President Trump managed to conclude 2019 with at least one trade policy achievement: the United States-Mexico-Canada Agreement on trade, which replaces the 1993 North American Free Trade Agreement. Getting it in place, however, was tricky.
The underlying deal was agreed to by all three countries in late 2018, but talks to get the deal passed by Congress stretched on throughout the year. Democrats initially demanded that the three countries reopen the talks, but Mexico and Canada categorically rejected their demands. At several other points along the way, the deal appeared dead only to rise from the ashes.
April 29 — Grassley warns steel and aluminum tariffs on Canada and Mexico threaten USMCA: The Trump administration initially gave Mexico and Canada exemptions to tariffs it imposed in 2018 of 25% on steel and 10% on aluminum but later removed the exemptions to pressure the countries during the negotiations over the trade deal. It was widely assumed that after the three countries did reach a deal on USMCA, the White House would restore the exemptions. It didn’t, though, and the tariffs became a running issue for Canada, Mexico, the business community, and many congressional lawmakers. All argued that the tariffs were too disruptive, and USMCA could not progress until the issue was resolved.
Senate Ways and Means Committee Chairman Chuck Grassley, an Iowa Republican, declared in a Wall Street Journal column, “If these tariffs aren’t lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place.”
The matter was resolved on May 17 when the White House agreed to lift the tariffs.
May 30 — Trump threatens Mexico with tariffs to stop immigration: Trump tweeted: “On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied.”
While not directly related to the USMCA talks, many, such as the National Association of Manufacturers, feared that the president’s move would spark a backlash in Mexico fierce enough to make it pull out of the deal.
After a series of hastily arranged meetings between the U.S. and Mexican officials, Trump announced on June 7 that the tariffs were “indefinitely suspended” after a deal in which Mexico agreed to step up enforcement and accept more asylum-seekers itself.
Sept. 25 — Trump warns that impeachment could derail USMCA: Trump said that Democrats pursuing impeachment could cause the trade deal to stall in Congress. “I don’t know that they’re ever going to get to a vote,” he told reporters in New York. “I don’t think they can do any deals.”
Democrats disputed Trump’s claim, arguing that the impeachment proceedings and the trade deal were separate matters. “There is no reason, based on what happened yesterday, to think that there’s any deterrents that will hold us back,” said House Ways and Means Chairman Richard Neal.
Nov. 19 — House Democrats pull back from a vote after AFL-CIO’s Richard Trumka objects: House Democratic leaders deflated hopes that a deal to pass USMCA was near by saying that it was still not ready for a floor vote. The announcement came after a party caucus meeting on Capitol Hill with AFL-CIO President Trumka, a critic of the trade deal.
House Speaker Nancy Pelosi said that the deal could pass the House when it was made “enforceable for America’s workers.” Trump responded by calling the Democrats the “Do Nothing Democrats.”
Dec. 4 — Mexico objects to USMCA’s factory inspection terms: After a compromise between the White House and Democrats to resolve concerns raised by the AFL-CIO over USMCA’s labor rights language, Mexico raised objections. Mexico Deputy Foreign Minister Jesus Seade, the country’s lead negotiator, wrote in a column for El Universal that USMCA’s current version would be an “unacceptable” violation of his country’s sovereignty. In a tweet the same day, Seade wrote, “I WILL NEVER accept anything that attempts against the interests + sovereignty of MX.” Seade was reacting to viral news accounts in Mexico that claimed Mexico had agreed to cede part of its sovereignty in the deal, reports that Seade called false.
Dec. 15 — Mexico says the language in USMCA regarding the compromise on inspections is unacceptable: Days after an agreement was reached between the White House and Democrats allowing for a full vote on USMCA, Mexico again raised the threat of opposition. It objected to the implementing language of USMCA, which required Labor Department inspectors to be stationed in Mexico in order to examine factories there, on the grounds that it would violate its national sovereignty. Seade said in a tweet that while the Labor Department officials stationed in U.S. embassies had been “contemplated” during the negotiations, no such agreement had been made. “Mexico will NEVER accept if it is in any measure of disguised inspectors, for a simple reason: Mexican law prohibits it.”
The issue was resolved the next day when the U.S. Trade Representative’s Office clarified that all inspections would be carried out by independent panels jointly appointed by the U.S. and Mexico. The Labor Department would provide assistance but “will not be ‘labor inspectors’ and will abide by all relevant Mexican laws.”
The House passed the trade deal on Dec. 19 on a vote of 385-41. The Republican-majority Senate is set to vote on the deal early next year.
