Monday, October 8, 2018
On Monday President Donald Trump announced the end of NAFTA, the trade agreement he’s repeatedly called a “disaster” for U.S. workers, and hailed its successor, the United States-Mexico-Canada Agreement, as the greatest trade deal ever seen. As you might therefore expect, the new agreement is just a lightly tweaked version of the old. Despite the president’s theatrics, NAFTA lives on.
That’s good—because, far from being a disaster, free trade across North America serves the interests of all three countries. But Trump’s USMCA has a downside. It was achieved only after months of needless economic uncertainty and the trashing of America’s reputation as a reliable partner.
Some of the tweaks in USMCA are good, some not so good, but the new pact mostly affirms the existing arrangements. Given the current cease-fire in Trump’s trade war with Europe, the administration’s trade complaints will focus more exclusively on China. (It’s notable that USMCA gestures in that direction, by barring members from negotiating trade deals with so-called non-market economies.) A worsening breakdown in U.S.-China relations now poses the biggest threat to global prosperity.
In coming to terms with China on trade and other issues, the U.S. will need the support of its allies, so it’s good that Trump has backed away from his trade fights with Mexico, Canada and Europe. But his aggressive and unruly posturing has done great harm nonetheless. The president has sent the message that he disdains alliances, sees the world in zero-sum terms, and cannot be trusted.
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