US: Quiet developments in Washington - Nomura

This week was relatively quiet in Washington as Congress was on recess and the President did not make any new major policy announcements, points out the research team at Nomura.

Key Quotes

“On trade, the US has become much more conciliatory towards NAFTA and is now pushing for wrapping up the negotiations quickly. Put another way, the probability that the US withdraws from NAFTA has declined. This week, the US and South Korea reached an agreement in principle to modify KORUS (the Korea-US free trade agreement). That agreement specified that South Korea would limit its steel exports to the US (effectively a quota) and would also allow more US manufactured vehicles into its market. Overall, the changes were not large.”

“Next week we will likely see the list of products that USTR puts forward to be subject to tariffs from the Section 301 action on China’s intellectual property policies. After publishing the list, there will be a 30-day public comment period. However, the theme that the Trump administration has become less hawkish on trade appears to hold for the 301 action as well: senior administration officials have engaged in negotiations with China to reduce tensions and avoid possible trade escalations between the two countries.”