Treasury’s Mnuchin Hopeful Trade Deal With Canada Will Get Done

4 takeaways from the U.S.-Mexico trade deal

USA stock indexes hit fresh records Monday as the United States and Mexico struck a tentative a bilateral trade deal that's expected to replace the 24-year old North American Free Trade Agreement.

At the same time, President Donald Trump threatened to keep Canada, the third member of NAFTA, out of any new trade agreement.

The three countries are now part of the North American Free Trade Agreement, and U.S.

Canada will be joining the talks after the United States and Mexico come to an agreement to replace NAFTA, which was signed in 1994. "The appearance of Canada as an irrelevant after-thought in NAFTA is a US frame designed exclusively to wrestle concessions from the Canadian side", says Adam Taylor.

Trump said Monday during an Oval Office event that he'll be calling the emerging agreement the "United States-Mexico Trade Agreement".

After mid-level trade talks in Washington last week ended with no agreement, a person familiar with the discussions said that Chinese officials had raised the prospect of suspending talks until after U.S. congressional elections in November.

The agreement is evidence that Trump's trade delegation is willing to negotiate in good faith, and even accept some concessions on key issues. Moore says a wage hike is needed to bring more help to middle class workers.

"They want to talk", Mr Trump said. Yet the preliminary agreement announced Monday is far from final.

If you've ever attempted to have a Skype call with anyone over the age of 60, you understand the struggle.

He added that there is also agreement on stronger labor/environment chapters, which "Canada will be fine with". "It has a bad connotation because the USA was hurt very badly by NAFTA".

Auto stocks soared and the S&P 500 and the Nasdaq rallied to record highs on the expectation that Canada would sign onto the deal and ease the economic uncertainty caused by US President Donald Trump's repeated threats to ditch the 1994 accord.

In addition to sabre-rattling about tariffs that would punish Canada's auto sector, Trump once again took aim at another of his favourite targets - the country's heavily protected dairy industry.

The sides also agreed that 40-45 percent of cars must be made at "high wage" factories where workers receive $16 an hour in order to receive duty-free treatment, something that could deter off-shoring USA auto manufacturing to Mexico.

Canadian Foreign Affairs Minister Chrystia Freeland is due to arrive in Washington D.C. Tuesday, and described the news as "encouraging" in a statement.

Ultimately, Canada may accept the deal but there's clearly a strategy here to isolate the Canada and it's one that caught them by surprise.

Instead, senior U.S. officials told reporters the agreement had been extended for 16 years but would be reviewed every six years.

Auto-immunity: Per Reuters, the agreement helps resolve one of the stickiest issues that arose under NAFTA surrounding the rules of origins for cars, which required that a certain percentage of vehicle parts be from countries within the NAFTA region in order to avoid tariffs. He said: "You know, they have tariffs of nearly 300 per cent on some of our dairy products, so we can't have that".

"This wasn't created to put pressure on anybody", a senior administration official said, before later adding that the U.S. planned to submit its NAFTA renegotiation plans to Congress by the end of the week with or without Canada's agreement.

"Mexico made a quantum shift from where they were thanks, I think, to their new president who argued that NAFTA was awful for Mexican workers who got the jobs but not the pay", he said.

Washington hopes Canada will fall into line as Trump's new global trade regime takes effect.

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