TRADE disputes have scarred the presidency of Donald Trump. So markets rose in relief when America and Mexico announced on August 27th that they had agreed on changes to the North American Free Trade Agreement (NAFTA). Mr Trump had earlier threatened to walk away from the deal, which eliminated most tariffs between its signatories after coming into force in 1994. As The Economist went to press, it was not clear whether Canada, the third party to NAFTA, would join the deal (see article). But across one border, at least, the threat of a trade crisis looks a bit less likely.

The relief may be short-lived. The concessions that Mexico has granted Mr Trump are for the most part economically damaging. The deal looks good for America only through the distorting prism of the president’s mercantilism. And Mr Trump is pursuing his trade agenda with a reckless bellicosity that makes a chaotic outcome more likely.

Planning, redux

If Canada ends up being folded into the agreement, the foundations of NAFTA would remain intact. But there would be several important changes, notably on cars. Today 62.5% of a car’s components must be made in North America for the vehicle to avoid tariffs. That will rise to 75%. Nearly half of the components will need to have been made by workers making at least $16 an hour. Because the average wage of Mexican manufacturing workers is $2.30, the benefit to some firms of moving south of the border will fall greatly. Worryingly, it appears that America may yet levy some tariffs on automotive imports from Mexico, if they exceed a given quota. That would put Mexican carmaking into a straitjacket.

By elevating arbitrary rules above the free market, these changes make a mockery of the White House’s supposed opposition to intrusive regulation. The result will be lower productivity, higher prices for consumers and a less competitive carmaking industry in North America, which competes as an integrated whole with producers in Europe and Asia. Uncertainty will not disappear. The deal could be rewritten again after six years, thanks to an unspecified review process.

None of this bothers Mr Trump. In his view, the purpose of trade is to maximise exports and minimise imports. The intention of his agreement is clear: to shove firms into abandoning cross-border supply chains in favour of the safe-but-costly option of producing in America. Economic might is a weapon to be used in service of that goal.

Mexico has acceded to so many of Mr Trump’s demands partly for domestic political reasons. It suits both the outgoing president, Enrique Peña Nieto, and his successor, Andrés Manuel López Obrador, to have any deal signed before the transition on December 1st. But the principal factor was Mr Trump’s threat to impose tariffs on all car imports, not just those above any quota—a threat that still looms over Canada. The president may yet extend his hardball tactics to his dealings with Congress, cancelling the original NAFTA to force legislators to choose between the new agreement and chaos.

America is used to presidents throwing their weight around in Washington. Yet Mr Trump’s attitude to trade is uniquely reckless. He has bullied his way to what he sees—wrongly—as a better deal with Mexico; he is intent on doing the same to Canada. He is using the ludicrous pretext of national security to justify his threats of car-import tariffs, in order to circumvent the rules of the World Trade Organisation. North America’s economies can withstand this folly. But the rules-based system of global trade, which relies on goodwill between countries, may prove to be more fragile.