US-Mexico trade deal sparks rally in auto stocks

Shares of top automakers rallied Monday after the U.S. and Mexico reached a preliminary trade deal, ending months of uncertainty for car production.

The agreement, reached during negotiations over revamping the North American Free Trade Agreement (NAFTA), would require that a larger share of vehicles’ parts be made in the region, raising content levels to 75 percent from 62.5 percent.

The Trump administration said the new “rules of origin” requirements will support billions of dollars in vehicle and parts production in the U.S. each year.

The deal also aims to raise wages for workers in Mexican car plants. NAFTA critics in the U.S. have argued that domestic factories have been forced to compete with cheaper labor across the border.

General Motors, the largest U.S. automaker by sales, jumped 4.8 percent in recent trading. Shares of Ford, Fiat Chrysler Automobiles, Toyota and Honda also posted sharp gains.

Ticker Security Last Change Change %
GM GENERAL MOTORS CO. 32.99 -0.17 -0.50%
F FORD MOTOR CO. 12.43 -0.12 -1.00%
FCAU n.a. n.a. n.a. n.a.
TM TOYOTA MOTOR CORP. 179.71 -2.77 -1.52%
HMC HONDA MOTOR CO. LTD. 33.63 -1.20 -3.44%

The trade deal between the U.S. and Mexico could replace NAFTA. However, the agreement paves the way for Canada to rejoin talks in hopes of forming a new pact between all three nations.