It’s actually amazing to me that U.S. stock markets weren’t down more today given all the uncertainty regarding trade relations between United States and China, between the United States and its NAFTA partners Canada and Mexico, and between the United States and the European Union.
The Standard & Poor’s 500 closed down today 0.26% and the Dow Jones Industrial Average managed a 0.01% advance. The NASDAQ Composite Index was off 0.38%.
Reports earlier this week had China offering to reduce its annual trade surplus with the United States by $200 billion as U.S. negotiators had asked. On Friday, reports on Chinese official media said China’s foreign ministry wasn’t aware of any offer made to President Donald Trump about reducing its annual trade surplus with the United States. White House economic advisor Larry Kudlow, however, remains adamant that China made the offer. The official Chinese reports did say that China had ended its probe into subsidies for U.S. sorghum exports to China. What to believe? Who to believe?
On NAFTA the picture is much clearer but more depressing. U.S. Trade Representative Robert Lighthizer said that the United States, Canada, and Mexico are “nowhere near a deal.” House Speaker Paul Ryan has set a May 17 deadline for getting a deal to Congress if the administration wants this Congress to vote on a revised NAFTA pact.
Meanwhile, the European Union has moved to activate a “blocking statute” that would forbid companies in the union “from complying with the extraterritorial effects of U.S. sanctions” on dealings with Iran that the U.S. is reviving. The blocking statute would allow European companies to recover damages resulting from renewed U.S. sanctions on Iran. The blocking statute is one part of an attempt by the European Union to preserve the Iran nuclear deal even after President Trump pulled the U.S. out of the agreement and threatened new sanctions on Iran’s financial and energy sectors.