On October 1st, NAFTA had officially been replaced by a new trade deal. Named the United States-Mexico-Canada Agreement (USMCA), this deal is the middle ground the three countries have reached. Other than the name change, there are some key new additions/modifications to this treaty. According to the new treaty, Canada has agreed to slowly open up their dairy market, setting higher import quotas for American dairy products. This was to try and compensate for trade losses to China and Mexico through tariffs. Also, the three countries are responsible for producing 75% (previously 62.5% under NAFTA) of the parts that they use to build and export cars in North America in order to qualify as duty free. This is a move pushed by the USA in order to retain blue collar jobs in America. There are other smaller provisions mentioned in the article, regarding labor, and trade with other continents. Although the US has made major gains through this trade deal, I personally think that it has done more harm than good to the United States. I agree with the author that through President Trump’s comments throughout the trade negotiations, the US has severely damaged the relationship between it and the other two members of USMCA.
Questions:
1. Do you think that USMCA has benefited the US or harmed it?
2. Will this new treaty help mitigate the negative economic impact of Chinese and Mexican tariffs?
3. Are there any specific provisions that you agree or disagree with?
USMCA has benefited the US when compared to NAFTA, at least on paper, however it has damaged our relationship with people who should be our closest allies. This will help mitigate economic impact, however the economic impact of these trade wars will still be major. I do like the provision encouraging Mexico to better pay its workers, because it equalizes the market, and allows for better competition from countries paying good wages.
ReplyDeleteOne drawback of the USMCA is that it requires more cars to be manufactured in the US rather than imported from foreign countries. While this appears to be beneficial for the American industry and provide more jobs, the American capacity to produce cars is much lower compared to other countries such as China, therefore it can lead to an inflation in the price of cars for Americans. Also, by replacing NAFTA with USMCA, there will be less exploitation by corporations in Mexico who take advantage of the lower wages there, which in turn can mean more industry level jobs for Americans.
ReplyDeleteRegarding question two, I do believe this new treaty will help deal with the economic impact of Chinese and Mexican tariffs. Trump's idea behind these tariffs is that the United States exports goods to these countries and is taxed very heavily, but when China and Mexico export goods to the United States then they are taxed to a much lower degree and this is just unfair for the United States. I believe his tariffs were employed under the right mindset, but there has never been billions of dollars of tariffs imposed before so it is still too early to predict what the outcome will be. Therefore, it is necessary that the United States reorganize relations with the countries bordering it such as Canada and Mexico. The USMCA has already had economic benefits for the US and will definitely prove useful in the competitive global market. An important aspect of this treaty is no trade deals with China. This is a huge factor to take into account because China would not only be losing the trade of the US but also of Canada which makes up more than 25% of its total trade and could cause then to reconsider their current deals with the United States.
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