The Mexican peso dropped sharply versus the dollar early Tuesday after top White House economic adviser Larry Kudlow suggested the US could engage in separate trade talks with Mexico and Canada.
The peso was down 2% against the greenback at 8:45 a.m. ET. It’s slipped more than 8% over the last three months as NAFTA negotiations drag on.
Kudlow told Fox News that President Donald Trump is now “seriously considering” bilateral trade talks with Mexico and Canada, an idea the president has previously floated, but added the US will not pull out of NAFTA.
“He may be moving quickly towards these bilateral discussions instead of as a whole,” Kudlow said.
That comes hours after Mexico announced a 20% tariff on US pork leg and shoulder imports to the country, which is the US’s biggest market. The US had imposed hefty steel and aluminum tariffs on the EU, Mexico, and Canada last week, prompting swift retaliatory responses from its closest allies.
Negotiations for a new North American trade deal have seen little progress recently. Analysts predict negotiations could drag into 2019 after the three countries missed a deadline last month set by House Speaker Paul Ryan.
The Canadian dollar also slipped against the dollar after Kudlow’s comments, shedding 0.56%.
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