NAFTA 2.0 could send some jobs back to U.S.

But what will it cost us?

WASHINGTON — President Donald Trump insists his new North American trade deal will deliver a victory for U.S. factory workers by returning many high-paying 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.

As Americans vote in the midterm elections, 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 labourers.

But shifting away from a business model that relies on Mexican labour would likely mean higher-priced 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 labour. Those manufacturers could then ship cars and other goods back to the United States and Canada, duty-free.

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