carney's and other remarks about going to partner with China at a gathering as isolated as Davos is from the real world may be very counterproductive.

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Tech company VK makes Russia's contribution to the Internet with Max to rival WeChat and Whats App. Max has the backing of the Russian government and is a messaging, ecommerce, all aspect platform. Russia learned over the years that its governmental processes could be subverted by apps from overseas. This is also the experience in India where democratic processes can be subverted by apps from overseas. As a result the idea of one internet is not real, internet not of the world, not of the US, not of India, not of China or Russia, but of one company monopoly of Google with a sub monopolist of Meta with its control of Whats App and social media- clearly unacceptable. 

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US $1.5 trillion budget request for 2027 fiscal year by the president for military and defense spending is about 4.7% of US GDP forecast of $31.8 trillion in 2026. In 1960 it was 9% following the Korean War. It dropped to 3.1% of GDP by 2000 and stayed around 3.4% till the current effort to modernization of the US military is thought to require about 5% of GDP.  (World Bank charts). The US spent far higher during an earlier period reaching 14% of GDP in 1953 during the Cold War with the Soviet Union. This report shows WSJ Analysis of where the $1.5 trillion request for Defense is going-  $1.1 trillion for War Department and $350 billion for critical munitions. The munitions are in short supply and war in Iran shows that it plays a critical part in defensive systems such as intercepting of missiles as missiles in short supply affect overall capabilities. An additional $200 billion for Iran War. Pay raises for Defense personnel. $66 billion for shipbuilding- 34 ships to put the US back in the lead for shipbuilding it has lost to China, with the help of Japan which is also ramping up the shipbuilding it has lost to China. US and Japan were leading shipbuilders in the  1930's and in the 1960's, then lost it to South Korea and China. About a 12% decrease in other Department's budgets including Health and Human Services, Treasury, Commerce, Interior, Housing and Agriculture.  These cost reductions some of it coming from more efficient functioning and from concepts such as zero based budgeting where every line item in the budget gets reviewed every year for how much is needed for the purpose, is the purpose still valid, and can it be done more efficiently costing less. $660 billion is coming from the savings. The Nation's capital will also get a facelift, a major renovation, after being ignored for years. In the new Budget is $10 billion for the Presidential Capital Stewardship Program within the National Park Service for beautification projects in Washington D.C., which will give the National Capital a much needed new look for millions of visitors from the 51 states in the Union.    ...

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A study by the EU Chamber of Commerce in China says European companies are being unfairly treated in the awarding of public contracts.

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US and China agree on the first step to a broader trade deal. US offers to take in Chinese students at American Universities, something DJT says he was good with.  “Chinese students using our college and universities,” adding that such attendance has “always been good with me.”  China for its part will not slow move export of magnets and rare earth minerals on which it has established a near monopoly of the supplies. These rare earth minerals are needed for technology products made in the US. US tariffs of 55% will still say in place as "deterrance" that the other side keeps its promises and to cut the trade deficit with China not simply talk about it has has happened for a decade of Bush, Obama, Biden. Treasury Secretary Bessent and Jamieson Greer US Trade Representative were at London talks with Commerce Secretary Howard Luttnick to find ways to get an impasse resolved. Both sides lack confidence in what the other is doing so that theis the first step to clarify the direction of talks for achieving a broader deal.  ...

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Softbank, Japan's leading search engine company, has a 34% stake in Alibaba. It also persuaded Alibaba's founder Jack Ma to start e-commerce site Taobao. Softbank will start a service in 2010 which connects Taobao to its Tahoo portal in Japan. Softbank owns a 35% stake in Oak Pacific Interactive which owns the popular social networking and game playing sites RenRen and Kaixin.com. Softbank's strategy in China is to concentrate on e-commerce, local social networking sites and online games. This avoids hitting a wall of government censorship which has hampered progres in China for Google and a number of other sites. Other steps taken by Softbank's founder are to work with respected local partners. Jack Ma sits on Softbank's board and Son sits on Alibaba's board. Softbank sees its mobile business connected to internet growth because mobile users are increasingly using the internet, and Softbank is a mobile carrier.

