Posted on 05/02/2019 12:49:21 PM PDT by Kaslin
The United States has been plagued with uncertainty ever since President Donald Trump started his trade disputes with many of our trading partners. From steel and aluminum tariffs to renegotiating the North American Free Trade Agreement (NAFTA) and replacing it with the United States-Mexico-Canada Agreement (USMCA), trade rules have been in flux, with U.S. consumers caught in the crossfire -- and with no end in sight.
This drama started in March 2018, when the Trump administration announced that it would impose 25% tariffs on steel and 10% tariffs on aluminum for imports from all countries that he deemed to be treating America unfairly. The duties were levied in the name of national security, even though they would actually punish many of our NATO allies. At the time, the administration made no secret about the fact that it planned to use the tariffs as leverage to renegotiate the 25-year-old NAFTA with Canada and Mexico.
Whether the strategy worked is still up for debate. Yes, NAFTA was renegotiated through the USMCA, but that agreement hasn't been approved by the U.S. Congress or ratified by Mexico or Canada, either. In other words, NAFTA is still the law of the land. Unfortunately, the uncertainty over whether (and when) the USMCA will replace NAFTA places a significant economic burden on companies trying to make investment decisions and predictions throughout North America.
What's not up for debate is the fact that in some important ways, the USMCA is more protectionist than NAFTA. It's true that the USMCA includes a few improvements over NAFTA, such as an update of the digital trade rules. The internet was barely a thing when NAFTA was adopted, so the agreement did need to be modernized on this front. The USMCA also includes the slight opening of a few markets, for example the Canadian dairy market. That said, several of these provisions were already agreed to in the Trans-Pacific Partnership (TPP) Agreement, which Trump withdrew from soon after he entered office.
On the negative side, the USMCA's new automotive "rules of origin" are much more restrictive than the ones in NAFTA, including a new minimum wage provision requiring that 40% of a car be made in plants where the workers are paid at least $16 an hour or tariffs will be imposed on those cars. No such requirement exists in NAFTA. These changes will make producing cars in North America, and in the United States specifically, more expensive. Considering that the automotive industry's future lies in large part with exporting, it's unwise to raise the cost of producing cars in the United States, as it makes it more difficult for U.S. car companies to export them.
That said, in spite of its problems, approving the USMCA would at least put an end to some uncertainty. In fact, according to a recent report by the U.S. International Trade Commission, some of the biggest economic gains from adopting the USMCA would come from ending the current uncertainty.
So how close are we to adopting the USMCA? It doesn't look too good.
For starters, the Democrats would like to see even more significant labor provisions imposed on Mexican workers. The House leadership said that it wasn't anywhere near putting it up for a vote.
On the Republican side, Senator Chuck Grassley of Iowa warned the president that he shouldn't expect his team to support the USMCA as long as the metal tariffs are still in place, writing in The Wall Street Journal, "If these tariffs aren't lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place." The metal tariffs have hurt American consumers of foreign metals. And once retaliatory tariffs from Canada and Mexico went up, everyone suffered even more.
What's more, Canadian and Mexican officials have shown very little interest in bringing the new deal to a vote in their own countries. The window for a vote is closing fast, as there are elections coming in Canada; observers predict that if the deal hasn't been approved by then, it will have to wait until 2020.
Ultimately, for all the talk about using these tariffs as leverage, it seems that Trump's true goal for the duties was to protect the steel industry. He is a protectionist, period. As such, he won't let those tariffs go easily.
So, get used to the uncertainty.
The past method of free trade meant we the USA got screwed in every deal. We paid tariffs and other countries didn’t or paid substantially less, in what sane world is that free trade?
We have tried the globalist way since WWII and we got screwed royally coming and going. I know Trump doesn’t please the snake oil salesman globalists pitching the “free trader” line and I use that term loosely because we have not been in a free trading world as some would lead try and lead us to believe. But their way factually and substantially destroyed our manufacturing base cost millions of American jobs, jobs they assured us would not be affected and once affected those workers were told to go back to school for retraining like it was easy as changing the oil in your car.
I am all for free trade as long as it is equal. You pay no tariffs, I pay no tariffs. You don’t subsidize an industry and I won’t, until then you pay what we pay.
Cry me a freakin river...
Boy it really brings out the cry-babies when Trump tries to do something good for the U. S.
The USMCA is fine with me.
Never liked NAFTA, and as for the TPA, seriously?
This sort of reasoned and well-informed analysis is NOT WELCOME here!
Trump is leveling the playing field while the Left want it tilted in favor of other nations. They call that fair.
How do you ensure Free Trade without the threat of Tariffs. Trump always signals, you remove your tariffs and compete on a level playing and he will be more than happy to be a free trader.
What the Free Trade clowns don’t understand is that no country in the world wants to compete with America on a level playing field. It would be suicide. And yes this include the China. We would crush them like a bug if they removed all tariffs.
Made sense when the USA was the only major country not devastated following WWII..., long past due to even the playing field for workers even if some prices go up! Yeah, I'll gripe about what some prices used to be, but..., we need jobs here in the USA!
Look at all the open borders turds that got excited by this.
Veronique de Rugy, another feckless turdette from National Review. She has an axe to grind, she’s a Canuck, so she’s probably pi$$ed off about the dropping tariffs on Canadian milk!
How much are the Chicoms paying her?
Oh, a dreaded “protectionist” who puts American liberty above narrow interests of businesses, and thinks tariffs are great? Reminds me of our founding fathers.
Another assaholic pro-globalism article by a French woman.
What about the uncertainty of a worker losing his job or a community losing its employers due to freetraitor policies?
Are you kidding me? Show me one auto supplier who is not paying his workers over $16/hr. I just found this:
The average salary for united auto worker jobs is $69,179.
That does include benefits like health insurance, pension, etc. Still, that's about $35/hour.
Re: “NAFTA was renegotiated through the USMCA, but that agreement hasn’t been approved by the U.S. Congress or ratified by Mexico or Canada, either. In other words, NAFTA is still the law of the land.”
Wow.
I had no idea.
Globalist “free trade” is to trade policy, what open borders is to immigration.
The entire world profits from middle class economic decline with the connivance of elites in the USA who ALSO profit from middle class economic decline !
No he is not a protectionist. That is false. Trump at least economically, is a pragmatist. And he is the first and only POTUS who is not compromised by the ChiComs. They were cheating and he decided to stand up to them. His relation to Europe and Canada is a little more nuanced, and whether you agree or not with his economic stance in regards to them, he is still not a protectionist.
Indeed, and I am as free trade as they get, but can step back beyond the ideology and see the US was being cheated.
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