Never Forget, All Trade Deals Aren't Always 'Free'

Earlier this week, headlines touted some seemingly good news on the trade front: Fifteen Asian nations had agreed in principle on key portions of a new trade deal, likely clearing the way for them to sign it next year. Even India's decision to opt out couldn't shake some pundits' enthusiasm over a potential positive to offset all the new tariffs accompanying the Trump administration's various trade spats. Far be it from us to pooh-pooh good news, but we think a little perspective is in order. One, big trade deals are seldom near-term economic drivers since they usually take effect gradually, over many years. Two, the deal in question—dubbed the Regional Comprehensive Economic Partnership (RCEP)—isn't even a free-trade deal. We see many reasons for investors to be bullish today, but this isn't one of them.