Afternoon Coffee: U.S. and E.U. Agree to Cooperate on Tariff Elimination, Private Investors Starting to Take Interest in Trade Financing

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The U.S. and the European Union announced Wednesday that they will work toward “zero tariffs” and the removal of non-tariff trade barriers, Supply Chain Dive reports. The two parties will also strive to resolve the issues that led to U.S. steel and aluminum tariffs, although they did not offer any further details on how they would accomplish this.

Investing in the Supply Chain

U.S. pension funds, private-equity firms and other investors are plowing capital into trade finance in a search for profits, The Wall Street Journal reports. Once the province of only a handful of banks, the $10 billion trade financing market is increasingly attracting institutional investors, which are looking to diversify their portfolios.

NAFTA Update

After a relatively quiet period, the renegotiation of the North American Free Trade Agreement (NAFTA) is back in the spotlight. U.S. Trade Representative Robert Lighthizer said Thursday a tentative agreement  to revamp the 24-year-old pact could be reached next month, according to Bloomberg. A key motivator for that timeline is the imminent departure of Mexican President Enrique Pena Nieto, who would likely be more amenable to signing a new agreement than President-elect Andres Manuel Lopez Obrado.

Wage Puzzle

And finally, a macroeconomic update: Hourly wages in the eurozone rose 2% in the first three months of 2018, the New York Times reports, but economists are at a loss to explain why. The broken link globally between falling unemployment and rising wages has puzzled economists since the end of the Great Recession, and central banks are weighing options for how to encourage necessary inflation without leaving workers behind.

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