US President Donald Trump’s verbal bombardment of Canadian Premier Justin Trudeau after the weekend’s G7 summit threatens the ongoing renegotiation of the North American Free Trade Agreement (NAFTA) considerably. We would remain short on MXN and CAD, as Trump’s blasts are unlikely to promote a deal.
Meanwhile, Trump is working on an de-nuclearisation deal for North Korea, which is a pawn in US-China relations. North Korea, as a puppet of China, will signal what its master wants and will do. Failure to deliver a positive result will likely trigger a Trump backlash of tariffs against China. A positive result could see Trump deescalate his China bashing (already he has waived restrictions on ZTE (HK:0763), a Chinese telecommunications equipment firm). Next week the US will likely release the final list of $50 billion in Chinese import tariffs – their shape and extent will depend on how the Trump-Kim summit goes.
As widely reported, Trump blew up the G7 by disavowing the communique after it was released. In a tweet Saturday Trump referred to Trudeau as “very dishonest and weak.” Trump adviser Peter Navarro piled on the Canadian PM, telling Fox news “there is a special place in hell for any leader that engages in bad faith diplomacy with Trump.”
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