Published: Mon, August 27, 2018
Finance | By Jaime Brady

US, Mexico reach new trade agreement

US, Mexico reach new trade agreement

"We have low volumes today, but the biggest risks the market were discounting were trade wars, so any reduction in trade war risk such as NAFTA talks or even Trump trying to find bilateral deals with everyone, has pushed USA shares to new records and will support markets", said Angelo Meda, head of equities and a portfolio manager at Banor SIM in Italy.

Trump told reporters in July that he had a 30-minute phone call with Lopez Obrador, who assumes office on December 1, about trade, border security and a potential U.S. -Mexico trade deal.

Trump said the conference call, which was broadcast live on television on Monday, was being held to "celebrate the understanding" the USA and Mexico have reached on trade, calling it "an incredible deal for both parties". He said he may include Canada in the Mexican deal.

New name: The new deal between the US and Mexico will aptly be called the United States-Mexico Trade Agreement, doing away with the NAFTA name, which Trump claims has "bad connotations", per Reuters. He's threatening anew to slap tariffs on Canadian cars if they fail to do what he wants.

News of a potential agreement on trade between the United States and Mexico is good news for Canada, a spokesperson for Foreign Affairs Minister Chrystia Freeland said Monday.

The United States and Mexico have reached an "understanding" on several critical trade issues following bilateral talks to renegotiate the North American Free Trade Agreement.

Pena Nieto joined by phone, and thanked Trump, calling the breakthrough on NAFTA "very positive for the United States and Mexico", and looked forward to the trilateral agreement.

Talks to overhaul the Nafta agreement began a year ago and have proven contentious.

He added, "we'll see if Canada can be part of deal".

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Trump understood the simple math that countries with which we have trade deficits would have to come to the negotiating table.
By definition, we buy more from them than they buy from us, which gives us the power any major consumer has over a seller.

Mr. Peña Nieto said Mr. Lopez Obrador and Mr. Trump would all toast with a shot of tequila at a signing ceremony for the deal.

El Financiero reports negotiators have already called on Canada to rejoin the talks now that a U.S. -Mexico bilateral agreement has been reached, and Canadian representatives could arrive in Washington, D.C.as early as Monday.

The US and Mexico reportedly reached a preliminary NAFTA deal.

"Millions of jobs in Texas depend on an updated NAFTA, and it's important that we get this right", said Senator John Cornyn, the No. 2 Republican in the Senate.

A final deal would need sign-off from Canada, the third country in the treaty, which governs more than $US1 trillion ($NZ1.49t) in annual trade.

The Mexican peso was up as much as 1% against the U.S. dollar Monday.

MSCI's gauge of stocks in 47 countries across the globe gained 0.91 per cent, helped by gains in developed markets from the U.S.to Europe and Asia.

More broadly, the deal vindicates Trump's approach to trade, which has been lambasted by voices ranging from Wall Street to the national security establishment to the Chamber of Commerce, as well as mavens from both political parties. A percentage of workers for auto manufacturers would also have to make more than $16 an hour.

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