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Big week for trade talks for Washington with two key deadlines. First up May 1 (May Day) is when the temporary exemptions on increased tariffs granted from the U.S. on imports of steel and aluminum lapse. Second is May 4 for NAFTA deal to go to Congress for a deal this year.

US imports Trade Defcit

May 1 - Temporary Exemptions Expire

The United States when announcing tariffs on Steel and aluminum granted exemptions to six countries plus exporters from the EU. Ten countries were denied exemptions.  President Trump will have to decide which of these countries with exemptions will keep them. If not they will be subject to tariff increases with the ten not exempted already.

Logically, if I can use that thinking, exemptions will continue to apply to both Canada and Mexico while the North American Free Trade Agreement (NAFTA) is still being renegotiated, Given the recent visits from France's Macron and Germany's Merkel to the oval office it would be logical to say  the EU countries will get continued exemptions also.

With a U.S. delegation heading off to Bejing this week and the nature of current Russian diplomacy it would be likely that China and Russia will not change. Treasury Secretary Steven Mnuchin and other US officials will travel to China this week to discuss trade issues with their Chinese counterparts.

One would expect lots of media noise but don't expect any thing big other than planning the next round of meetings. Look for cohesion among the  US delegation. The US officials, including Secretary Mnuchin, U.S. Trade Representative Robert Lighthizer and Larry Kudlow have very different opinions on trade issues. 

May 4 - U.S. Congress NAFTA Date

May 4 is when US, Mexican and Canadian negotiators hope to have at least something on a revised NAFTA. The date is meaningful to the U.S. as any agreement must be sent to Congress and reviewed for six to eight months. Thus if an agreement is sent to Congress by May 4 then Congress will be able vote on the deal before the end of the year.

Given the state of U.S. politics and upsets already where Democrats have beaten Republicans in by elections theTrump administration  wants to have any agreement voted on by a Republican controlled Congress. The danger is that Democrats could be in control after this fall’s mid-term elections.

Given the nature of, at least public declarations an agreement is possible by May 4, however it would likely contain only modest revisions and very few of the President’s "hot priorities". There is also upcoming Mexican elections, so it is in Mexico's interests for a deal.  Should there be no agreement  then the long game would kick in for a deal next year after Mexican and US elections.

Done tactfully one would expect the US to remain in NAFTA in the meantime either way, expect lots of noise either way given that is the biggest market risk from trade policy not involving China.

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