Trump’s Fake NAFTA Replacement Makes Almost No Difference

JM Ashby
Written by JM Ashby

The bipartisan International Trade Commission has released their analysis of the so-called United-States-Mexico-Canada-Trade Agreement or USMCA and it tells us that minor changes included in the deal won't be noticeable to the vast majority of the country.

Republicans themselves have said that 95 percent of the USMCA is the same as NAFTA and that is illustrated by this analysis which says the agreement would add just $68.2 billion to GDP over a period of six years while increasing employment in manufacturing by slightly less than 0.4 percent.

From the Wall Street Journal:

The International Trade Commission report released Thursday found that the USMCA that President Trump reached with this Canadian and Mexican counterparts would increase U.S. GDP by a slim margin of $68.2 billion, or 0.35%. [...]

In a sector assessment, the ITC calculates that the U.S. manufacturing industry would benefit the most for the ratification of USMCA. The industry would experience the largest percentage increase in employment equal to 0.37% and real wages of 0.50%.

For perspective, US GDP is about $19.4 trillion and this would add $68.2 billion over six years.

It's not that adding a tiny amount to GDP or the number of people employed by the manufacturing industry is a bad thing, it's just that this is not going the move the needle in any significant way if it's ever approved by Congress.

The office of Trump's trade representative, Robert Lighthizer, released their own analysis of the agreement and, as you might expect, their analysis is not entirely on the level.

USTR estimated that the trade deal would create 76,000 automotive sector jobs within five years as automakers invest some $34 billion in new plants to comply with the regional content rules. The total includes about $15 billion in projects already announced.

USTR officials said their analysis was based on plans disclosed by automakers to the trade agency for compliance with the new agreement’s tighter rules of origin.

They have verbally committed to us that they intend to comply with the rules,” a senior USTR official said. “And they have told us that this is not going to have significant upward pressure on vehicle prices.”

It seems unlikely to me that this agreement will be approved by Congress this year and, practically speaking, it makes almost no difference if it's approved or not.

Considering how little difference this agreement would make, I personally wouldn't vote to approve the agreement if I were a member of Congress because Trump does not deserve the opportunity to assume ownership of a trade agreement that was negotiated nearly 30 years ago. Slapping his name on the work of others is the story of Trump's entire life.

But that is me at my most petty.

  • muselet

    Wow. NAFTA 1.1 will increase the US’s GDP by a rounding error.

    No matter how low expectations are, the Trump administration still won’t manage to meet them.


  • Draxiar

    But JM, taking credit for other people’s work by slapping his name on it is THE trump way!

    Yeah…he doesn’t get credit for that shit.