Modest Gains for Trump in NAFTA Renegotiation

Canada opens up its dairy market and Mexico agrees to rules that could see car production leave the country.

Angela Merkel Donald Trump Justin Trudeau
German chancellor Angela Merkel, American president Donald Trump, Canadian prime minister Justin Trudeau and other G7 leaders meet in Charlevoix, June 8 (Flickr/Justin Trudeau)

On the heels of an arbitrary — and, it turns out, unnecessary — deadline, Canada, Mexico and the United States have finalized a renegotiation the North American Free Trade Agreement (NAFTA). The new deal is called the United States-Mexico-Canada Agreement (USMCA):

What’s in it?

From the Financial Times and Reuters:

  • Dairy: Expanded American access to Canada’s tightly regulated milk market.
  • Dispute resolution: An expert panel to resolve trade disputes, that has repeatedly ruled in favor of Canadian lumber exports, remains in place.
  • National security: America can still impose 25-percent tariffs on cars and car parts on national security grounds, but the new deal carves out generous exemptions for Canada and Mexico.
  • Rules of origin: The share of auto parts manufactured regionally to benefit from the trade agreement rises from 62.5 to 75 percent, which may benefit American companies.
  • Sunset clause: Unlike NAFTA, the new deal is set to expire in sixteen years.
  • Wages: 40 percent of a car’s value needs to be made in areas paying workers at least $16 per hour, which could shift production to Canada and the United States.

In short: A lot of fire and fury from Donald Trump — who refused to even meet Canadian prime minister Justin Trudeau on the sidelines of the United Nations General Assembly last week — but in the end only modest changes.