US-Mexico trade deal could allow Trump to put more pressure on China - TDS
|According to analysts from TDS, today’s trade agreement between Mexico and the US it's the end of NAFTA as currently known and it could allow Trump’s administration to put more pressure on China.
Key Quotes:
“The US and Mexico reached a bilateral trade agreement without Canada's participation, and US President Trump surprised by announcing that the existing NAFTA deal will be terminated — although the timeline for termination remains uncertain.”
“Today's agreement between the US and Mexico will put pressure on the Canadian delegation. We do not yet know how the new agreement will address some of Canada's concerns, nor do we know how the Canadian government will respond. Still, Canada lacks leverage in the negotiations, and with President Trump threatening auto tariffs in the absence of a deal we expect that Canada will eventually agree to terms.”
“This deal is a near-term "win" for the Trump Administration on trade ahead of the US midterm elections. There is some question whether it gets through the US Congress as agreed to, or whether the incoming Mexican government will propose changes. In the meantime, it likely will embolden the US Administration to take a harder line on other trade disputes, most notably with China.”
“Progress on a replacement for NAFTA could allow the Trump Administration to put more pressure on other US trading partners current embroiled in disputes — most notably China. With low-level negotiations not producing any substantive progress, US officials are preparing for an additional $200bn in US tariffs against Chinese imports. We expect the first tranche could be announced in early September.”
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