The new U.S.-Mexico-Canada Agreement (USMCA) reduces the risk of an escalating global trade war by allowing the Trump administration to turn its focus on trade tensions with China and the European Union, analysts say. The analysts who spoke to International Business Times also said the deal, which updates the 1944 North American Free Trade Agreement (NAFTA) pact, was a victory for President Donald Trump, but offered little to the U.S. while giving the best possible outcome for Canada.
“The president and the administration is looking for a forward momentum on trade, so they can set sights on other issues with some of the more friendly trading partners,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “It’s likely to boil down quickly enough to an issue between the U.S. and China. So, Canada and probably next is the continued negotiations with the EU. It sets a positive momentum for these negotiations.”
In a note seen by IBT, Bank of America said the USMCA deal reduced the risk of an escalation of global trade wars as it provided a path for other trade deals such as an eventual U.S.-China agreement.