U.S. Will Address 4 Key Weaknesses in New Trade Deal With China
Look for the U.S. to address these sectors after the latest update on a new trade deal with China.
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The outlines of a trade deal with China have been announced. Multiple other deals with other countries were announced. To me, this just fully sets the concept of "production for security" (or ProSec, as I try to refer to it) in motion.
We will be back at the negotiation table in a year or so with China (assuming this framework comes to fruition).
That gives us a clear window of time to put ourselves in even better negotiating stance for that round (China will be doing the same).
Think of every point of weakness/vulnerability with China and look for the U.S. to address it:
- Too many chips come from Taiwan, where trade could be disputed by China
- Too much of the base components, in particular, for our medicines come from China and India, let alone some final compounds
- Processed and refined rare earths and critical minerals — yes, the commodities themselves are important, but the processing and refining is even more “critical” to security (pun intended)
- Electron production — we need the electricity production to power the next generation of innovation
These are all things we have written about for weeks (maybe even months). I’m more fully invested in the concept than ever.
Basically the concept of ESG, in the U.S., is going to be replaced by ProSec (or the same theme, with a different name, though ProSec seems to capture the concept well enough).
Two quick side notes/brief thoughts:
- Europe has not yet understood this. Having said that, I saw much different sentiment on social media this past weekend surrounding the destruction of a decommissioned nuclear reactor’s cooling towers. Europe is so wedded to “traditional” ESG that it will take them longer to figure out that true sustainability requires security.
- The administration has floated the idea of converting some of the gold reserves to digital reserves. I could see that happening, but I could also see this as the start of a negotiation that converts some of the gold to “ProSec” assets. Basically a way to allocate money to equities in the space. It would allow for larger investments in national champions, in addition to growing the spectrum for “lottery ticket” investments.
We will all try to figure out what the deal will look like, but I’d be shocked if the main outcome of the deal isn’t a rush in the U.S. to make sure we are in a better position next time — and that will require investment and deregulation — both of which I expect to create almost daily headlines, for the foreseeable future.
Now I just need the Blue Jays to win at least one in L.A.
