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New U.S.-Mexico Trade Deal Lifts Stocks & Investor Sentiment
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The U.S. and Mexico announced a trade new deal which will be called The United States-Mexico Trade Agreement, instead of “NAFTA,” the original trade agreement between the two countries and Canada.
President Donald Trump indicated that “the name NAFTA has a bad connotation,” and explained why he thinks the deal is a better version than the previous one. The negotiations have been dragging on for months, and finally a deal has been struck.
The updated deal entails new provisions in areas such as farm products, car manufacturing, and Mexican labor unions.
First, Trump said Mexican officials have promised that the country will start buying as much U.S. farm product as possible.
The second, and perhaps most important, part of the new deal is its amendment to the rules for building cars across the continent. This enables a greater portion of cars to be built in each region.
The third key part relates to Mexican labor unions. The deal has new provisions to raise wages and ensure rights to these groups, in hopes of easing the complaints that cheaper Mexican labor has been hurting American workers.
Of course, the name “NAFTA” included Canada, while the “United States-Mexico Trade Agreement” doesn’t. This deal between the U.S. and Mexico puts Canada in an interesting position.
With the announcement of this deal, Mr. Trump pressured Canada by saying “we’ll see” if Canada will also put offers on the table to be able to join this trade agreement. Trump said if Canada wanted to negotiate fairly, the U.S is willing to.
In the midst of this trade war, perhaps this is a sign that Mr. Trump is ready to soften up towards other countries. Another move in July similar to this was Trump’s extension of an olive branch to the European Commission.
Back then, Mr. Trump agreed not to impose tariffs on European autos as long as negotiations kept coming along. In response, the EU said it would try to move away from not purchasing U.S. natural gas and soybeans entirely. However, steel and aluminum tariffs would remain in place.
Meanwhile, the trade dispute with China has been continuously escalating, but Chinese and U.S. officials did meet to discuss trade issues on August 22 and 23. Though the impacts of these discussions are uncertain as of now, there is a possibility that tensions between the two might ease down.
This streamline of efforts on the White House’s end to ease tensions with other countries regarding trade might signal a change in Mr. Trump’s “America First” trade policy, where he is intending on working closer with his trading partners.
Such promise was reflected in the markets on Monday. The Mexican peso jumped 1.4 percent against the dollar. Caterpillar (CAT - Free Report) and Boeing (BA - Free Report) rose 2.75 percent and 1.2 percent through late afternoon trading. The Dow Jones Industrial Average rose 245 points.
The Nasdaq Composite climbed 0.8 percent, as FANG (Facebook , Amazon (AMZN - Free Report) , Netflix (NFLX - Free Report) and Alphabet (GOOGL - Free Report) rose. The S&P gained 0.7 percent.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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New U.S.-Mexico Trade Deal Lifts Stocks & Investor Sentiment
The U.S. and Mexico announced a trade new deal which will be called The United States-Mexico Trade Agreement, instead of “NAFTA,” the original trade agreement between the two countries and Canada.
President Donald Trump indicated that “the name NAFTA has a bad connotation,” and explained why he thinks the deal is a better version than the previous one. The negotiations have been dragging on for months, and finally a deal has been struck.
The updated deal entails new provisions in areas such as farm products, car manufacturing, and Mexican labor unions.
First, Trump said Mexican officials have promised that the country will start buying as much U.S. farm product as possible.
The second, and perhaps most important, part of the new deal is its amendment to the rules for building cars across the continent. This enables a greater portion of cars to be built in each region.
The third key part relates to Mexican labor unions. The deal has new provisions to raise wages and ensure rights to these groups, in hopes of easing the complaints that cheaper Mexican labor has been hurting American workers.
Of course, the name “NAFTA” included Canada, while the “United States-Mexico Trade Agreement” doesn’t. This deal between the U.S. and Mexico puts Canada in an interesting position.
With the announcement of this deal, Mr. Trump pressured Canada by saying “we’ll see” if Canada will also put offers on the table to be able to join this trade agreement. Trump said if Canada wanted to negotiate fairly, the U.S is willing to.
In the midst of this trade war, perhaps this is a sign that Mr. Trump is ready to soften up towards other countries. Another move in July similar to this was Trump’s extension of an olive branch to the European Commission.
Back then, Mr. Trump agreed not to impose tariffs on European autos as long as negotiations kept coming along. In response, the EU said it would try to move away from not purchasing U.S. natural gas and soybeans entirely. However, steel and aluminum tariffs would remain in place.
Meanwhile, the trade dispute with China has been continuously escalating, but Chinese and U.S. officials did meet to discuss trade issues on August 22 and 23. Though the impacts of these discussions are uncertain as of now, there is a possibility that tensions between the two might ease down.
This streamline of efforts on the White House’s end to ease tensions with other countries regarding trade might signal a change in Mr. Trump’s “America First” trade policy, where he is intending on working closer with his trading partners.
Such promise was reflected in the markets on Monday. The Mexican peso jumped 1.4 percent against the dollar. Caterpillar (CAT - Free Report) and Boeing (BA - Free Report) rose 2.75 percent and 1.2 percent through late afternoon trading. The Dow Jones Industrial Average rose 245 points.
The Nasdaq Composite climbed 0.8 percent, as FANG (Facebook , Amazon (AMZN - Free Report) , Netflix (NFLX - Free Report) and Alphabet (GOOGL - Free Report) rose. The S&P gained 0.7 percent.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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