Pres. Donald J. Trump may have just earned his biggest victory for everyday Americans so far by reaching agreement on the framework of trade deal with Mexico.
Once again making good on his campaign promises, the president has been embroiled in heated trade spats over inequities in NAFTA, U.S.-EU tariffs and a grotesque disparity with China. In recent months, the EU yielded to White House-imposed tariffs and details are in the works to eliminate inequality with a zero-tariff goal.
The president has been a long-time critic of the uneven Clinton-era NAFTA deal that many point to as destructive to the nation’s manufacturing base. The president also scuttled the Trans-Pacific Partnership touted by Hillary Clinton and the Obama Administration.
Pres. Trump heralded the hard-won concessions by his negotiating team and tipped his cap to their Mexican counterparts.
“We’ve all worked very hard and your brilliant representatives are sitting right in front of me and I thought we would congratulate each other before it got out,” Trump told Mexico Pres. Enrique Pena Nieto. “I know we’ll have a formal news conference in the not-too-distant future.”
“It’s a big day for trade, big day for our country, a lot of people thought we’d never get here because we all negotiate tough. We do, so does Mexico,” Pres. Trump reportedly said.
Although several left-leaning media outlets have attempted to demonize efforts to renegotiate a fair and balanced trade agreement with Mexico and Canada, the president’s recent break through changes the world trade landscape in an unprecedented fashion. Bad actors such as China are witnessing American resolve and the rebirth of the country’s economic dominance. The Trump win will also put the protectionist policies of Canada under strict scrutiny as North America trade shifts.
What’s in the U.S.-Mexico Agreement?
The announcement by the presidents marked a leap forward in North American trade. The deal has not yet been finalized as the U.S. and Mexico await a potential agreement with Canada that would effectively rewrite NAFTA.
Pres. Trump has gone on the record stating that he would be willing to move forward with a bilateral agreement. Significant concern exists over Canada’s protectionist dairy industry tariffs. The northern neighbor has effectively blocked American dairy farmers from selling products in its markets.
Following five weeks of hotly contested bilateral negotiations, the U.S. and Mexico have come to terms on the following trade changes.
- Automobiles originating outside a NAFTA country would be subject to a tariff of 75 percent. This marks an increase from the current 62.5 percent.
- Between 40-45 percent of any freight hauled into the U.S. must be made by workers paid $16 per hour or higher. U.S. unions have been calling for this change.
- Rules will tighten to force the supply chain to produce more domestic apparel. Much of the clothing in U.S. retail outlets originates in China.
- Increased intellectual property protections by enhancing enforcement and extending minimum copyrights to 75 years. Again, China has been repeatedly cited for intellectual property theft.
- Digital content such as e-books and software would enjoy zero tariffs.
- Mexico must raise its duty threshold on businesses that ship across the border from $50 to $100. Lower amounts by U.S. companies would not be subject to fees.
- The trade rules regarding the origin of steel, glass, optical fiber and chemicals would be consistent with auto tariffs.
The details included in a renewed trade deal with Mexico are likely to encourage manufacturing growth and ramp up wages. Mexico has been criticized for exploiting low-wage workers to drain American jobs. But the elements that clamp down on goods not produced in North America spell bad news for Chinese aggression.
U.S.-Mexico Deal Heaps Pressure on China
The Chinese hierarchy have been reportedly divided about how to handle the escalating trade war with the United States. News of a deal with Mexico that closes backdoors to made in China goods provides Pres. Trump an even stronger negotiating posture.
Economic experts following the very limited talks between the world’s two largest economies point to a strong difference in trade philosophy. China reportedly favors structural changes to the trade imbalance. Pres. Trump wants determined policies that balance trade in terms of real dollars.
“I suspect that (Pres. Trump) will hold out on negotiating a settlement with China for the time being. I suspect it could even run through the mid-term elections in November,” Asia Pacific investment officer at Credit Suisse John Woods reportedly said.
Economists around the world expect the Trump Administration to dig in as another $200 billion in tariffs hits Chinese goods during September. The U.S. Treasury has already reaped billions in revenue since the trade spat began and are prepared to offset any farmer losses due to retaliation by rerouting the revenue.
~ American Liberty Report
