Trump touts his NAFTA replacement
What happened
President Trump was celebrating his administration’s renegotiation of the North American Free Trade Agreement with Canada and Mexico this week, calling the updated pact a boon to the U.S. economy and a vindication of his hardnosed negotiating tactics. Speaking at the White House, Trump said that the new deal, the U.S.-Mexico-Canada Agreement (USMCA), would “send cash and jobs pouring into the U.S.” If approved by legislatures in all three nations, the USMCA will replace the 24-year-old NAFTA, which Trump has long derided as “the worst deal ever,” saying it sent jobs overseas and wrecked the Rust Belt. He attributed the renegotiation, which took 13 months and was completed just hours before a U.S.-imposed deadline, to his willingness to play tough with America’s neighbors. “Without tariffs,” he said, “we wouldn’t be talking about a deal.”
For cars and trucks to qualify for zero tariffs under the USMCA, at least 75 percent of their parts will need to be made in North America by 2020, up from NAFTA’s 62.5 percent. By 2023, 40 percent of a car or truck’s production will also have to be completed by workers earning at least $16 per hour—three times what the average Mexican autoworker currently makes. The deal will also see Canada open 3.6 percent of its closely protected dairy sector to U.S. imports, and let U.S. drug companies sell pharmaceuticals for 10 years in Canada before facing generic competition, up from eight years under NAFTA. Canadian Prime Minister Justin Trudeau called the agreement “a good deal,” but admitted to trade-offs. “Like any important negotiation,” he said, “we had to make compromises.”
What the editorials said
This “could have been worse,” said The Washington Post. If Trump had followed through on his threats to scrap NAFTA entirely, hemispheric supply chains would have collapsed. Thankfully, he “retreated from the brink with respect to America’s second- and third-largest trading partners, Canada and Mexico,” and settled for minor tweaks to the deal. The resulting agreement is more “managed trade” than “free trade,” but that’s a price worth paying if it preserves “economic stability in the Western Hemisphere.” Trump can be incredibly wrongheaded on trade, said the Washington Examiner, but “no one can take this win away from him.” He cleverly forced Canada “to bow to his will,” striking a deal first with Mexico and then telling Trudeau to take it or leave it. The USMCA itself isn’t much of an improvement on NAFTA, but it “has certain advantages.” The U.S. agricultural industry, in particular, will get greater access to foreign markets. So, “one cheer, perhaps two, for the new trade agreement.”
What the columnists said
“Well, that was unnecessarily painful,” said Catherine Rampell in The Washington Post. Trump has alienated allies and punished “our farmers and manufacturers with devastating tariffs” only to end up with a trade deal that looks “an awful lot” like the old one. The sections he did rewrite could backfire on the U.S.: The updated rules of origin for autos “may end up being so costly to adhere to that they’ll encourage manufacturers to move more of their operations outside North America.”
Experts said it was crazy to attack NAFTA, said Walter Russell Mead in The Wall Street Journal, but Trump was proved right. Flush with success, he’s now likely to be less deferential to aides and advisers “as he gains even more confidence in the power of his intuition and bargaining ability.” The president is only getting started in his plan to “refashion the Western global order,” said Krishnadev Calamur in TheAtlantic.com. And though they may not like it, U.S. trade partners “have little choice but to go along with much of what the world’s largest economy wants.” With China and Russia as the only viable alternatives to the U.S. “global order,” many countries will begrudgingly accept “Pax Americana.”
Still, the USMCA is far from a done deal, said Megan Cassella in Politico.com. A vote in Congress isn’t expected until 2019, and if Democrats win control of either chamber in the midterms, they could reject the pact and deny a president they despise “anything even closely resembling a policy victory.” As one former Senate aide said, “It’ll be too much fun for them to just kill it off on Day One.”