Nafta – U.S. Trade Relations Reach a New Low Point – Tariffs Likely

nafta

After a week of positivity where President Donald Trump became the first sitting president to meet with a North Korean leader, it appears that the government is about to impose new sanctions on China, deepening the ongoing trade dispute. There is also speculation that Trump intends to withdraw the U.S. from NAFTA, a move that could worsen relations with Canada and Mexico.

Tariffs Likely to be Announced Friday

Friday will likely come with the announcement that the United States will implement a reduced but significant list of tariffs on goods and materials imported from China.

The approval still awaits Donald Trump’s signature, but it is understood that the Commerce and Treasury departments have both agreed with the White House that proposed tariffs should go ahead. The administration had initially proposed $12.5 billion of tariffs on up to $50 billion worth of Chinese goods, however, Friday’s announcement will likely be of some reduced numbers.

While we won’t know anything for sure until at least another day, new tariffs could leave the U.S. exposed to retaliation from China, which has already implemented tariffs on U.S. pork and other goods.

Will the United States Leave NAFTA?

The G7 summit left many analysts worried about the future of NAFTA. The United States is already levying tariffs on aluminum and steel from Mexico and Canada, and both countries have imposed tax on a diverse range of goods from pork to ketchup.

While the U.S. does have a negative trade balance with Canada in some areas, there is a services surplus that is $8 billion in favor of the United States. Canada has felt particularly slighted by Trump’s decision to impose tariffs on aluminum and steel.

Even if the President does decide to pull out of the free trade agreement, he does not have full executive power to do so. The matter would likely end up passing through congress and the courts. Peterson Institute, a leading research firm, estimates that 187,000 U.S. jobs could be lost in as little as three years if there is no longer free trade between the three North American nations.

The Trade and Political Situations are New Grounds for This Administration

Trump has been in office for a period of strong economic growth and has delivered on many of his campaign promises. However, the administration has also left the country divided on some issues, and relationships with allies like Canada and the European Union have reached new lows because of trade disputes.

This is a new era for the country and the government, and the President’s management of these issues moving forward will be of great importance to investors at every level.

 

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The reports, research and newsletter are based on current and historical market data, as well as publicly available financial data.They are intended to be a starting point for investors. They do not provide every material fact about a company or industry, nor are they recommendations to buy or sell. The writers and the company make no warranties or representations as to the accuracy of these reports.   You should NOT rely solely upon the information or opinions read in the content. Rather, you should use the content as a starting point for doing independent research on the independent analysis and trading methods in the content. The content is impersonal and does not provide individualized advice or recommendations for any specific reader or individual portfolio. By accessing this website you have agreed to our disclaimers and privacy policy.

 

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