3 Funds To Gain From America's Improving Trade Relations

The year 2020 is proving to be an exciting one on the trade front. This week, the much-awaited initial phase of the U.S.-China trade agreement was signed by the two countries and the U.S. Senate gave a green signal to the U.S.-Mexico-Canada Agreement (USMCA), which now awaits President Donald Trump’s signature.

Mutual fund investors who wish to make the most of these trade deals would find it prudent to invest in a couple of funds that are set to gain ahead.

U.S.-China’s Initial Deal is Promising

On Jan 15, Trump signed the first stage of the U.S.-China trade deal, which indicated a truce between the two countries. The trade dispute between Washington and Beijing, which started in mid-2018 is finally anticipated to be nearing a closure, beginning with the deal signed this week.

Chinese vice-premier Liu He joined Trump at the White House to sign the deal in the East Room. This initial deal boosts Chinese purchases of U.S. agricultural, manufacturing and other products, and comprises enforcement mechanisms. China has promised to raise its purchases of U.S. goods and services by $200 billion over a period of two years.

Agricultural purchases account for $32 billion of a total of $200 billion and consist of oilseeds, meat, cotton and other commodities. Although tariffs on about $360 billion of Chinese products are still intact, the signed pact slashes U.S. tariffs to 7.5% on around $120 billion in Chinese imports, which is a promising start.

White House economic adviser Larry Kudlow told CNBC that the United States will take “proportionate actions” if China doesn’t abide by its commitments and defended the President’s use of import tariffs to push Beijing for negotiation.

U.S. Senate Approves USMCA

In addition to the trade agreement with China, a trade deal with the United States’ biggest trade partners could be on its way. On Jan 16, the U.S. Senate overwhelmingly approved the USMCA, sending across the agreement to Trump for approval. The Senate’s nod came after a 385-41 vote in the House of Representatives in December.

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