Tuesday's Market Minute: USMCA Approved?

The trade deal pushed to the side U.S./China trade war is now in the forefront on reports that House Democrats and the Trump administration are near an agreement on USMCA. Discussions on the deal have taken over a year now, and if it passes the House before the end of 2019, it would move on to be ratified by Mexico and Canada -- so markets shouldn't celebrate too soon.

Sticking points for the draft include pharmaceutical provisions and labor protections, both to protect U.S. jobs from moving internationally, and upholding workers' standards in Mexico.

However, enforcement of the provisions is still up in the air, as are potential objections from Canada and Mexico. Investors should also not forget about European tariffs: $7.5B-worth were added in October, with no signs of reprieve. Since the U.S. is now battling on trade on nearly all fronts, this is a piece of good news for markets while they wait for progress on a Phase 1 U.S./China deal, which has been delayed further and further into the future.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

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