Asian shares recovered on Tuesday, after U.S. President Donald Trump signaled that his proposed steel tariffs would be canceled if a “fair” NAFTA agreement is reached. Asian stocks indexes followed Wall Street higher, recovering fully from the damage that resulted from Trump’s tariff proposal and snapping a four-session losing streak. Leading the Asian ascent was Japan’s Nikkei 225 which soared as much as 2.41 percent in early Asian trade. As of 1:41 p.m. HK/SIN the index was up 1.82 percent. Hong Kong’s Hang Seng Index was up 1.42 percent as was the Kospi. Australia’s ASX 200 was up 1.14 percent.
The dollar also firmed as the threat of a trade war receded, trading up against the yen at 106.20, sending the export sector higher, with manufacturers, technology and automakers enjoying the largest part of the upswing.
At the NAFTA negotiations on Monday the U.S. and Mexican representatives pushed for expedited negotiations. Mexico was eager to come to an agreement before its upcoming presidential election and its upcoming expiration of congressional negotiating authorization, while the U.S. was eager to avoid the trade war that has been troubling both investors and the country’s political and economic allies. President Trump has threatened to withdraw from NAFTA unless it increases U.S. manufacturing and employment, claiming that the current agreement has forced U.S. jobs into Mexico. Mexican Economy Minister Ildefonso Guajardo has speculated that there will be some lower-level discussions about NAFTA in the next few weeks before the next round of talks in April. U.S. Trade Representative Robert Lighthizer has commented that he may pursue bilateral talks with each of the U.S.’s neighbors, but that he prefers a three-way agreement between the U.S., Canada and Mexico. Lighthizer has also said that Canada and Mexico would be exempt from any U.S. steel tariffs if a deal was reached.