Congressional Political Wasteland

President Trump’s new U.S.-Mexico-Canada Agreement (USMCA), his NAFTA replacement agreement, is in trouble with congressional resistance. Congress’ August recess is 3-weeks away and House Democrats are demanding changes. Changes are unlikely, however. The current agreement has already been signed by Trump, Trudeau and Nieto, and ratified by Mexico’s legislature (114-4). Democrats don’t want to give Trump a win prior to the 2020 presidential campaign, no matter the extraordinary cost to US workers and the economy.

“a trade pact with Mexico and Canada to replace NAFTA is more important.” Larry Kudlow

“I don’t see how that happens in three weeks,” said a combative Rep. Earl Blumenauer (D-OR), before scoffing, “That’s their problem.” Speaker Pelosi (D-Calif.) noted that U.S. Trade Representative Robert Lighthizer is still meeting with House Democrats. Then she added the implausible: “It’s about the substance of the agreement, not the politics at all.” The bottom line is parts of USMCA go into effect in 2020 so any changes will come from side agreements and addendum, not starting over.

Really Big Deal

The USMCA agreement is massive, 34-chapters and 1,809 pages. Key elements include a quadrupling of US agriculture exports into Canada and Mexico and near quadrupling (360% increase) in US dairy exports into Canada. Other provisions will reduce existing pricing barriers, provide greater protections for US and Mexican autoworkers and expand access to the US markets for both Canada and Mexico. The numbers are equally impressive.

Each year US companies sell more than $660 billion worth of goods and services into Canada and Mexico. Those numbers represent 12 million existing US jobs. According to the US International Trade Commission, the USMCA will add 176,000 new US jobs and over $68 billion to the US economy. Larry Kudlow, Trump’s top economic adviser, said, “a trade pact with Mexico and Canada to replace NAFTA is more important…than a deal with China.” Kudlow is right. The Democrats are wrong; 176,000 US job and $68B in economic activity prove the point.