The Trump Administration revealed over the weekend that a new deal has been agreed to with Canada, closing the final outstanding issue for a revamped North American Free Trade Agreement (NAFTA). The new pact, which is being called the U.S.-Mexico-Canada Agreement, will bring in, what President Trump hopes to be, a new wave of American dominance within the continent.
While the move is a step in the right direction, there are still many hurdles to pass, including getting the new deal through a divided Congress in which the President’s own party has not shown signs to be fully on board with the new agreement. Add to the fact that the deal most likely will not be passed until 2019, and a whole new issue may take shape with a new set of personalities pushing new trade agendas.
In addition, Mexico’s current President Enrique Peña Nieto must sign the deal before his successor takes over later this year, a man who has made it clear he is not in favor of conceding to President Trump in any way.
If passed, the monumental deal President Trump promised most likely won’t be as monumental as many had hoped. Outside of a good deal for dairy farmers and automotive industry pay, there isn’t many changes if at all. For dairy farmers, the deal “opens up the Canadian dairy market to U.S. exports at a level higher than the 3.25 percent market share the Obama administration negotiated under the Trans-Pacific Partnership”.
For the automotive industry, an increase of the rules of origin threshold will take place, meaning “75% as opposed to the previous 62.5% of a vehicle’s components must be made in North America to avoid tariffs.” In addition, “approximately 40 to 45 per cent of vehicle components must be made by workers earning a minimum of US$16 per hour, in contrast to the current US$2.30 an hour that a worker earns on average in a Mexican car manufacturing plant.” according to an August 30th The Economist article.
As it pertains to current tariffs from the US, Canada, and Mexico, no news has been given as to their removal.