Markets climbed late on Monday after the announcement that the United States and Mexico had reached an agreement on the North America Free Trade Agreement (NAFTA) after several rounds of negotiations. According to a report from Reuters, both the S&P 500 and the Nasdaq closed at “record-highs.”
Technology stocks, in particular, saw significant increases in both markets.
The ongoing NAFTA talks and the overall political situation between Washington and Mexico City have left many investors feeling gunshy about investing in the stock market, however experts hope the new agreement will calm investors’ nerves.
“It takes a long time for people to come out of the concerns related to those thousand-point down days and feel a little bit more comfortable,” said Robert Pavlik, chief investment strategist at SlateStone Wealth, LLC in New York while speaking to Reuters. “And the trade concerns and the tariffs, that played a part in it, that’s what held it back.
Besides technology, automakers also finished strong on Monday, with shares of both the Ford Motor Company and General Motors rising more than 3 percent.
“It’s a big deal because everybody ultimately is looking for certainty and closure on what’s going to happen with trade, tariffs,” said James Kamsickas, CEO of Dana Incorporated, an auto parts manufacturing firm, while speaking to The Street.
Few details of the new agreement, now called the United States-Mexico Trade Agreement by President Trump, have emerged. However, according to Reuters, the new pact opens the door for more “regional car manufacturing” and increases the amount of automotive manufacturing required to be done in the United States.
Although the leadership of both the United States and Mexico are satisfied with the deal, negotiators from both sides will now have to meet with representatives from Canada for trilateral talks.
Canada is expected to agree to the new deal by the end of the week, however, according to Reuters, tariffs could soon be coming for Canadian-made vehicles if Canada fails to settle trade differences with the United States.
“I think with Canada, frankly, the easiest thing we can do is to tariff their cars coming in,” President Trump said while speaking to Mexican President Enrique Peña Nieto. “It’s a tremendous amount of money and it’s a very simple negotiation. It could end in one day and we take in a lot of money the following day.”
Mexico also expressed its willingness to leave Canada out of the deal to preserve its relationship with Washington according to a report from the New York Times.
Despite the progress being made between the two countries, issues at the Mexico-U.S. border are unlikely to be resolved in any trade deal. Improving Mexico’s internal security is one of the platforms Mexican president-elect Andrés Manuel López Obrador ran on earlier this year. According to The Guardian, López-Obrador plans to rethink the country’s approach to the drug war currently ravaging the country.
However, the recent rise in violent crime in popular tourist destinations has prompted the U.S. to issue a travel advisory for several Mexican states. According to Time, the new advisory is a result of the discovery of eight corpses, six of which had been mutilated, in Cancún last week.