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The president of the U.S. Chamber of Commerce China Center says the White House has a supportive community when it comes to getting China to abide by fair rules relating to intellectual property. Mr. Bolton talking to the CEO Council was frank about the U.S. government's efforts to get China to to implement a broad set of reforms. He even called for a show of hands from executives who think its acceptable to live by the situation today which hurts the U.S. when it comes to intellectual property. No one showed their hand. U.S. executives once skeptical about the tariffs from president Trump on Chinese products are now shifting their views on the confrontational approach taken by president Trump on issues of U.S. technology transferred to companies in China that lead to the U.S. losing its technological advantage.

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A directive from the Central Committee of the CCP, China's Communist Party is shown in this report in the WSJ that requires strengthening the work in corporate governance of the United Front Work Departments. This applies to foreign companies according to this directive in September 2020. This report says the European Chamber of Commerce in China has said that "this would have a considerable impact on business sentiment, and could lead foreign companies to reconsider future and even current investments in China."

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The influence of business executives who helped shape president Trump's views on Mexico, China, Export Import Bank, and other issues is covered by Stokols and Bender of WSJ. On Mexico the departure of Mike Flynn helped moderate views, Wilbur Ross, the Commerce Secretary also provided a moderating influence. The plans are now to change NAFTA but not entirely redo the agreement. On the Export Import Bank the views of Boeing CEO Muilenburg, who explained to Trump why the Bank supported U.S. exports and how other countries had similar banks, led to the president filling the bank vacancies. On China the influence of NEC head, Gary Cohn, former president of Goldman Sachs, and other business executives, led to a less confrontational position. The president once called NATO obsolete during the campaign but he met this week with NATO secretary general Stoltenberg this week and expressed strong support for NATO after rising tensions with Russia.

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China's civilian and profit oriented enterprises now work for the military and the People's Liberation Army. The spy balloon program has one individual behind it Beijing academic Wu Zhe, who is a member of the Communist party and has formed several private companies to develop balloons, with several patents on the technology, says this report in WSJ. Four of six companies blacklisted by the Commerce Department have ties to Wu Zhe says this report.

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Jorg Wuttke, chairman of the EU Chamber of Commerce in China says Germany exports 600 million euros worth of good to China every day. China exports $1.3 billion euros world of goods to Germany every day. Germany companies have heavily invested in Germany and millions of jobs in Germany depend on investments in China from engineering services to engine parts. Big companies making cars, chemicals and engineering goods make in China and have markets in China. This makes it very difficult for Germany to develop its own independent policies in relation to China for its own security following the war in Ukraine where China has supported Russia. Two decades of Merkel and CDU policies with the participation of the SPD leadership have led to this situation. Scholz is aware of this as his coalition partners Lindner of FDP, Habeck and Baerbock of the Greens oppose the dependency on China which restricts Germany from developing its own independent policies during a period when there is war in Eastern Europe with Russia. ...

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Alibaba, the internet commerce company in China, will split into 6 independently run companies. This reorganization comes as the company had grown too large and become a competing center for financial direction for China rivalling the government. Jack Ma was critical of financial regulation in China leading to a period in which the internet company founder was seen as providing a different direction for the Chinese economy from that of Xi Jinping. As China cracked down on some of the problems from lack of regulation of the economy, pollution of the environment,  worsening of climate change, and wide disparities in wealth in the country, Jack Ma was becoming increasing at odds with the new trend for better distribution of wealth, and attention to problems of neglected regions, tackling problems of corruption that had developed in the boom period of the economy. 

 

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U.S. Commerce Secretary, Wilbur Ross, has balanced the rhetoric of president Trump on trade in the NAFTA debate by saying the U.S. is looking for win-win solutions in trade relations with Mexico. At the WSJ CFO network Ross says the trade regime from the post war years is now an anachronism and does not work well especially for the U.S. Many experts agree that the trade framework from that period is problematic. It does not take into account, for instance say experts, the situation where a command economy such as China could help manufacturing industries with state policies, including currency policies. The rapid growth in China was different from the rapid growth in an earlier period of Japan, in terms of its impact say experts. The U.S was the dominant economy during the sixties, and the growth in Japan was not at the accelerated pace and of the magnitude that happened in China. As a result the impact on  some communities in the U.S. was much more intense in the last two decades, as documented by prominent trade studies, leading to the sense that trade did not work for these communities. ...

