Trump Announces U.S.-Mexico Trade Deal to Replace NAFTA

After a rough few days for the White House late last week, this morning President Trump announced that the United States had reached a tentative trade deal with our southern neighbors. Currently known as the United States-Mexico Trade Agreement, the president says he’s purposely ditching the NAFTA name, citing the connotation that agreement has gained over nearly 25 years. Speaking from the Oval Office, Trump said, ” The United States was hurt very badly by NAFTA. We’ve made it better.”

As CNBC notes, the agreement is the result of months of negotiations between the two nations. It also comes ahead of December 1st when Andrés Manuel López Obrador will become President of Mexico, replacing the outgoing Enrique Peña Nieto. Diving into the some of the details, Reuters reports the deal required 75% of auto content to be made in North America  — a figure currently set at 62.5%. Meanwhile the president says Mexico has also agreed to purchase as much farm product from the U.S. as possible.

With a deal between Mexico and the United States now in place, all eyes turn to the north. However observers expect that integrating Canada into the fold will be a much quicker process, with a deal potentially being reached by the end of the week even. A senior official told Reuters, “We are now inviting the Canadians in as well and hope that we can reach a fair and successful conclusion with them as well.” Additionally Canada foreign minister Chrystia Freeland has previously stated that the nation would come to the table, saying Friday, “Once the bilateral issues get resolved, Canada will be joining the talks to work on both bilateral issues and our trilateral issues.” As for what President Trump had to say about Canada’s involvement, he seemed to threaten the country in the event a deal fell through, stating, “I think with Canada, frankly, the easiest we can do is to tariff their cars coming in. It’s a tremendous amount of money and it’s a very simple negotiation. It could end in one day and we take in a lot of money the following day.”

President Trump had made renegotiating NAFTA a major part of his campaign, touting his plan — and even threats to “rip up” the agreement — in the Rust Belt states that ended up putting him in the White House. Because of this, the announcement of a new deal with Mexico is significant and will grow even more so should Canada join in as well. At the same time the agreement may grant a bit of credence to what some have viewed as the president’s strategy of imposing new import tariffs on other nations in hopes of landing better trade deals overall. Of course, with this news still fresh and Canada yet to come onboard, expect plenty of analysis and details on the deal to emerge in the coming days.

Also published on Medium.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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