Trump Is Winning on Trade

President Trump hailed Monday a last-minute agreement with Canada that would in effect rebrand the North American Free Trade Agreement. He called the pact, which also includes Mexico, “a great deal for all three countries [that] solves the many deficiencies and mistakes in nafta.”

The new agreement, announced late Sunday, is being labeled the United States Mexico Canada Agreement, or USMCA, and it ends months of uncertainty over what Trump’s longtime aversion to nafta would mean for the accord, which went into effect in 1994.

Renegotiating nafta was a key campaign promise for the U.S. president because, in his view, the agreement hurt U.S. workers. Last month, the U.S. reached what Trump called a bilateral trade agreement with Mexico, but a similar pact with Canada proved trickier. Negotiations between the two sides were at an impasse over access to Canada’s highly protected dairy sector, Canadian auto imports to the U.S., and how trade disputes are settled. Further details are expected Tuesday; on Monday, different observers had different assessments of the significance of the changes—from modest to significant. If nothing else, the agreement gives Trump a political win.
Among the most significant changes: U.S. dairy farmers will have marginally more access to Canada’s market, a win for the U.S.; the mechanism used to resolve trade disputes is being preserved, despite strong U.S. opposition to it; Canadian and Mexican auto imports will have some exemptions from U.S. auto tariffs; and the new trade agreement will have a sunset clause—16 years, up from the five years the U.S. had demanded. The agreement must be approved by the legislatures in all three countries, which is by no means assured. Until then, nafta remains in place.  

The new agreement shows not only how Trump is willing to risk alliances to get the kinds of agreements he believes benefit American workers, but also how, despite protests, U.S. partners have little choice but to go along with much of what the world’s largest economy wants. It also shows how, ultimately, Trump is starting to refashion the Western global order, which the U.S. constructed in the wake of World War II, to align with his own worldview: more transactional, more bilateral, and less reliant on permanent alliances.