The trade agreement announced Monday between the United States and Mexico is a small step, but an encouraging one. The deal is far from complete and — despite President Trump’s declarations — does little to alter the North American Free Trade Agreement. But it signals progress on a vitally important issue.
Most important, we hope it represents the administration’s long-term vision for international trade, a sector that is crucial to the economy of Washington state and that has been a cause for concern throughout Trump’s presidency.
Monday’s announcement highlights a preliminary deal with Mexico to reform NAFTA, a 24-year-old trade agreement between the United States, Mexico and Canada. “They used to call it NAFTA,” Trump said. “We’re going to call it the United States-Mexico trade agreement. We’re going to get rid of NAFTA because it has a bad connotation.” Actually, eliminating NAFTA will require an act of Congress and will have to include Canada. That might be wishful thinking on Trump’s part. In January, 36 Republican senators wrote to the president, “The next step to advance the economy requires that we keep NAFTA in place, but modernize it to better reflect our 21st century economy.”
Of course, Trump has never been one to concern himself with details (i.e. his premature declaration of a nuclear-free Korean Peninsula), but progress on a deal with Mexico is a good sign.
As reported by Vox.com, one aspect of the new pact would make it so most parts of an automobile traded without tariffs must be made in factories that pay workers higher wages. Because U.S. workers are paid more than those in Mexico, that could increase jobs in this country.
Trump’s economic policies have extended and have built upon the stability he inherited. Unemployment is near record low levels and growth is robust, but it remains tenuous under policies that will produce a deficit of nearly $1 trillion this year. The administration and Congress are borrowing against the nation’s future, and we hope the gamble pays off.
From a local perspective, there remains concern about Trump’s trade war. Last week, for example, Washington state cherry growers released an estimate that they face $86 million in losses this year because of retaliatory tariffs imposed by China, which last year was the largest importer of Northwest cherries. China has imposed a 50 percent tariff on cherries in response to the Trump administration’s tariffs on goods from that country. “They’re a large market and a premium market,” said Mark Powers, president of the Northwest Horticultural Council. “Cherries couldn’t go anywhere else for the same price.”
Washington apple growers and wheat growers also are suffering from closed markets directly linked to the trade war, and that creates collateral damage. When farmers are unable to move their products, trucking companies and ports and countless vendors also feel the impact.
In imposing tariffs upon trading partners, President Trump long has insisted that the strategy will pay off in the long run through improved agreements. He often has called NAFTA “the worst deal maybe ever signed” and has promised to remake the pact. Revisiting NAFTA is a worthy undertaking and could be beneficial for the U.S. economy.
Monday’s announcement reflects an important step in that direction, but the journey remains a long one. Ideally, it will be part of a comprehensive approach that strengthens U.S. ties with trading partners and provides stability for years to come.
