Well, it looks like all suspicions are now confirmed. The dragon dance of 2017 and 2018 has extended into 2019. DPRK Chairman Kim fires rockets, Trump smacks Chinese Chairman Xi. Yes, we can officially put the remaining bits of skepticism to rest…

The meeting last week between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and their Chinese counterparts including Vice-Chairman Liu, was especially important. Mnuchin and Lighthizer said they would debrief President Trump on the likelihood of whether a successful trade deal with a communist regime was structurally possible; or whether Beijing was playing a game of delay.

The ongoing dance with the dragon has been a series of cunning manuevers between the Panda mask and the Dragon face. At the conclusion of the Beijing visit by Mnuchin and Lighthizer, Chinese Chairman Xi sent a proactive response using his familiar proxy North Korean Chairman Kim. The DPRK test-fired three missiles.

Today President Trump responds:

The increase of the Round-1 tariffs from 10% to 25%, previously delayed after discussions between Xi and Trump in Argentina, will now be triggered. Additionally, the Round-2 tariffs (25% on $325 billion of different goods), originally scheduled for March 1, also postponed after the Argentina dinner, will now be implemented.

WASHINGTON (Reuters) – President Donald Trump dramatically increased pressure on China to reach a trade deal by announcing on Sunday he would hike U.S. tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon. The move marked a major escalation in trade tensions between the world’s two largest economies and a shift in tone from Trump, who cited progress in talks as recently as Friday. But a less than rosy update from United States Trade Representative Robert Lighthizer, including details that China was pulling back from some commitments it made previously, prompted Trump’s decision and jab on Twitter at Beijing. “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump said in a tweet. Financial markets reacted negatively. S&P 500 e-minis fell 1.6%, while Dow futures were down 420 points or 1.6%. The move could be a negotiating tactic ahead of a new round of talks this week. [It’s not, /SD] Chinese officials are scheduled to meet their U.S. counterparts in Washington on Wednesday after meeting in Beijing last week for a round that Treasury Secretary Steven Mnuchin described as “productive.” New fines will now hang over those talks, assuming they take place as planned. Trump said tariffs on $200 billion of goods would increase to 25 percent on Friday from 10 percent, reversing a decision he made in February to keep them at the 10 percent rate after progress between the two sides. The president also said he would target a further $325 billion of Chinese goods with 25 percent tariffs “shortly,” essentially targeting all products imported to the United States from China. (read more)

Inflation in the U.S. remains low at 1.4%…. now is the perfect time to hit Beijing with expanded tariffs. I’m surprised China didn’t evaluate that aspect, perhaps they did; but they are also running out of time due to negotiation pressure from Trump.

Beijing referring back to the DPRK blackmail reflects a certain desperation on the part of the communist regime. A dual display of bad form, and a visible *tell* for President Trump.

Knowing China has just indicated a weak hand, now Trump calls their bluff.

Chairman Xi played a cunning Panda-face game between the Argentina dinner (G20), the manipulation of the Hanoi summit with Chairman Kim, and the extended trade negotiation talks. Xi stopped the immediate tariff threat, and simultaneously retained the DPRK leverage over Trump.

However, given the scale of China’s dependence on access to the U.S. market, it was only a matter of Trump allowing the appearance of diplomatic time to pass before he could counter with a more forceful response of his own. I have no doubt Lighthizer dropped a strategic ultimatum on Beijing last week, triggering them to drop the panda mask.

Team U.S.A. came out of these negotiations exactly where President Trump always seemed to be heading; he wants full frontal tariffs on Chinese imports because he knows China will never genuinely negotiate terms until they are defeated.

Chairman Xi and Vice-Chairman Liu now have only a few days to rethink their approach. Now they have exhausted the delay strategy; and simultaneously any immediate increase in DPRK hostilities will be transparent and of no further trade benefit.

Fully acquiesce to Trump trade terms, or purchase some extended trade benefit with full retreat from North Korea manipulation.

…..Keep watching; this is the part where Wilbur Ross reemerges to close the deal.