U.S. President Donald Trump is ready to commence with an imposition of $200 billion worth of tariffs on Chinese goods, sending the Dow Jones Industrial Average into the red by over 150 points as of 3:00 p.m. ET. In the meantime, a Friday deadline for a NAFTA deal with Canada is less than 24 hours away, causing investors to fret over whether a deal can get accomplished as the clock continues to tick.
“We had some momentum when the U.S and Mexico struck a deal earlier in the week,” said Ryan Nauman, market strategist at Informa Financial Intelligence. “But as the deadline approaches, people are getting a bit worried.”
Things were looking on the up-and-up when Canada’s Foreign Affairs Minister Chrystia Freeland said ongoing talks with the U.S. remain “constructive” despite the threat of punitive tariffs on Canadian-made cars if Canada spurns the prospect of a new NAFTA deal come Friday.
“It was a very constructive meeting with Ambassador (Robert) Lighthizer and his team and we’ll be back again tomorrow,” said Freeland. “What has really paved the way for what Canada believes will be a good week is the fact that Mexico has made some significant concessions, particularly in the area of labor and of rules of origin on cars.”
Freeland was effusive in her praise of Mexico’s trade concessions on autos and labor rights on Tuesday as she rejoined NAFTA talks. In the meantime, U.S. lawmakers were wary that a bilateral U.S.-Mexico trade deal may encounter obstacles on its path towards approval in Congress.
The trade deal struck with Mexico on Monday would effectively eliminate the NAFTA name and would now be called The United States-Mexico Trade agreement. The Trump administration was pushing for a revamp of the NAFTA agreement prior to December 1 when Mexico turns over its leadership to the incoming administration of President-elect Andrés Manuel López Obrador.
The bilateral U.S.-Mexico deal announced on Monday gives U.S. President Donald Trump the right to impose 25% tariffs on imports of Mexican-made passenger vehicles. If Trump proceeds with the tariffs, Mexican duty-free exports of cars and sport-utility vehicles to the U.S. would have a cap of 2.4 million vehicles per year.
Freeland said that Mexico’s tough concessions to the U.S. could pave the way for productive negotiations, but a succinct resolution has yet to be in place.
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