Mandel Ngan/AFP/Getty Images --
President Donald Trump shakes hands with Mexico’s Foreign Minister Luis Videgaray Caso as he arrives to speak on trade in the Oval Office of the White House in Washington, Aug. 27, 2018.
Mandel Ngan/AFP/Getty Images -- President Donald Trump shakes hands with Mexico’s Foreign Minister Luis Videgaray Caso as he arrives to speak on trade in the Oval Office of the White House in Washington, Aug. 27, 2018.
By CBW Staff
On Monday President Trump announced he had come to a trade “understanding” with Mexico that could lead to the North American Free Trade Agreement (NAFTA) being revised.
Trump has long said he wasn’t a fan of NAFTA – the trade agreement between the U.S., Canada and Mexico – as it was a bad deal for the United States. Any new deal will have to have the signature of all three countries and be approved by Congress.
According to Bloomberg, a key breakthrough regards a “lighter” sunset clause, for which the U.S. has been pushing. The agreement also updates provisions surrounding the digital economy, automobiles, agriculture and labor unions. American companies will still be allowed to operate in Mexico and Canada without tariffs.
The terms with Mexico require car companies to manufacture at least 75 percent of an automobile’s value in North America – that is up from 62  percent, to qualify for NAFTA’s zero tariffs. Car companies will also be required to have 40 to 45 percent of the car made by workers earning at least $16 an hour, using more local steel, aluminum and auto parts.
The news has pushed auto stocks much higher on Wall Street. U.S. stocks opened higher on Monday, hitting record highs with the benchmark S&P 500 index and the Nasdaq on optimism around a U.S. and Mexico deal.
Trump and Mexico both have said they would like to bring Canada into a newer trilateral agreement between the countries but Trump alluded to being open to leaving Canada behind if they did not “negotiate fairly”.
Chrystia Freeland, the Canadian foreign minister, is in Washington, D.C. this week to continue trade talks.