Trump tweaks NAFTA, and it’s slightly worse
President Donald Trump announced his new North American trade deal with much fanfare. It was, he said, “the most important trade deal we’ve ever made — by far!” And it would replace what he described as “the worst trade deal ever ... the job-killing disaster known as NAFTA.”
What a Trumpian moment this was. The deal to succeed the North American Free Trade Agreement, and all the pomp and circumstance surrounding the announcement, was Trump in microcosm. He has spent much of his presidency breaking things, both to garner attention and to make the point that the people who made these laws, policies and agreements lacked his brilliance.
In some cases, his plan has been to leave the detritus strewn about the playroom floor like Lego blocks and dismembered GI Joe parts. With North American trade, his plan is to reassemble the parts in more or less the same order and claim he has created something new and marvelous.
Some observers will find NAFTA 2.0 — which Trump has rebranded USMCA, for the United States-Mexico-Canada Agreement — modestly better than NAFTA. Others will find it modestly worse. We find ourselves in the modestly worse camp.
This deal is surely preferable to blowing up NAFTA. Its big “win” for the U.S. is an agreement by Canada to remove some protections for its domestic dairy industry. This might mean a lot to American dairy farmers, but not so much for the 99.9% of the country. What’s more, Canada had already agreed to similar language with other countries in Asia and the Americas.
The deal is also said to include some protections for U.S. patents and antipiracy efforts. These reflect changes in the tech world since NAFTA became law in 1994. In return, the new deal includes several questionable provisions:
❚ NAFTA stipulated that any vehicle wishing to avoid tariffs would have to be at least 62.5 percent made in North America. The Trump deal would increase the percentage to 75 percent. That could be good for autoworkers. But it will make cars marginally more expensive and could produce unintended consequences, particularly for the growing industry of exporting U.S.made German and Japanese vehicles.
❚ The deal continues America’s campaign to get the world to accept 75-year copyrights on creative works such as movies, books and music. This helps Hollywood, but 75 years after the death of a creator (and even longer for some corporate creations) seems a bit much.
❚ The deal includes a sunset clause that will cause it to end after 16 years. For years, American companies have complained about a tax code that is subject to uncertainty. Now they will have the same fears with trade.
Despite Monday’s hoopla, the deal faces a very uncertain future in Congress. Why would the president invest so much time and effort on a NAFTA tweak that might not even be approved? The best answer seems to be that Trump wants something new to put his name on.