July 23, 2021

Trump's tough negotiating hand submits Canada and Mexico

Trump's tough negotiating hand submits Canada and Mexico



US President Donald Trump, in his own way, achieved the greatest commercial success since his arrival at the White House: the new US-Mexico-Canada agreement (USMCA), which replaces the Treaty of Free Trade of North America (NAFTA), in force since 1994.

The three countries reached a compromise after more than a year of talks, which began after Trump labeled the old treaty "the worst trade pact ever made."

"This is a great victory for Trump, there is no doubt about that," assures Efe Monica DeBolle, an economist at the Peterson Institute in Washington and a professor at Johns Hopkins University.

To reach the USMCA rubric, the president used a strong hand from the start, when he threatened to end NAFTA and began using tariffs as a continuous intimidation for Mexico and Canada to sit at the negotiating table.

The next step of his strategy was to move from words to action and impose taxes of 25% on steel imports and 15% on aluminum imports from Canada and Mexico, two of the largest historical trade allies in the United States.

Trump himself was proud of his "modus operandi" on Monday, to ensure that "without the tariffs" had not managed to close the USMCA, while he stressed that the sanctions implemented will remain in force despite the trilateral agreement reached.

"Without tariffs we would not be here today," the president said at a press conference to celebrate the pact in the Rose Garden, a garden inside the presidential mansion.

In this sense, the economist DeBolle highlights "the effectiveness" of Trump's rhetoric, which even declared that his Canadian neighbor was "the number one enemy of the US" in commercial matters, something unheard of.

"Trump exploited that message very well and we have to give him credit for that," said the expert.

Once the pact was sealed, the US government was expected to ease the tension with Canada and Mexico by ending the controversial steel and aluminum levies announced in May; a movement that did not come.

This firm stance "sends a message to China", one of the main commercial objectives of the Trump Administration, according to the statements of the president's chief economic adviser, Larry Kudlow, to the Fox television network.

"I hope they are paying attention," Kudlow said in a threatening tone.

However, what Canada and Mexico did achieve is that Washington pledged not to apply tariffs on cars produced in those countries, a threat that was still on the table until Sunday.

Even the leaders of the automobile sector in Ottawa warned that if the US president had complied with that warning, "could have led Canada to a severe recession," according to statements made by The Washington Post.

"I think the intimidation of imposing levies on cars was a trick that Trump wielded with great skill, Canadians and Mexicans protected their industry in the best way they could," he said in a conversation with Efe Tamara Kay, professor at the University of Notre Dame in Indianapolis and expert in transnational agreements.

The new USMCA regulations also stipulate that at least 75% of auto parts must be manufactured in North America, compared to 62.5 established by NAFTA.

In addition, between 40 and 45% of the vehicle will have to be produced by workers who earn at least $ 16 per hour.

The pact also offers greater access to the Canadian market to American dairy producers and includes new provisions on digital commerce and intellectual property.

All these adjustments, which will take effect from 2020, served for Trump to hang the medal for harvesting the largest trade agreement of his legislature through a very particular approach that opens the door to be repeated in the coming months in other mercantile negotiations.

.



Source link