It’s absolutely insane. Trump has delivered on more promises in the last two years than any president in recent memory. It really has been a long string of wins, and mainstream media still has a chunk of the country convinced that the sky is falling.
Openly socialist crazy people are crying that the economy is in shambles. By every metric that exists, this is the best economy in the history of the entire world. It defies all logic that people can still be so anti-Trump when he is so massively successful. Well, he just scored another huge win, and you need to know about it.
From the campaign trail, Trump loudly criticized NAFTA and promised to renegotiate it if elected. Count this as yet another promise kept. Mexico agreed to Trump’s new trade deal months ago, but Canada tried to hold out in the hopes of a little favoritism. In the end, they gave in to Trump’s demands this past Sunday. Trump had set a deadline, and the extra pressure was enough for the Canadian negotiators to agree to the new NAFTA deal.
Many of the original principles of the old deal are still in place. It still aims to enable the three countries to mostly trade without barriers, but some extremely important changes are now in place. One of the biggest changes is in agriculture. Canada is now giving America’s dairy farmers access to an additional $16 billion-worth of goods. This helps U.S. dairy farmers stay competitive in domestic markets. Wheat and chicken are seeing a similar change.
Another big change is in pharmaceuticals. For decades, Canadians have enjoyed cheap medication. U.S. companies pay to develop drugs, and the Canadian government collectively bargains with those companies to artificially lower prices. The U.S. has been picking up the tab. The new deal doesn’t completely destroy this, but it gives more protection to new medications to relieve some of the financial burden on American medical recipients.
By far the most talked about change has been to auto trade. Trump has reserved the right to put tariffs on automobile imports to the U.S., but he made big provisions for imports from Canada and Mexico. This is one of the important concessions from all sides. Mexico, especially, needs reliable car exports to the U.S. to stay afloat, but this still enables Trump to use car tariffs in brokering other international agreements (most notably with Europe).
The last major piece of the new trade deal is a major exception. Mostly, the three countries have worked to prevent tariffs on each other, but Trump pushed through the key outlier to the rule: steel and aluminum. These tariffs will stay in place against Mexico and Canada even when the new deal takes full effect. This is vital to helping the U.S. sustain the recent boom in manufacturing it has enjoyed since Trump took office.
Altogether, this new agreement covers $1.2 trillion in trade across the three countries. The name has been changed to the United States-Mexico-Canada Agreement (USMCA, but I’ll refer to it as new NAFTA for the remainder of this discussion), and it is set to be ratified by all three countries by the end of November.
China Is Next
Trump’s success in renegotiating NAFTA is big for many reasons. It silenced all of his dissenters who said it couldn’t be done and that a better deal was impossible. More importantly, it shows a strong, stable America in the eyes of the international community. With Mexico and Canada on board, other countries have little hope of finding real ways to pressure Trump within their own trade negotiations.
This hits no one harder than China. Even before NAFTA was finished, China was already on the brink in their trade war with the U.S. They stopped responding tit for tat to Trump’s tariffs. Basically, there’s nothing left for them to tariff, but Trump has plenty of weaponry left in his arsenal. Now, China has to abandon one of their key strategies. They can no longer look to Canada and Mexico as alternative routes into the U.S.
The most important thing to understand about this so-called trade war with China is that it’s one-sided. The U.S. economy has soared while Trump tightened the screws on the world’s number two. China has barely stayed afloat. They have had to hemorrhage cash stores to keep their currency from crashing. Their production in every sector is in sharp decline. They never had the legs to withstand American pressure, and it’s showing.
Trump finishing NAFTA was pretty much the final nail in the coffin. You can expect China to return to the negotiating table within a few months, and before 2019 is done, we will have a new (and much better) trade agreement with China.
A Bright Future
With North America secure and China well on the way, there are other trade discussions that are about to change. Mostly, it’s the EU. Europe tried to flex its muscles to show Trump that they couldn’t be bullied. They said a lot of things about restricting American trade. Most of it was bluster because the U.S. is the biggest trader with the Eurozone, but even that bluster is starting to fade. The biggest play Europe had was trying to support more open trade with Canada and Mexico to stall NAFTA negotiations.
That play is now dead. Canada and Mexico can fully sustain themselves just by going across our borders. Europe has lost its only leverage, and with a China deal on the horizon, you can expect Trump to settle his gaze on Europe next.
The world is changing, and Trump is the driving force. The massive success of the American economy is still in the early stages. Deregulation and tax cuts got us going, but new trade deals across the globe will ensure lasting growth. Trump has delivered. What the rest of the world doesn’t yet understand is that if they get in line, Trump can make them great again too.
