This article was originally published on ETFTrends.com.
Per a Politico report, the United States and Mexico are finalizing a deal on the automotive rules of origin section as part of an effort to revamp the North American Free Trade Agreement. This would mark a significant step forward in renegotiating NAFTA as the autos deal has been one of the primary points of contention in getting a deal done.
Mexican Economy Secretary Ildefonso Guajardo is set to meet with U.S. Trade Representative Robert Lighthizer in Washington on Thursday for another round of ministerial meetings running through Friday, reports Politico.
Settling the autos deal would effectively put a halt to the tit-for-tat tariff wars between the U.S., Canada and Mexico. This could be a boon to Mexico-specific ETFs like the iShares MSCI Mexico Capped ETF (EWW) and Direxion Dly MSCI Mexico Bull 3X ShsETF (MEXX).
EWW tracks the investment results of the MSCI Mexico IMI 25/50 Index and is the largest Mexico-focused ETF based on assets. MEXX seeks daily investment results equal to 300% of the daily performance of the MSCI Mexico IMI 25/50 Index.
Both ETFs ended Monday's trading session in the green with EWW up 0.60% and MEXX up 2.43%. Additionally, EWW is up 13.3% within the past month and with its leverage times three, MEXX is up 44.4%.
Likewise, the deal could benefit Canada ETFs, such as the iShares MSCI Canada ETF (EWC) and SPDR MSCI Canada StrategicFactors ETF (QCAN) . With the latest news that a NAFTA deal was close to completion, EWC was up 0.17% after hours as of 4:40 p.m. ET.
Once an agreement is official with Mexico, the U.S. plans to turn its attention to Canada. Though there are no plans to meet with Canada as of yet, the hope for U.S. President Donald Trump's administration is to apply pressure on Canada by reaching a deal with Mexico first.
"My hope is that we will before very long have a conclusion with respect to Mexico, and that as a result of that Canada will come in, and we can compromise," said U.S. Trade Representative Robert Lighthizer.
Related: Trying Times for Mexico ETF
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