Balance of Power: Nafta Infighting

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Score another win for the globalists -- this time, the ones in Donald Trump's White House.

After a fierce internal debate on whether to pull out of the North American Free Trade Agreement, Trump instead decided to go slow and renegotiate the pact with Canada and Mexico. The decision capped a day of drama, with many news outlets reporting that Trump was seriously considering an executive action to withdraw from Nafta.

Behind the scenes, hardliners urged Trump to fulfill a key campaign promise ahead of Saturday's First 100 Days milestone, two people familiar with the matter told Bloomberg's Jennifer Jacobs. More moderate voices argued he could let the date pass and revisit the issue later through more formal procedures.

The decision is sure to be interpreted as another defeat for Trump's anti-free-trade chief strategist Steve Bannon, who is already viewed as on the outs after sparring with Jared Kushner.

So while Bannon's fate isn't clear, Nafta's is, at least for a while.

Elsewhere Around the Globe

Macron stands up to Le Pen | French presidential front-runner Emmanuel Macron survived a media circus on the campaign trail, quieting a crowd of hostile factory workers who'd been fired up earlier in the day by his rival, Marine Le Pen. He discussed the realities of trade policy with the crowd for nearly 90 minutes, defusing a lot of the anger, and slamming the National Front candidate for demagoguery.

What Trump gives, Yellen may take away | Trump rolled out his conservative wish-list of just about every income tax cut imaginable, at a cost of $3 trillion to $7 trillion, per one think-tank estimate. If enacted, it could worry the Federal Reserve. The Fed could use higher interest rates to keep the economy from overheating as taxes go down and budget deficits go up, especially with near full-employment.

War in Korea would paralyze the global electronics industry | A conflict on the peninsula could destroy the supply chains that feed the global electronics industry and disrupt trade routes in the Pacific, our Asian bureaus report. Parts for Apple Inc.'s iPhone are made at factories within striking range of North Korean artillery. Trump officials, meanwhile, said they are open to negotiations on peaceful denuclearization of the Korean Peninsula.

Merkel talks tough on Brexit | The German chancellor had a tough message for British Prime Minister Theresa May as European Union leaders prepare for a Brexit summit on Saturday. The U.K. can't expect preferential treatment in the upcoming negotiations and the EU's interests must come first. “Unfortunately I have the feeling that some in Britain still have illusions,” she told lawmakers in Berlin.

Will Putin fire his prime minister? | Dmitry Medvedev is more worried about his political future than ever before, according to two people familiar with his thinking. Putin's long-serving premier has become the target of a new anti-corruption movement after a documentary accused him of amassing luxurious properties in Russia and Italy, with more than $1 billion channeled by business allies to bogus charity funds. But it's not an easy call for Putin, since removing the trusted ally could be seen as giving in to the opposition.

Trump-Putin summit in late May? | The two presidents may finally meet at the end of May after Trump attends the G-7 in Italy, Russian newspaper Kommersant reported today, citing unidentified sources on both sides. The meeting would take place in a third country after the G-7 confab, the newspaper said.

U.S. government shutdown threat eases | The White House pulled Washington back from the brink of a federal government shutdown by caving on Democratic demands for Obamacare subsidies for lower-income Americans. Look for lawmakers to pass a seven-day temporary spending bill while they finish up a $1.1 trillion measure to fund the government through Sept. 30. Meanwhile, a Saturday vote is possible on House Republicans' latest Obamacare repeal plan.

And finally... Looking for the sweet side to Donald Trump? If so, try the maple-flavored “Lucky Trump” cookies on sale at Japan's parliamentary gift shop. The snacks featuring a caricature of the president saw a brisk trade when he took office, though demand is waning as bean-paste buns bearing the image of Prime Minister Shinzo Abe stage a comeback.

-- With assistance from Kathleen Hunter.

To contact the author of this story: Caroline Alexander in London at calexander1@bloomberg.net.

To contact the editors responsible for this story: John Fraher at jfraher@bloomberg.net, Craig Gordon Elizabeth Titus