Lilia Lara, a Tijuana resident, displays the U.S. and Mexican flags at the plaza where Mexican President Andres López Obrador held a rally in Tijuana on Saturday. López Obrador says Mexico plans to ratify the new NAFTA deal next week. (Hans-Maximo Musielik/ Associated Press)
Mexico’s president says it will ratify the new NAFTA trade deal next week, as markets turned ebullient over the deal between the U.S. and Mexico that averts trade tariffs.
The Trump administration had been set to apply a five per cent tariff across the board on all Mexican imports, starting Monday, if Mexico did not take measures to stem the flow of migrants across the U.S. border. Hurried talks between Mexican and U.S. officials resulted in a deal announced late Friday to avert the tariffs.
That removed a major risk for many U.S. companies, which have integrated supply chains that involve parts or assembly in Mexico.
Stocks move higher
Stock markets responded by jumping higher, with the Dow ending the day up 78 points to 26,062 after soaring 180 points in the morning. The S&P 500 index was up 13.39 points at 2,886.73, while the Nasdaq composite was up 81.07 points at 7,823.17. Auto makers and chipmakers saw strong gains.
Several megadeals also helped buoy stocks. Industrial giant United Technologies is merging with defence contractor Raytheon in a deal that will create a defence contracting powerhouse with more sales than rivals Lockheed Martin and Northrop Grumman.
Meanwhile, customer-management software developer Salesforce is buying data analytics company Tableau Software in an all-stock deal valued at $15.7 billion US.
The deal over immigration with the U.S. was a relief for Mexico, which, like Canada, recently saw the lifting of U.S. tariffs on its steel and aluminum sector.
President Andrés Manuel López Obrador announced Monday that Mexico’s Senate would hold an extraordinary session in a week’s time to ratify the new Canada-U.S.-Mexico Agreement.
“I can assure you that next week, the Senate will ratify this,” he said, expressing the hope this would encourage the U.S. and Canada to ratify the free trade deal.
Over the weekend, the G20 financial ministers expressed their concern over “intensifying” trade and geopolitical risks.
U.S. President Donald Trump said on Monday he was ready to impose another round of punitive tariffs on Chinese imports if he does not reach a trade deal with China’s president at a Group of 20 summit later this month.
He is expected to meet Chinese President Xi Jinping at the June 28-29 summit in Osaka, Japan, though China has not confirmed any such meeting.
Oil at $53 amid doubts over global growth
The U.S.-China trade war hangs over the markets and is putting a cap on global growth.
The price of oil is well below the $65 it had achieved a month ago. West Texas Intermediate, the benchmark North American contract, fell 63 cents at $53.35 US a barrel on Monday at the close. Russia’s oil minister predicted oil could slump to $30 US a barrel because of oversupply.
The Canadian contract, Western Canada Select, fell 21 cents to $39.79 US a barrel.
Toronto’s main stock index, the TSX closed down 15 points at 16,216, pulled down by both the wavering fortunes of oil and a decline in the price of gold.