The US and Mexico reached a deal today to replace NAFTA with a new agreement between the US and Mexico. President Trump made the announcement from the White House where he spoke with Mexican President Enrique Pena Nieto on the phone, his negotiating team was present in the US. The deal will help both farmers and manufacturers in America.
Mexico to Purchase US Farm Products
During the announcement, President Trump expressed his view that the agreement includes Mexico purchasing as much farm product from the US as it possibly could.
NAFTA has been eliminated and this new deal between Mexico and America will last 16 years with 6 year reviews. The Mexican Peso moved 1% higher against the US Dollar when the announcement was made. Several US based companies that could see additional contracts in Mexico also saw their shares rise during the trading day.
Negotiations with Canada Have Not Began
President Trump has held back from negotiating with Canada, preferring to complete talks with Mexico first. Canada wants to make sure any new deal benefits its middle class. Canada appears to be able to join joint talks with the US and Mexico as an additional third party. The work Mexico had to do with the US was more difficult than the inclusion of Canada will be.
Automobiles, Steel and Aluminum
The focus of talks with Mexico were on new rules for automobile manufacturing. The worst trade deal in history, NAFTA, hurt the American car industry greatly, according to the President. Congress will approve the deal which calls for a certain level of American steel and aluminum to be used in auto manufacturing south of the border. Current tariffs will stay in place. And new factories that do not use 85% America parts will face 25% tariffs on their cars coming into the US.
Oil Development in Mexico
The countries also agreed to not restrict American companies from doing oil exploration in Mexico.
Hope is that the deal will be complete before December 1st when the new Mexican President, Andres Manuel Lopez Obrador takes power. The trade negotiators worked through the weekend to reach the agreement today.
President Trump announces new trade deal with Mexico