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Trump Revamps NAFTA, Closes Important Deal With Mexico

President Trump is well on his way to fulfilling one of his top campaign promises – to renegotiate the North American Free Trade Agreement so that American workers and industries do not continue to suffer due to lopsided deals with Mexico and Canada. This week, the president announced that the U.S. and Mexico would enter into their own, separate bilateral trade agreement, though administration officials will now pivot to Canada in an effort to put back together some form of the tri-country deal, which has been in place since the Clinton presidency.

“They used to call it NAFTA,” Trump said. “We’re going to call it the United States-Mexico Trade Agreement.”

The president could not resist tooting his own horn, recalling that “many people” has expressed an opinion that it would be impossible to renegotiate NAFTA with terms more favorable to the United States. In another president, this kind of shameless bragging would be groan-worthy, but with Trump, we’ve not only come to expect it, it makes a certain amount of sense. After all, this is one situation where the old adage rings true: No one else is going to do it. Not in the mainstream press, certainly.

Because powerful interests in the United States, including manufacturers and Republicans in Congress, to say nothing of the wishes of the Mexican government, want NAFTA to remain a trilateral agreement, it is doubtful that we will actually see this trade agreement break into two or more separate deals. More likely: Trump is using that threat to draw Canada to the negotiating table. He has expressed his extreme disapproval over Canada’s use of retaliatory tariffs and their already-existing tariffs on American dairy. If Canadian Prime Minister Justin Trudeau can find a way to mend those fences, we could certainly be on our way to a new and vastly improved NAFTA.

Among the changes the U.S. and Mexico agreed to: New avenues for trade in a world now dominated by information technology, updated rules for the internet age, new requirements that car companies focus more of their manufacturing in North America, new requirements for companies when it comes to the use of local steel and aluminum, and even a wage agreement that will make it mandatory that companies pay their dominant car manufacturing workers $16 an hour. This latter clause is of course intended to put a stop to low Mexican wages, which have shifted a great deal of factory work south of the border.

It’s another big trade win for the man who promised to come into office and revamp the “terrible” deals worked out by his predecessors. Trump won’t get nearly the credit for this as he should in the media, but the economic effects may be large enough to speak for themselves.


Written by Andrew

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