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July 31, 2017

While Trump Administration Slows Down Steel Investigation, It Raises Prospects Of NAFTA Currency Language

In an interview last week with The Wall Street Journal, President Donald Trump explained that “his administration would take its time in making a long-awaited decision on whether to block steel imports, saying ‘we don’t want to do it at this moment.’”

The announcement does not mean that the administration has taken tariffs or other penalties off the table, however. Indeed, according to Politico’s “Morning Trade,” in a meeting last week with House lawmakers, U.S. Commerce Secretary Wilbur Ross still stressed that “current forums,” including the World Trade Organization (WTO), “have not been adequate in addressing” steel dumping. U.S. Trade Representative Robert Lighthizer made similar comments in an interview last week.

While the Trump administration continues its work on the Section 232 steel and aluminum investigations, the administration is taking a look at other ways to address unfair trading practices. For example, in a hearing in the U.S. Senate last week, U.S. Treasury Secretary Steve Mnuchin said “the Trump administration may seek a provision to deter currency manipulation in the North American Free Trade Agreement (NAFTA) as part of its planning for future free trade deals.” As Connecting the Dots reported last week, the Trump administration included currency manipulation in its NAFTA negotiating objectives. MSCI is pleased with this development. While Canada and Mexico aren’t guilty of manipulating their currency, MSCI believes currency provisions should be the cornerstone of all free trade agreements.

Additionally, Peter Navarro, director of the White House Trade Council, made it clear last week that that the Trump administration does not plan to allow China to be granted market economy status by the WTO. As readers of Connecting the Dots know, MSCI opposes efforts to grant this status to China and has joined forces with Manufacturers for Trade Enforcement to prevent it from happening.

In related news: last Wednesday, all 32 Republican freshman members sent a letter to U.S. Trade Representative Lighthizer regarding NAFTA. While the lawmakers said they support the administration’s efforts to improve the trade pact, the letter underscored the importance of the growth generated by the NAFTA. MSCI’s own comments on NAFTA renegotiation made these points.