US to take trade action against China – Nomura

Analysts at Nomura note that yesterday, US President Trump directed the US Trade Representative (USTR) to take action against China following the release of the USTR’s Section 301 investigation into China’s intellectual property policies.

Key Quotes

“The proposed 25% tariffs on $50bn of imports from China are below expectations. Also, the US recently dropped one of the more contentious demands in the NAFTA renegotiations and has provided temporary steel and aluminum tariff relief to many countries. In our view, the actions in the past week suggest overall US trade policy risks have waned modestly, although the Trump administration may still become more aggressive on trade.”

“Initial jobless claims: Initial jobless claims remain near historical lows. The low reading on initial claims corresponds to the BLS employment report survey week, consistent with a healthy nonfarm payroll employment gain during March. The labor market continues to strengthen: we expect the unemployment rate to reach 3.6% by year-end.”