The S&P closed at record highs on Tuesday after hitting the 2,900 mark for a few moments during the trading session, buoyed by consumer optimism after the U.S. and Mexico formed a new trade deal. The deal, announced on Monday, will be a replacement for NAFTA, a trade agreement that previously included Canada as a member. According to U.S. President Donald Trump, the new deal will be called the United States-Mexico Trade Agreement, and it will be in force for 16 years, with periodic reviews every six years.
According to Reuters, the new deal will enable President Trump to impose 25 percent tariffs on auto parts when certain import volumes are hit as well as on Mexican-made automobiles and sport-utility vehicles once more than 2.4 million vehicles is imported. These difficult trade concessions were praised by Chrystia Freeland, Canada’s Foreign minister, as well as by Canada’s top trade negotiators, who believe that the concessions will set the stage for this week’s negotiations whose goal is to revamp NAFTA before Friday’s deadline. President Trump has threatened to place additional tariffs on Canada if it does not sign on to the new trade terms.
Asian markets were mixed on Wednesday morning after Wall Street’s continued rally, in a sign that traders are concerned over the impending trade talks. The Shanghai Composite was down 0.35 percent and the Shenzhen Composite was down 0.60 percent as of 12:57 p.m. HK/SIN. The Nikkei 225 was up 0.41 percent, the Hang Seng Index was up 0.23 percent and the Kospi was 0.22 percent higher in the early afternoon. The next tariff deadline is on September 5, when the U.S. may increase tariffs on $200 billion of Chinese goods. Washington has said that it hopes to settle the NAFTA trade disputes before focusing on China, hinting that the trade dispute could spill over into next year.