President Trump scored a big win this weekend. No matter how wrongheaded he can be on trade — he recently described trade with the U.S. as a “privilege” for foreigners — no one can take this win away from him.
Trump forced Canada to bow to his will and accept a new trade agreement that its government had resisted. Trump first settled it with a willing Mexican government, a trading partner whose economy is growing much faster and will matter much more in the near future. The Canadians were then forced either to capitulate or find themselves out in the cold with their noses pressed up against the window looking in at the party being enjoyed by others inside. Prime Minister Justin Trudeau, fearful of being cut out, cried uncle on Sunday night and accepted.
Is the new deal better than NAFTA? Not by much, if at all. But it has certain advantages, and it’s more or less what Trump wanted, which means it’s a win for him and a political promise fulfilled, even if the gains may prove chimerical.
First, it closes one front in the world tariff war in which Trump had begun to seem stuck. The constant creation of new barriers to international trade, both by Trump and by other countries retaliating, threatened great harm to a national economy that has just started recovering from the policies of former President Barack Obama.
Now Trump can start thinking about tariff de-escalation and devising plans for new trade agreements with Europe, Pacific nations, post-Brexit Britain, and perhaps even China.
In making a deal, Trump has averted a crisis for the agricultural industry. Voters in farm country were sweating bullets, but renewal of free trade with Mexico especially, but also with Canada, allays their fears just in time for the midterm elections. Trump has proven he wasn’t blowing smoke when he said he intends to open foreign markets to American crops. Farm voters, not just Rust Belt voters, have reasons to feel they can trust him.
Third, Trump won concessions from Canada in the form of open markets for at least modest amounts of American milk products, eggs, and poultry. That’s a win, not as big as the Trans-Pacific Partnership would have been for the same products, but something.
The deal isn’t all roses. Trump has weirdly decided to create a new $16-per-hour wage for auto workers throughout North America. This will slightly slow the pace at which Mexico catches up economically, which, although hardly fatal, will prolong the free-trade zone’s growing pains, leaving in place longer the outsize wage difference between the U.S. and Mexico.
But, having entered those caveats into the record, it must be said that this deal is far better than no deal, contains some good things, and is a huge political win for Trump. NAFTA’s collapse without a replacement would have been an economic catastrophe. A return to World Trade Organization rules would have put as many as 14 million U.S. jobs at risk and would have inflicted damage on all three signatory nations. There’s no reason for such carnage, especially with a wealthier and rapidly developing Mexico exponentially boosting its consumption of American natural gas.
Trump has saved face and kept a promise. There is reason for genuine celebration — one cheer, perhaps two, for the new trade agreement.