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Where changes are being made that make America stronger business leaders wholeheartedly support and value the president's work and the people on his team working on it. Brad Smith of Microsoft says of Biden on cybersecurity "he has done more in his presidency than any president ever." CEO's of auto companies (Stellantis, GM, Ford) and Intel CEO Geisinger value the investment the government is making for climate change transition and investments in rebuilding semiconductor manufacturing to level the playing field with China, something the US Chamber of Commerce never advocated. It is the policy officer of the US Chamber of Commerce who uses the word "complicated" because the positions taken by the US Chamber of Commerce are at odds with what the American people need, or are demanding of the president. If one is talking about large oil companies, so called Tech companies such as Google and Apple that are not paying their fair share of taxes, and Pharma companies that are charging exorbitant prices, the president is only doing what is best for the American people. One could see this in the recent Senate hearings with Big Pharma companies ,when out of sheer frustration the senior Republican senator Mike Braun of Indiana warned the Pharma companies, that they were following a path that he other Republicans could no longer support. Banks faced tighter regulation because of banking crises including the 2009 crisis caused by the banks that hurt workers and middle class. Business relations with the Biden administration are being shaped then by a new vision for America and the American people, to point to a brighter future, not to pull back to the past. ...

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The surprise is the DJT Senate bill cuts to about 75% of the solar and wind subsidies in the Biden 2022 IRA Act for $843 billion in investments that were going to Republican districts. New rules in the Senate version of 3B Tax Cuts Bill require US renewable solar to disentangle supply chain from China by 2027 or face an excise import tax. All renewable subsidies will also be phased out earlier by 2027 instead of 2032 set by the Biden administration in the Inflation Reduction Act. The Inflation Reduction Act passed in 2022 with subsidies, tax credits for renewables solar and wind led to $843 billion in planned solar and wind investments. Suddenly much of this is placed in doubt. Instead of 2032 phase out the date is moved up to end of 2027 for 30% subsidies and to end of 2028. The result is confusion in the renewables industry and opposition to the excise tax for not disentangling from China supply chain by end of 2027 spreading to the US Chamber of Commerce. ...

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The mysterious activities and losses of a South Korean/Japanese venture capital company Softbank which has been part of the massive misallocation of capital away from infrastructure and health care services during the decades before the pandemic. It has emerged recently as the mystery investor in options on tech shares that led to shares losses of 7 billion pounds for Softbank.

It lost half of its value in an earlier dotcom crash. A few investments in China during the early period of its development based on gut feel of the founder, including Alibaba an e-commerce company based on Amazon's success in the U.S. and other investments in China, is the basis of its business model. This model puts huge amounts of U.S. and foreign capital with estimated pool of capital at $100 billion into ventures that set the wrong priorities for investment- leading to misallocation of capital at this time of the pandemic. 

