-What happened last week?
One of the most important developments last week was when U.S. President Donald Trump's announced that he would terminate the North America Free Trade Agreement (NAFTA) between the U.S., Canada Mexico, which has been in effect since 1994.
On Monday, he said the U.S. and Mexico reached a preliminary agreement that will be called The United States-Mexico Trade Agreement. Canada could also join the U.S.-Mexico trade deal, or pursue a separate bilateral agreement with the U.S., Trump and added "Frankly, the easiest thing we could do is tariff their cars coming in. But I think we’ll give them a chance to probably have a separate deal. We could have a separate deal or we could put it this deal."
Trump said the negotiations between the U.S. and Canada started immediately last week but did not come to a conclusion on Friday. The talks will resume this week.
-Deadline postponement
While the Trump administration initially announced Monday that Canada had until Friday, Aug. 31 to reach a decision on whether it would join the new deal, this turned out not to be the case.
Instead, Friday was the deadline for Trump to notify Congress that in 90 days he plans to sign a new trade deal.
Since the current Mexican President Enrique Pena Nieto will leave for President-elect Andres Manuel Lopez Obrador on Dec. 1, Trump wants to finalize a deal between the U.S., Mexico Canada before that date.
Although Trump notified Congress on Friday that he intends to sign a new trade deal, it later became clear that Canada could be added to the U.S.-Mexico agreement 60 days prior to the Dec. 1 date. This leaves Canada until the end of September to settle its differences with the U.S. in trade and become part of the new deal.
Since Trump is planning to terminate NAFTA, the U.S. Congress would likely have another trilateral trade agreement to replace it, and not a bilateral one. However, ratifying the new trade deal could extend to early next year with congressional elections looming in mid-November.
If Trump's Republican Party loses the majority in Congress, Democrats could also object to the new trade deal.
-Threat against WTO
Trump threatened Thursday to withdraw his country from the World Trade Organization (WTO) unless it starts treating America better.
"If they don’t shape up, I would withdraw from the WTO," Trump said, and claimed that the organization has been treating the U.S. "very badly".
The U.S. has won 87 percent of the cases it brings to the WTO against other countries. But Trump's decision to impose tariffs on steel and aluminum imports from other countries, combined with additional tariffs on Chinese goods, has put the U.S. in a difficult position.
Turkey’s Trade Ministry announced on Aug. 20 that it had launched a legal process against Washington’s decision to impose tariffs on imports of Turkish steel and aluminum. India, China, Switzerland, Norway, Canada, Russia, Mexico and the European Union have also started legal processes against the U.S. at the WTO, according to the ministry.
Trump’s tirade against the WTO is not the first instance of criticism by the U.S. against the organization. In January, U.S. Trade Representative Robert Lighthizer said that allowing China into the WTO in 2001 was a mistake.
American lawmakers, on the other hand, considered that bringing China into the WTO and the global trade system was a successful way to avoid potential trade wars.
While the U.S. has led the way in shaping the global economy and free-market trade system in the post-World War II era, its WTO withdrawal could strike a major blow to the country, the global economy and financial markets.
-Additional tariffs on China
Trump has also signaled Thursday his intention to impose $200 billion in additional tariffs on imports from China after the Sept. 6 deadline passes -- the date that the public comment period on the issue ends.
The U.S.' 25-percent tariffs on $34 billion worth of Chinese goods were implemented in July, while an additional $16 billion came into effect in mid-August.
Trump said in July he is ready to increase tariffs to $500 billion, almost the total value of goods the U.S. imported from China in 2017.
While Beijing has so far responded by imposing the same amount of tariffs against the U.S., it will fall short if Trump goes ahead with his plan to impose $200 billion worth of tariffs. China imported just $130 billion of American products last year, according to the U.S. Commerce Department.
-Pay raise for civilian employees canceled
Trump said Thursday he decided to cancel a pay raise for civilian employees in 2019, citing budget concerns.
The across-the-board increase of 2.1 percent was set to take effect on Jan. 1, but Trump argued that the move would save the federal budget $25 billion. He also argued his decision will not materially affect the government's ability to attract and retain a well‑qualified federal workforce.
Three weeks ago, however, Trump signed a $716 billion defense bill that sees a 2.6 percent raise for service members next year.
Trump's tax cut is also estimated to add $1 trillion to the budget deficit in the next 10 years, according to the Joint Committee on Taxation.
-What to expect from this week?
Investors and the markets this week will closely watch nonfarm payrolls and the unemployment rate for August.
While the American economy added 157,000 jobs in July, it is expected that 191,000 jobs were added last month.
The unemployment level in the country is hovering around a historic low of 3.9 percent, and this is not expected to change in August.
This week will also be busy with official statements of U.S. Federal Reserve members.
On Wednesday, New York Fed President John Williams, Minneapolis Fed President Neel Kashkari, and Atlanta Fed President Raphael Bostic will make speeches.
Williams is expected to make another speech on Thursday, while Boston Fed President Eric Rosengren, Cleveland Fed President Loretta Mester Dallas Fed President Robert Kaplan will talk on Friday.
It is Labor Day, a federal holiday, on Monday. The New York Stock Exchange will be closed, as well as the federal government and private institutions.
Therefore, the weekly change in the U.S.' crude oil production and inventories will also be announced on Thursday, instead of the usual Wednesday.
The weekly change in the U.S.' oil rig count will be released on Friday.
