The iShares MSCI Mexico Capped ETF (NYSEArca: EWW), the largest US-listed exchange traded fund dedicated to stocks in Mexico, rallied Monday after the U.S. and Mexico backed away from a possible trade war. It’s up 3.16% as of 12:48 pm EDT, trading at $44.94.
Last week, President Trump took to Twitter to say that if Mexico agreed to up purchases of agriculture commodities from U.S. farmers, the tariffs could be averted. Trump originally floated the idea of tariffs on Mexico if the country did not step up to help with the immigration crisis.
“U.S. President Donald Trump had threatened to impose 5% import tariffs on all Mexican goods starting on Monday if Mexico did not commit to do more to tighten its borders,” reports Reuters.
Mexico is the United States’ third largest trading partner and is the second largest exporter of electronics to the United States. The U.S. is the largest export partner for Mexico, consuming about 80% of Mexican-made goods.
President Trump announced he will implement a broad 5% tariff on all Mexico’s products shipped to the U.S., and the levies could hit 25% by October if Mexico fails to satisfy the White House’s demands on illegal immigration.
Mexico Trade Crisis Averted
EWW seeks to track the investment results of the MSCI Mexico IMI 25/50 Index, which is a free float-adjusted market capitalization-weighted index with a capping methodology applied to issuer weights so that no single issuer of a component exceeds 25% of the underlying index weight, and all issuers with a weight above 5% do not cumulatively exceed 50% of the underlying index weight.
“In a joint declaration after three days of talks in Washington, both countries said Mexico had agreed to rapidly expand a controversial asylum program and deploy security forces to stem the flow of illegal Central American migrants,” according to Reuters.
EWW entered Monday lower by nearly 2% over the past month. Investors have pulled nearly $300 million from EWW this year.
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