Trump Strikes Preliminary Deal with Mexico on Trade; Stock Market Jumps

I don't see many details in this FoxNews article, except for these:

According to a fact sheet from the United States Trade Representative, the agreement includes new rules of origin to incentivize manufacturers to source goods and materials in North America -- including requiring 75 percent of auto content be made in the United States and Mexico.

I'm going to guess that the point of this is to require Mexico to buy the bulk of the steel used in making cars from US/Mexican steel-makers, which probably means "US steel makers" in practice. Rather than, say, Chinese or Canadian or other makers.

...

The U.S. on Thursday agreed to keep the 2.5 percent tariff currently applied under World Trade Organization rules if the cars are made at factories that already exist, which leaves open the possibility that automobiles that are built at new plants could face tariffs of 20 percent to 25 percent.

I guess that is an attempt to stop the further shifting of factories to Mexico, but can't Mexican factories simply expand and still be in compliance? Seems all they have to do is to avoid building "new" factories, but they could add new wings to existing factories.

Trump said he'd begin talking to Canada about joining a similar trade agreement "pretty much immediately."

The market reacted positively, with the DJIA gaining 260 points and NASDAQ hitting 8000 for the first time in its history.

BTW, I added a lot to the last post after first posting it, so maybe give it a quick scan to see if you missed any new stuff.

posted by Ace of Spades at 01:48 PM

| Access Comments