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Analysts at Nomura noted that this last week witnessed a flurry of activity on the trade policy front, but with no final conclusions, nor any developments that alter their fundamental view that Trump’s trade policies, while protectionist, will not be significant enough to materially affect the economic outlook.

Key Quotes:

“What began as US Section 301 action against China over intellectual property has evolved into a broader set of trade issues between the two countries.”

“Additional issues include the bilateral trade balance, US sanctions against ZTE, industrial policy and national security concerns.”

“The two countries have exchanged lists of demands but appear far apart.”

“Vice Premier Liu He met with President Trump in Washington this week. The Vice Premier’s visit follows a high-level US delegation to Beijing earlier this year.”

“For NAFTA, despite a notable push by the US to meet a Congressional deadline, a new NAFTA agreement was not reached this week. Given that the current Congress is increasingly unlikely to complete the ratification process before newly elected members are sworn in next year, political pressure to reach a deal could ease and hence the pace of progress toward a final agreement could slow significantly. The next unofficial deadline to reach an agreement will be 1 July, the date of Mexico’s general elections. Separately, 1 June will also be of interest given that Canada, Mexico and the EU currently face a deadline of 1 June to reach long-term agreements before the steel and aluminum tariffs are imposed.”