Stocks rise as Trump's NAFTA tweet eases trade war concern

Tyler Owen
March 10, 2018

The President later tweeted: "To protect our Country we must protect American Steel!"

Countermeasures would include European tariffs on USA oranges, tobacco and bourbon, he said.

Trudeau, meanwhile, spoke with the president this week.

"If the US does unilaterally withdraw from NAFTA, all bets are off", Monex Canada's Berich said.

"We are disappointed, to say the least, that the Trump administration would impose a potentially debilitating tariff on aluminium imports from the Kitimat smelter", said O'Driscoll. "I just want fairness".

In Mexico, the main U.S. negotiator, Robert Lighthizer, said that the revision of the pact was slower than expected with only six chapters completed with 30 pending, since the parties began negotiations in August 2017.

President Donald Trump's call last week for tariffs of 25 percent on steel and 10 percent on aluminum imports has stirred fears of a global trade fight.

Mulroney also said negotiations between Canada, the USA and Mexico to modernize NAFTA are tough but improving - and now is not the time to make threats.

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Beijing will take "firm actions" if the tariffs inflict losses on Chinese businesses, Commerce Ministry official Wang Hejun said Friday. But he told CNN last week that tariffs would have "tremendous consequences" for the US-Mexico trade relationship.

Guajardo's threats of tit-for-tat retaliation stood in stark contrast with the conciliatory words emanating from the White House and elsewhere in the Trump administration this week.

As of late Wednesday evening, the tariff announcement was not listed on the White House schedule.

Trump states that the tariffs are needed to safeguard domestic industries against inequitable opposition from China and elsewhere. "This is where it really gets awkward because whoever blinks first, that's where trade wars start". Knowing the game could end in higher tariffs for USA farm products, they are engaging with more reliable suppliers.

"We can expect retaliatory measures elsewhere in the world that will destabilize market equilibrium". The Canadian dollar and Mexican peso gained against the US dollar. In a situation like this, no one wins, and in the resulting trade wars that are looming on horizon like the gathering thunderclouds of a summer storm, all sectors of the economy in Canada will be hurt, primarily because the Canada's biggest trading partner, and vice-versa.

Only the European Union, though, has announced potential retaliation so far.

In a bid to "rebalance" Nafta and boost USA manufacturing, the US wants to require that 85 percent of a typical auto be built within Nafta to be traded under the pact, up from the current 62.5 percent, and add a US -specific requirement of 50 percent, while also rewriting what products' origin is tracked. That scenario, Tom Donohue said, would endanger the economic momentum from the GOP tax cuts and Trump's rollback of regulations.

"If I were those companies, I'd still be investigating and making my cases behind the scenes", Ryder said. The major problem here being that Trump has a different idea of a "fair" NAFTA than both Canada and Mexico. "We're going to see what he actually announces... but we're continuing to push on getting the right deal for Canada, getting the right deal for Canadians".

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