The positive news that the U.S. and Mexico had a struck a new Trump Nafta deal started the week on a high note for Wall Street. Yet things weren't looking so promising at week's end as Canada and the U.S. put negotiations on hold Friday afternoon with no deal.
XU.S.-Canada trade talks are expected to resume next week, so all isn't lost. Yet instead of a big step in defusing global trade tensions, everything appears lined up for an escalation of Trump trade wars. President Donald Trump is reportedly ready to unleash Trump tariffs on another $200 billion worth of Chinese imports as soon as Sept. 6, the official end of the public comment period.
The main question isn't whether more Trump tariffs on China are coming, but whether the tariffs will initially be set at 10%, as Trump first suggested, or 25%, as he later threatened. Beijing has vowed to respond with tariffs as high as 25% on $60 billion worth of imports from the U.S.
Wall Street also is bracing for a Trump decision on whether to impose tariffs on auto imports. The Commerce Department's national security investigation ordered by Trump is expected to wrap up in coming weeks.
"The administration seems ready and willing to move forward on auto tariffs," wrote Seth Carpenter, chief U.S. economist at UBS, in a note titled, "Buckle Up: Tariffs, tariffs, and more tariffs."
Auto Tariffs Probe Due
UBS expects an announcement on the autos probe in the first two weeks of September. Trump has threatened auto tariffs as high as 25%. Despite a seeming breakthrough in relations with the European Union last month, there's a big question over whether Trump will allow an EU exemption. This week, he rejected an EU offer to cut industrial tariffs, including on autos, to zero.
Despite the struggle to complete talks with Canada, the Trump administration planned to give Congress notice that a Nafta deal could be coming within 30 days. That timing would allow Trump to sign a deal within 90 days, letting Mexico's current president sign the agreement before leaving office.
The deal hashed out between Trump and Mexico seems to imply that auto tariffs are coming. Mexico would face a 2.5% tariff if it doesn't meet new rules requiring 75% North American auto content and $16 wages for 40% to 45% of workers. But there's a 2.4 million cap on the number of vehicles that Mexico can ship to the U.S. before a higher tariff determined by the Commerce Department applies.
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The post Nafta Talks Stall; Get Ready For Auto Tariffs, Trump Tariffs, China Tariffs appeared first on Investor's Business Daily.
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