By Joyce Yu
Philadelphia, PA–US stocks market was encouraged by the new trade pact struck between the US, Mexico and Canada, rising over 200 points on Monday. Expected to bring more jobs into the United States, the new United States-Mexico-Canada Agreement, which is replacing the North American Free Trade Agreement, largely keeps the broader deal intact, with Canada and Mexico accepting more restrictive commerce with the United States.
One of such is the opening-up of Canadian dairy markets to U.S. farmers. It was reported that Ottawa agreed to give U.S. dairy farmers the access to about 3.5% of its roughly $16 billion annual domestic dairy market. Under the deal, Canadian dairy farmers who hurt by the deal will be compensated by the Canadian government.
While expected to have little overall economic impact, the new deal will affect specific companies and industries, according to some analysts. Good news to the automakers in Canada and Mexico is that they are largely spared from paying possible higher tariffs on their vehicles, however global auto makers may find it harder to build cars cheaply in Mexico. This will in turn bring more jobs into the United States.
“These measures will support many – hundreds of thousands – American jobs,” Trump said in remarks at the White House. “It means far more American jobs, and these are high-quality jobs.”
Stocks of major automakers jumped on the news. Ford, which said it is ‘very encouraged’ by new trade pact, jumped 1.4% to $9.38; General Motors gained 1.1% to $34.04 and Fiat Chrysler advanced 2% to $17.86. Driving the market today was General Electric which soared more than 9% after the company announced to replace its CEO John Flannery with board member Larry Culp., setting for its best day in more than three years.
Commenting on the overall market sentiment, Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, told Reuters that, “It’s relatively broad-based rather than certain stocks… you’ve had this trade stuff hanging over the markets for a while, so any good news is positive.”
Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, echoed the same sentiments. He said, the economics in the market is very strong and only concerns about the trade issues have been holding it back from moving higher.
