Tags: nafta | deal | trump | trade

The Not-NAFTA Deal Remains Pending

The Not-NAFTA Deal Remains Pending
(Prasit Rodphan/Dreamstime)

By
Tuesday, 04 September 2018 09:24 AM Current | Bio | Archive

President Donald Trump hasn't been able to force Canada to agree with a new Not-NAFTA deal on his terms.

He tweeted: “There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off..."

And if that wasn’t enough, on the Labor Day holiday on Monday he attacked Richard Trumka, the head of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), America’s largest union umbrella group, who said on “Fox News Sunday” that “it’s pretty hard to see” how NAFTA works without Canada.

Trump tweeted: “Richard Trumka, the head of the AFL-CIO, represented his union poorly on television this weekend. Some of the things he said were so against the working men and women of our country, and the success of the U.S. itself, that it is easy to see why unions are doing so poorly. A Dem! — Donald J. Trump (@realDonaldTrump) September 3, 2018”

It could be helpful to recall that Trump had hoped unions would lean on Democrats to back his approach.

So, the Not-NAFTA talks that will resume tomorrow could still meet an end-of-September procedural deadline set by Congress, but under Congressional rules for passing trade agreements the administration must publicly release text of the agreement 60 days before any signing.

Yes, the time is running out, but we aren’t there yet.

The SALT Cap Dilemma

Largely because of the State and Local Tax (SALT) cap dilemma, House Republicans are hitting the pause button on “Tax Reform 2.0” legislation, according to three GOP aides who requested anonymity to speak about the matter. The lawmakers want to weigh the political benefits and risks of a vote on the bill in the coming weeks and assess if they have enough support to pass it.

House Republicans had planned to use a second phase of tax cuts to force Democrats into a difficult vote ahead of mid-term elections.

The proposal would make the individual changes in last year’s overhaul permanent, including the $10,000 annual cap for state and local tax deductions, one of the law’s most disputed provisions. That would put Republican lawmakers in high-tax states like New York, New Jersey and California in the tricky position of either supporting the cap or voting against tax cuts backed by their party.

This shows the problem the Republican Party is encountering this year as it tries to take its signature policy achievement of the past two years to voters.

Emerging Markets – Argentina and Turkey

Argentina’s government has come up with a new austerity plan in order to ‘restore’ confidence in the country’s economic outlook. There is a pledge to remove the primary deficit, borrowing excluding interest charges, over the course of next year.

The Argentinian peso weakened to 38.07 per dollar on the news, which does not perhaps signal an overwhelming vote of confidence from the financial markets.

We’ll see what comes out of the talks with the IMF tomorrow.

Meanwhile in Turkey, the inflation rate rose sharply last month rising to 17.9 percent, up from July’s reading of 15.9 percent. This has caused the central bank to ‘talk’ about changing the monetary policy stance saying in a statement: “We will take necessary actions … Monetary stance will be adjusted” which bolstered expectations that it will increase rates when it meets on September 13.

Of course, conventional wisdom would suggest that implies an interest rate hike, although the Turkish President Erdogan has in the past taken the opposite view suggesting that rate cuts are the best way to lower inflation.

The Turkish lira slipped 0.3 percent to 6.6578 per dollar as of 10:29 a.m. in Istanbul today after falling 2.6 percent yesterday.

As an investor, I would prefer to remain on the sidelines until we’ll get more clarity where we could go.

Euro Area PPI

In the Euro area we got producer prices (ex-construction) that remained at 0.4 percent in July. This was the third increase in a row and enough to lift annual PPI inflation from 3.6 percent to 4.0 percent, its strongest reading since April 2017.

It also gives investors some sense of how exporters might be reacting to the U.S. tariffs.

The stable even slightly rising inflation rate indicates that the U.S. tariffs are being passed on to the consumers.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.
 

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
HansParisis
Yes, the time is running out, but we aren’t there yet.
nafta, deal, trump, trade
763
2018-24-04
Tuesday, 04 September 2018 09:24 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved