Market Commentary

Trade

It appears that the U.S. and Mexico are close to completing the revamp of the NAFTA that President Trump tore up. He prefers deals with individual countries. Mexico has recently elected a new president and he is not as friendly to the new terms that have been worked out, mostly concerning Mexico’s oil industry. Canada may well restart talks with the U.S. once the Mexican deal is complete. At least that is the very strong indications.

Trade with the EU and China are still on the battle field with China recently inviting talks to restart.

The struggle over trade is raging but the results of the battle are very likely to benefit the U.S. in the long run. In the short run politicians, investors and corporations are all worried, and in some cases frantic, that the world order, so carefully crafted over the decades, is being shaken up.

That world order needs shaken up every so often as economic reality changes over time. For instance, it may have been acceptable to give China favorable trade concessions at one point, to boost their economy and make them a trade partner instead of an enemy, but no longer. It also may have been good to be the economic engine of the world with open trade with the EU and our other partners where they have tariffs on our goods entering their countries to protect their industries, but little on their products coming to our shores; but that time is past.

Leave a Reply

Your email address will not be published. Required fields are marked *