U.S. trade relations improve with EU, Mexico and Canada

In what is likely to be a strategic move, the United States has moved quickly to reach new trade deals with Mexico, the EU and Canada and in doing so it can then focus its energies on China, which is sees as its prime competitor.

On Thursday, gains in the U.S. stock market paused following concerns that with the Trump Administration reaching trade deals with Europe and other countries from North America, China is likely to be left behind.

Adding to the optimism was the news that the U.S. and Canada could reach a new North American Trade Agreement deal by Friday.

“In all honestly, the NAFTA situation probably reflects a desire to get the agreement over the line before elections in Mexico and the mid-term vote in the U.S.,” said Craig Erlam, senior market analyst at OANDA, an FX broker.However, with U.S. tariffs on China beginning to sink in, stock markets across Asia began to lose of their forward thrust.

“It doesn’t mean the U.S. will look for a quick solution with China. There’s still a long way to run with these trade situations, and I wouldn’t be surprised if we see more tariffs on more goods before it gets better,” said Erlam.

A pan-European stock index dropped 0.4% on Thursday, dragging the MSCI world equity index, which tracks shares in 47 countries, off its five-month high. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped by 0.3%, with broad gains across the region offset by losses in China. The Shanghai Composite Index slid 0.9 percent and Hong Kong’s Hang Seng fell 0.8 percent.

“Investors are relatively pessimistic and cautious for now amid low levels of trading volume, as there are still concerns over the development of the Sino-U.S. trade spat,” said Yan Kaiwen, an analyst with China Fortune Securities.

The next load of U.S. tariffs on $200 billion of Chinese goods are scheduled to go into play from September 2018.

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