NAFTA 2.0 could draw jobs back to U.S., but at what cost?

President Donald Trump insists his new North American trade deal will deliver a victory for U.S. factory workers by returning many highpaying jobs to the United States.

Maybe. But a review of the agreement suggests that it could also mean higher prices for consumers and more inefficiencies for businesses. And the biggest winners might end up being robots and the companies that make them.

Trump is heralding the U.S.-Mexico-Canada Agreement as a triumph for his antagonistic trade policy — an approach that he says will usher in “a new dawn for the American auto industry and the American auto worker.”

The pact, unveiled Sept. 30, does appear to meet some of Trump’s goals: It could shift more factory production to the United States, thereby reversing a long-standing flow of jobs to lower-wage Mexico. And it could result in better working conditions and perhaps higher pay for Mexico’s long-suffering laborers.

But shifting away from a business model that relies on Mexican labor would likely mean higherpriced cars for American consumers. And North America’s automakers could become less competitive compared with rivals in Europe and Asia.

“It’s going to be harder to keep North America competitive as a manufacturing hub,” said Michael McAdoo of the Boston Consulting Group.

What’s more, much of the manufacturing work that does return to the United States would likely be done by robots in America’s increasingly automated plants, not by human workers.

The deal — known by its acronym, USMCA — is meant to replace the North American Free Trade Agreement. Trump had long condemned the 24-year-old NAFTA as a killer of American jobs. He even banished its name once the new deal was struck.

NAFTA had erased most trade barriers separating the United States, Canada and Mexico. Trade among the three surged. But many U.S. manufacturers moved factories and jobs to Mexico to capitalize on cheaper labor. Those manufacturers could then ship cars and other goods back to the United States and Canada, duty-free.

Trump demanded a new deal more favorable to American workers. Negotiations began in August 2017 and eventually produced USMCA.

“These measures will support many hundreds of thousands of American jobs,” Trump declared early last month.

USMCA isn’t a done deal. It has yet to be signed by the leaders or ratified by the legislatures of the three countries. Some Democrats have expressed support for the pact. But if their party regains control of the U.S. House in Tuesday’s elections, it’s far from clear that its leaders would want to hand Trump a victory.

What’s more, Canadian and Mexican lawmakers might think twice about ratifying the deal unless Trump frees them from the import taxes he’s imposed on steel and aluminum in a separate dispute.

To qualify for dutyfree benefits, USMCA requires carmakers to acquire 75 percent of auto content from within North America — up from 62.5 percent under NAFTA. That means more content would have to be homegrown in higher-wage North America, not imported more cheaply from elsewhere.

At least 40 percent of vehicles would also have to originate in places where workers earn at least $16 an hour. That would likely benefit the United States or Canada — not Mexico, where auto assembly workers earn an average of just $7.34 an hour and parts workers $3.41 an hour.

Gladys Cisneros of the AFL-CIO’s Solidarity Center, which advocates for unions, said she doubts the $16-an-hour wage requirement would do much for Mexican workers.

“Not a single auto parts or auto assembly plant pays that much” in Mexico, Cisneros said. “You’re not going to get them ... to $16 anytime soon.”

Tony Payan, director of the Mexico Center at Rice University’s Baker Institute for Public Policy, noted that for years Mexican governments sought to keep wages low to give their country a competitive edge.

“Most American leaders understood that,” Payan said. “They simply didn’t address it because it was good for business. Cheap labor was good for business.”