This week, President Donald Trump will meet with key US allies at the G7 Summit in Quebec.
The EU and Canada are threatening retaliation if it does not change course regarding new duties on steel and aluminum. China, being open to negotiations to resolve the dispute, warned that it would abandon trade obligations if the president realizes the threat of tariffs for an Asian country. China does not want to escalate tensions in the sphere of trade relations, however, it will defend its interests.
“I am not against the NAFTA, in which you would be under a different name … A separate deal with Canada … A separate deal with Mexico. These are two different countries, ”Trump told reporters, adding that, in his opinion, the US is losing“ a lot of money with Canada ”due to the existing structure and is losing“ a fortune with Mexico. ”
Trump often changes his mind. US allies and rivals seem to hope that he will do so with respect to tariffs in the next few days. If he does not, a “trade war” may become inevitable. The White House seems to remain unabashed against threats from the Allies. Chief Economic Advisor Larry Kudlow said the blame for any escalation lies with US trading partners.
On Monday, Trump exacerbated the situation by tweeting that China and Canada suffer from unacceptable barriers to agricultural imports.
“The position of the administration in negotiations is often unpredictable, so there is a risk of over-interpretation of any one event. Nevertheless, this is another signal that the prospects for a short-term NAFTA deal disappear just a few weeks after it seemed that an agreement could be reached, especially for the automotive sector, ”Goldman Sachs experts noted.
Investors in Asia are apparently a little scared by talk of a “trade war,” while stock markets in Japan, China, Australia, and South Korea continued trading on Monday.
After three days of negotiations on Saturday, financial leaders from developed countries remained “unanimous” in their condemnation of Trump’s decision to impose tariffs on steel and aluminum, promising to come up with retaliatory measures if Trump does not change his mind.
It was a rebuke that portends a big drama when Trump will meet with leaders of the other six industrialized nations on Friday at the Quebec Summit.
At the same time, Beijing is outraged by Trump’s resurgence of threats to introduce $ 50 billion in tariffs on Chinese imports, saying he will consider abandoning some of the commitments made in recent negotiations to expand trade with the United States.
The rebuke reported by the Xinhua News Agency on Sunday came after Chinese officials held talks with the U.S. delegation led by Commerce Secretary Wilbur Ross over the weekend. The talks were the third round of discussions between the two countries after the start of the trade summit.
The United States did not say much about how the meetings between Ross and Beijing were held, saying on Monday that the delegation would make a report and receive instructions on the next steps. During his trip, Ross outlined “Trump’s clear goal of achieving fair trade relations with China,” according to a White House statement.
According to a comment by China Radio International, the government’s position regarding the cancellation of any agreements reached in the negotiations if Trump’s tariffs take effect is the “red line”.
What is NAFTA blamed for?
Donald Trump just killed the trade union with his actions. The 25% steel tariff and 10% aluminum tariff that the US Presidential Administration used to strike the economies of Canada and Mexico, not to mention the EU, is a weapon to destroy trade unions. The only negotiating position that works against Donald Trump is the ability and desire to leave.
Every time a conversation about trade comes in, at least one poorly informed reader accuses the NAFTA of losing production jobs.
Number of employed in production
NAFTA is not responsible for the loss of production jobs. The number of manufacturing jobs peaked in June 1979, almost 15 years before NAFTA. Please note that manufacturing jobs have grown during the first 8 years after the start of NAFTA.
Share of employed
A reduction in production as a percentage of employment began in 1960 for both the United States and Canada.
Trump complains that “the US is losing their fortune” on trade with Mexico. The graph above shows that Trump is wrong.
Moreover, cheap parts supplies help lower car prices. Consumers spend their savings on something else. In the process, jobs are created, not lost.
