This week, the gang talks about the end of the threatened trade war with Mexico, the Trump family’s visit to England, the latest turns in the 2020 Democratic primary race, and they share some very personal anecdotes from their non-political lives.
On this MPU episode, Kevin, DJ, Greg, and Rebekah discuss the latest assault on Roe v. Wade, the Trump v. China trade war, and the primary campaign prospects of Joe Biden, Bernie Sanders and Elizabeth Warren.
by D.J. McGuire
Donald Trump did not advance the cause of freer trade with his partial agreement with Mexico. If anything, the “deal” raises barriers to trade rather than lowers them, while moving the North American Free Trade Area closer to the backward and sclerotic model of a customs union – and that assumes he doesn’t exclude Canada. If Canada ends up on the outside looking it, things will be even worse.
As usual, Trump himself gave no details during his Oval Office press conference with his Mexican counterpart – Enrique Pena Nieto – on speaker phone. About the only specifics we got were that Trump wants to “terminate” the North American Free Trade Agreement and replace it with this new agreement, if Canada signs on. If Canada refuses, Trump will slap a 25% auto tariff on them and call it a day.
Oh, and Canada apparently has until Friday to make up its mind (Daniel Dale, Toronto Star).
Even if Canada chooses to shoe-horn itself into this deal, the specifics we now have (CATO, AEI, and Dale) are still a net negative from the status quo. The “North American standard” for cars will be raised to 75% from 62.5% (i.e., unless the car is 75% made in North America, it won’t qualify for being tariff-free). There is a sunset clause (albeit stretched from 5 years, as Trump originally wanted, to 16) with a mandated review every six years. Investment protections were “gutted.” There may even be a new tariff power for the US against any new Mexican cars.
Senator Ben Sasse (R-Nebraska) is already worried (via Megan Cassella, Politico):
…there is reason to worry that this might be a step backward from NAFTA for American families – especially on fundamental issues of presumed presumed expiration of the deal, and empowering government bureaucrats rather than markets to determine the components of cars and other goods.
Indeed it is a step backward, as well as a step toward a serious sovereignty issue – a customs union. Unlike free trade areas, where nations can set whatever trade policies they like with countries not in the FTA, customs unions have uniform trade barriers that all nations must accept. The car percentage requirement is such a barrier; raising it as this agreement does makes it worse.
Again, this is even if Canada ends up in the deal. If not, further disruptions in trade due to Trump’s tariffs are likely. Moreover, whether Canada agrees or not, Trump clearly would like to replace NAFTA with this deal. That requires Congressional approval – trade deals are not treaties, but executive agreements, which means Congress has the power to enact laws that match the agreements, or invalidate agreements by refusing to enact said laws. Will the GOP-controlled Congress finally draw the line and refuse Trump’s demand.
Don’t hold your breath.
This is not an agreement that lowers barriers, but raises them. It does not advance freer trade, but attacks it. It will be more likely to add uncertainty than to alleviate it. It’s a bad deal for Mexico, for the United States, and for the rest of the world.
D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015
by D.J. McGuire
Defenders of Donald Trump are crowing about his “deal” with the EU to hold off future tariff hikes and discuss reducing trade barriers in certain manufacturing goods. Never have so many offered so much praise for so little.
Scott Lincicome of the CATO Institute examined the joint statement on this Twitter thread. To make a long story short, no actual reductions in tariffs were agreed. Instead, the US and the EU have agreed to start talking about future reductions in tariffs. So none of Trump’s tariffs were reversed; nor were any of the EU’s retaliation tariffs. As Lincicome also notes, even the apparent promise to rule out future tariffs against each other is “vague.”
Still, a future trade liberalization agreement would be helpful, yes?
Actually, yes it would. That’s not the problem here.
What is the problem was that talks on US-EU trade liberalization had already been well under way during the Obama Administration. It was known as the Transatlantic Trade and Investment Partnership. Negotiations hadn’t been completed, of course, and it was controversial, but it was also an established framework to discuss freer trade between America and Europe that was far beyond merely “non-auto industrial goods.”
What happened to the TTIP? Donald Trump happened to the TTIP. He railed against it as a candidate, and his election killed the negotiations.
Over a year and a half later, we’re starting all over again with a much more cramped potential agreement, with Trump’s harmful tariffs still in place.
We also have to consider how Trump will react to the wheezing, dysfunctional nature of negotiating with the EU (although that’s the EU’s fault, not his).
This is hardly worth celebrating. At best, we should be relieved that, for now, US-EU trade relations won’t get worse. However, the damage to our economy from the tariffs is not only done, but is still happening as the tariff hikes themselves didn’t go away.
It’s a typical Trump “deal” – nothing of substance behind a list of platitudes not worth the bandwith on which they’re virtually printed. That Trump and his supporters are touting it so loudly is a sign of their desperation. In reality, nothing has been accomplished here.
D.J. McGuire – a self-described “progressive conservative” – has been part of the More Perfect Union Podcast since 2015
by D.J. McGuire
Over the eight months and change of the Trump Administration, two of his closest allies – both geopolitically and personally – have been Justin Trudeau and Theresa May, Prime Ministers of Canada and the United Kingdom, respectively.
This week, the Trump Administration declared a trade war on both of them – and the Democrats are practically silent. Between Trump’s economic ignorance and the opposition’s political malpractice, we’re in for a very bumpy ride.