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01 OCTOBER 2018 AL CIRCLE

New NAFTA deal between US and Canada brings in a resolution to Trump’s auto tariff

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

The 24-year old North American Free Trade Agreement (NAFTA) reportedly underwent modest revisions on Sunday, September 30, to build up a last-gasp between the United States, Canada, and Mexico.

This new deal called the US-Mexico-Canada Agreement, or USMCA, is meant to rescue a US$1.2 trillion open-trade zone that had been about to collapse after nearly a quarter century.

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The US and Canadian negotiators worked around the clock over the weekend to settle differences, with both sides making concessions to seal the deal.

According to two senior Trump administration officials who spoke to reporters on condition of anonymity, the new accord involves improved access to Canada’s dairy market for US farmers to about 3.5 per cent of approximately US$16 billion annual domestic dairy market. The new deal also offers Canada and Mexico some cover from the Trump administration’s threat to impose heavy duties on car imports. Up to 2.6 million cars exported from Canada would not be impacted by the US auto tariffs. Mexico got the same threshold level, though neither of the two countries exports than many cars to the US.

Steel and aluminium tariffs that Mr. Trump had imposed on both countries earlier, however, has been decided to be dealt separately, according to the US officials.

In a joint statement, the two nations said this new USMCA agreement would "result in freer markets, fairer trade and robust economic growth in our region".

According to the report, the US officials would sign the deal with Canada and Mexico at the end of November, after which it would be submitted to the US Congress for approval.

Backed on this new NAFTA agreement, the financial markets in all three countries rebounded. The US stock index futures rose, with S&P 500 Index e-mini futures rising by more than 0.5 per cent. The Canadian dollar surged to its highest since May against the US dollar, gaining around 0.5 percent from Friday's close. The Mexican peso gained 0.8 percent to its highest against the greenback since early August.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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