Katie Deal , Washington Analyst,
US Equity Division
Since the beginning of his 2016 presidential campaign, President Trump has vowed to abandon trade agreements he believes hurt the US economy. By replacing the North American Free Trade Agreement (NAFTA) with the US Mexico Canada Agreement (USMCA), the president can now state that he has fulfilled his commitment to eliminate, in his words, “the worst trade deal of all time”— another step in his “Promises Made, Promises Kept” campaign.
But the new agreement—while perhaps having only a limited economic impact— offers talking points across the US political spectrum.
In Trade, Much Like Politics, Timing Is Everything
Given the proximity of 2020 elections, US politicians from both parties felt pressure to tout USMCA as an opportunity to help their constituents.
The president, beyond the headline of fulfilling a key campaign promise, can say he’s cut a better deal for American companies, agriculture and workers. His chief trade negotiator, Robert Lighthizer, claims that bipartisan support for the USMCA shows “you can have a permanent trade policy if you get the balance right.”
Democrats were especially eager to get on board with the agreement. In 2018, they took control of the House by winning some swing districts that are suburban and more politically moderate. Passing the USMCA allows the party to demonstrate that it engaged in bipartisan negotiations and action during a legislative session defined by impeachment.
By touting that they achieved more stringent labor provisions within the USMCA, Democrats can also argue that they pushed through changes that will improve economic prospects for working Americans. Notably, the AFL CIO, the nation’s largest union federation, reluctantly signed off on the pact.
As of mid January, the USMCA had been approved by both houses of the US Congress and by the Mexican government. Canada’s passage of the accord will be required for full ratification.
Pact Could Boost Confidence
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