Follow Paul Donovan

What's in a name?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • That which we call a NAFTA, by any other name would smell as sweet. US President Trump declared an end to NAFTA and proposed a not-NAFTA deal with Mexico (which looks a lot like NAFTA). Canada is not yet included, and effectively has until Friday to sign up.
  • Markets have treated this as progress, and a sign that the free trade system on which US companies depend will not be abandoned. Details do remain limited – it is hard to fit the complexities of a trade deal into a tweet. However, this is not risk free. Not-NAFTA will require Congressional approval, and without Canada, fast track authority probably cannot be used.
  • This does not have a bearing on the Chinese trade negotiations (which do not appear to be going that well). Not-NAFTA lies somewhere between the EU negotiations (keeping things as they were) and China (political problems). It does stress the unpredictable nature of a policy that depends on the personal whims of the US president.
  • There is little data of note today – a US consumer confidence opinion poll. Praet of the ECB is scheduled to speak. Turkish markets reopen after a holiday, with the lira a little weaker.