Amid news that Mexico and the U.S. reached a trade agreement, which boosted investor sentiment and sent stocks flying, Canadian Foreign Minister Chrystia Freeland will travel to Washington today to continue trade negotiations. “We’ll give them a chance to have a separate deal, or we could put it into this,” President Trump declared, adding that the “simplest deal is more or less already made.” “We will only sign a new NAFTA that is good for Canada and good for the middle class,” spokesman Adam Austen replied in a statement.
Details of the Mexican deal – which is for 16 years, to be reviewed every six years – are starting to emerge: Proposals will obligate car companies to manufacture at least 75% of an automobile’s value in North America, up from the current 62.5%, and would require a set proportion of auto components be made by workers earning at least $16 an hour. The U.S. also backed off from a “sunset” clause demand, while Mexico agreed to eliminate a settlement system for anti-dumping disputes, but payments for a border wall were not discussed.
The need to involve Canada and the Mexican presidential transition mean a comprehensive pact won’t be approved by Mexico until December at the earliest. That will almost certainly push U.S. approval into 2019, when a new Congress will have say in the matter. “We may have to resort to auto tariffs if the U.S. and Canada can’t reach a fair deal,” White House Economic Adviser Larry Kudlow told CNBC.
Speaking to reporters after the Mexico accord, President Trump said he’s rejecting overtures from China to negotiate as he tries to achieve a less “one-sided” trade policy. “They want to talk… but it’s just not the right time to talk right now, to be honest.” Chinese officials reportedly raised the prospect of suspending talks last week until after U.S. congressional elections in November.
With some U.S. farm products getting slammed by retaliatory tariffs, the Trump administration is prepared to begin its emergency agriculture plan right after Labor Day in a “three-pronged approach” that will initially include about $6B in aid. Farmers “cannot pay their bills with simple patriotism,” Agriculture Secretary Sonny Perdue declared. Some farm groups, however, are cautioning the spending won’t make up for losses from the trade clashes.
It’s the first time Iran’s parliament summoned President Hassan Rouhani, who is under pressure from hardline rivals to change his cabinet after a deterioration in U.S. relations and growing economic difficulties. “The problems are critical, but more important than that is that many people have lost their faith in the future of the Islamic Republic and are in doubt about its power,” he said. “We will overcome the troubles.”
The U.K. can still make a success of Brexit if it tumbles out of the EU without a deal, according to Prime Minister Theresa May. “I’ve said right from the beginning that no deal is better than a bad deal.” Trade Secretary Liam Fox echoed the comments in Singapore, where he is making the case for the U.K.’s accession to the Comprehensive & Progressive Agreement for Trans-Pacific Partnership.