Trump Focuses on NAFTA, Border Wall

Policy Watch

• Trump threatens NAFTA. While negotiations for the decades old trade agreement uniting North America have been underway for a few days, President Trump announced at a rally Tuesday that he did not believe a deal could be reached. He said he believes the threat of termination is how “you make a deal” and explained, “Personally, I don’t think we can make a deal. I think we’ll probably end up terminating NAFTA at some point.” The NAFTA talks continue in Mexico the first week of September. The US stock index future markets were roiled by the indication that the resident was willing to walk away from the trade agreement, falling 0.3%. [Reuters]
• President threatens shutdown over border wall construction. At a rally held on Tuesday, President Trump threatened a shutdown the government in order to pressure Congress into funding the border wall. While Congress must pass a spending bill by Sept. 30th, few lawmakers have indicated that the border wall is a significant enough policy goal that they’d be unwilling to pass a bill without it. Far more Republican lawmakers have expressed concerns about cutting spending to pay for tax cuts or other legislative priorities. It remains to be seen if the President will have sufficient political capital to force lawmakers to comply come September. [Bloomberg]

Economic Indicators & News

• US New Home Sales drop off. Due to the widespread trend of low construction rates and resulting higher home prices, sales of new homes dropped this past month. While the drop is not dramatic, with single family home sales falling 9.4%, revisions to estimates from previous months indicated that home sales in the second quarter were even higher than previously reported. A combination of the lack of affordability, as median sale prices increased 6.3% year over year, and low inventory have pushed buyers, often young first-timers, out of the market. [Bloomberg]
• Crude inventories fall, in line with expectations. US crude inventories fell by 3.3 million barrels this past week, slightly below investor expectations. Gasoline inventories also decreased by 1.2 million barrels. Both inventory figures are on the upper end of the average range for this point on the calendar. Oil prices briefly increased by 25 cents, but fell back to $47.70/barrel, down 10 cents on the day. [Energy Information Administration]