President hails revision of trade agreement
‘It’s a brand-new deal. It’s not NAFTA redone,’ Trump says
WASHINGTON — President Donald Trump said Monday that the revised North American Free Trade Agreement with Mexico and Canada would pour “cash and jobs” into the United States. But the deal’s importance may have less to do with the details than the signal it sends that Trump is methodically settling his multifront trade war to fight a single enemy: China.
A jubilant Trump celebrated the new NAFTA agreement as the fulfillment of a bedrock campaign promise. He claimed it was a vindication of his aggressive use of tariffs and vowed to keep imposing them to extract deals from other trading partners, like the European Union and Japan.
But while Trump expressed confidence about eventually reaching deals with Europe and Japan, he was far more grudging about China, saying it was too soon to begin talking. Administration officials say privately that Trump is content to leave tariffs on $250 billion of Chinese goods in place for the foreseeable future to weaken its hand.
“China wants to talk very badly,” Trump said at a news conference in the White House Rose Garden. “I said frankly it’s too early to talk, because they’re not ready.” He added, “If politically, people force it too quickly, you’re not going to make the right deal.”
The updated NAFTA, which will be called the United States-Mexico-Canada Agreement, or USMCA, represents Trump’s biggest trade achievement to date, and it comes after more
than a year of intense negotiations that frequently fell into personal rancor between Trump and the leaders of Canada and Mexico.
After languishing for weeks, negotiations with Canada suddenly broke through Friday morning, according to a senior U.S. official. The Trump administration, having received a detailed proposal from Canadian officials the day before, submitted a counteroffer, which the Canadians accepted in principle.
With a deal safely in hand, Trump lavished praise on Mexico’s outgoing president, Enrique Peña Nieto, with whom he had tangled repeatedly over the phone. He was less effusive about Prime Minister Justin Trudeau of Canada, but suggested their Cold War was over, too. It was not personal, Trump suggested about both men; it was just business.
“We had very strong tensions,” Trump said. “It was just an unfair deal, whether it was Mexico or Canada, and now it’s a fair deal for everybody. It’s a much different deal. It’s a brand-new deal. It’s not NAFTA redone.”
Still, like some of Trump’s other accomplishments in business and government, the deal is partly a step forward and partly an exercise in rebranding.
Canada will ease long-standing protections on its dairy market and provide access greater than what the United States would have gained through the TransPacific Partnership, a trade treaty negotiated by President Barack Obama, from which Trump withdrew last year.
The United States relented on its demand to eliminate an independent tariff dispute settlement system that Canada had said was a red line. Preserving it was a major concession for the United States, which had eliminated the mechanism, known as Chapter 19, as part of its deal with Mexico.
The pact also makes a series of changes to areas like intellectual property and the digital economy, including protections for patents and domain names — all of which refresh NAFTA, a 25-yearold pact that had become somewhat outmoded in the digital age.
But many of these innovations were drawn from the Trans-Pacific Partnership, which included Canada and Mexico, and it prompted a senior Trump adviser to offer a rare endorsement of an Obama legacy achievement that Trump delighted in dismantling.
“We’re building on what was done in TPP,” said Robert Lighthizer, the U.S. trade representative. “I’m in no way trying to knock the people that negotiated TPP.”
But he added, “Because we had the benefit of that, our agreement is substantially better than TPP.”
Lighthizer pointed to changes in regulations governing automobile manufacturing, which he said would bring more car production back to the United States. Under the agreement, a greater percentage of vehicles would have to be made in North America to qualify for NAFTA’s zero tariffs.
A significant portion of the vehicles would also have to be assembled by workers earning at least $16 an hour — a wage floor intended to increase jobs in the United States and Canada, where wages are higher than in Mexico. While inflation will erode this wage protection over time, officials noted that the pact’s terms could be reviewed every six years.
Analysts said the agreement might have an incremental effect on U.S. automotive jobs, and might push car prices slightly higher. But Ford Motor Co. said in a statement that it was “encouraged” by the accord, noting that a three-nation trade zone “will support an integrated, globally competitive automotive business in North America.”
The United Steelworkers union urged caution, lamenting that the Trump administration’s steel and aluminum tariffs had not been lifted as part of the deal. Commerce Secretary Wilbur Ross described those as “separate issues,” and Mexico and Canada say they expect those tariffs to be worked out on a separate track. Trump said the United States was talking with Mexico and Canada about potentially replacing them with quotas. Also unresolved is whether Canada and Mexico will continue retaliatory tariffs on U.S. products like whiskey, orange juice and chocolate.
Trump must now submit the deal to Congress, where a potential change in control from Republicans to Democrats could throw its passage into doubt. Rep. Nancy Pelosi of California, the House minority leader, made clear on Monday that Trump’s deal would not receive a rubber stamp.
But the top Senate Democrat, Chuck Schumer of New York, offered a rare endorsement of Trump’s approach.
“As someone who voted against NAFTA and opposed it for many years, I knew it needed fixing. The president deserves praise for taking large steps to improve it,” Schumer said in a statement. He cautioned, though, that “any final agreement must be judged on how it benefits and protects middle-class families and the working people in our country.”
Experts on trade delivered a mixed verdict on the agreement. Parts of it, they said, were a much-needed update to NAFTA. But other parts could restrict trade in a way that would ultimately hurt U.S. consumers and increase uncertainty for U.S. companies.
“He started this conflagration with Mexico and Canada, as he has with other trading partners,” said Daniel Price, a former trade adviser to President George W. Bush. “That he may put out the fires after they have destroyed significant acreage does not vindicate either the strategy or the result.”
The White House is moving on several fronts to settle the trade disputes Trump started. Last week, Trump signed a revised trade agreement with President Moon Jae-in of South Korea. He and Prime Minister Shinzo Abe of Japan agreed to begin talks on a deal, after months of resistance by Tokyo.