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Did a major U.S. chip maker Advance Micro Devices give away advanced computer chip technology in deals that saved the company as it faced a downturn in business. In Jun 2019 the U.S. Commerce Department issued an order that bars several Chinese companies from getting American technology. In the meantime Chinese versions of AMD chips are rolling off production lines in China, according to this report in the WSJ. It shows that AMD's partner in China, a military contractor, already used those chips to build what could be the world's fastest supercomputer. The AMD deals gave China access to state  of the art x86 chips made only by AMD and Intel Corp. Here the WSJ says AMD's CEO in October 2014 Lis Su, faced AMD's financial difficulties when she joined, with lack of cash, large debt, and declining revenues. Some analysts predicting bankruptcy protection. The deal for China's company Sugon to manufacture the x86 chips included $293 million in licensing fees, and $371 million for selling an 85% stake in its two factories in China and Malaysia to China Integrated Circuit Industry Investment Fund Co, a state backed financier. The U.S defense Department tried but failed to get AMD to submit the deals to Cfius, the committee on foreign investment in the U.S. that has people from Treasury, Defense, Commerce, Justice and Energy. The Treasury Department ruled in AMD's favor in the closing months of the Obama administration. Defense Department officials say the deals were structured to sidestep U.S. regulations through two interlinked joint ventures. The first venture focusses on R&D and production controlled by AMD, the second on design and sale controlled by AMD's Chinese partner. The second company venture enables China to show that the resulting product was developed locally in China. In another development Sugon publicly announced that it was using the AMD x86 chip to advance China's chip technology advancement just as it had done for high speed trains. Making indigenous an imported technology, designing it at home, absorbing it, and then innovating to make China a leader. By mid 2017 this information reached General Spalding at the Trump White House. Lawmakers wanted to give Cfius committee new powers. By August 2018 Defense department submitted the Sugon deal for review a second time. After the Defense Department's deputy undersecretary for Research and Engineering criticized the whole deal publicly in front of industry executives, Commerce Department stepped in and on June 21 it asked for the unwinding of the deal with Sugon,  imposing new export restrictions to limit access to U.S. technologies. For AMD the cash infusion from China enabled it to get back from near bankruptcy. China gained x86 technology in its bid to make the fastest supercomputer, the U.S. faced with another loss in technological edge, and AMD shares jumped 80% to $30 per share recently. Brian Spegele, Kate O'Keefe, and Yang Jie in Beijing, covered this story for the Wall Street Journal. ...

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"Made in China 2025" has caused consternation and alarm in Washington about China's effort to dominate key industries of the future with state subsidies. This report in WSJ shows the European response to China's effort. A survey by the EU Chamber of Commerce in China shows 58% of companies have not been able to participate in Made In China initiatives. There is concern that global supply chains are not being utilized in robotics, aerospace, and electric vehicles, three areas under China's program.  62% of companies say they didn't know whether this was leading to increased discrimination against foreign companies.

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Greg Ip of the WSJ looks at the result of changes in supply chains away from China, and the new trading relationship with China to 2028. He says the shift to a new global supply chain that diversifies it away from concentration in China is taking place. Would taking the tariffs from 30% to 60% under a new Trump administration be a good idea? Greg Ip thinks it is a bad idea as the change is gradual and is actually taking place. It may have the unintended effect of worsening US China relations essential for global stability when it is coupled with erratic or retaliatory rhetoric. Rhetoric that appears to China that it is being singled out in world trade beyond what are changes that have taken place with Japan in the past in trade. The Biden administration is for good reasons working to restore a balanced yet stable relationship with China. Apple is shifting production of 25% of iPhones to India. Samsung is investing more in Vietnam. The trade deficit with Mexico has reached $151 billion twice as large as in 2017. And $100 billion with Vietnam three times as large as 2017. The US trade deficit with China has dropped from $381 billion to $281 billion in the last 12 months, the Commerce Department reports show. And from $1.1 trillion with the whole world from $1.2 trillion for the last 12 months, 4% of US GDP. Overall the Trump era tariffs of 30% have not reduced the US  trade deficit substantially but has shifted American and European foreign investment to India, Vietnam, Mexico and other countries as well as to the home country. Over time the supply chain would become truly diversified as India makes great strides to become the third largest economy with new infrastructure by 2030. The head emeritus of the European Union Chamber of Commerce in China, Joerg Wuttke, says the pressure to export will be high for China as its economy shifts more to manufacturing from construction. Most Chinese companies are producing more than internal demand in China, and most companies in solar are losing money, in wind turbines and solar all are losing money, Wuttke says. This means China will double down and increase its investments in Mexico, Vietnam, Morocco and other countries so that it can send its products to the US through third countries that do the final export. One expert even says removing a few screws here and some there, find a different supplier, and shipping to a third party for final export that makes it not 100% Chinese content, the pressure for that is high. ...