- Mon Aug 27, 2018 4:30 pm
#107248
President Trump won a major victory on trade on Monday, supplanting the North American Free Trade Agreement (NAFTA) and replacing it with something far more beneficial. The new deal will help American workers and manufacturers. Mexico has accepted the agreement and agree to it's terms.It will bring in more than enough money to build the wall ten times over.
One of the most fundamental parts of Trump’s campaign for president was his promise to change America’s deeply flawed trade arrangements. These deals left us with massive $500 billion trade deficits—a huge drag on the economy—and devastated forgotten communities across America that are dependent on manufacturing jobs.
Second only to the booming economy, Monday’s announcement of a deal with Mexico is the most visible manifestation of Trump’s fulfilment of his campaign promises. Last year, the USA had a large $71 billion trade in goods deficit with Mexico, owing in part to much lower worker pay. This new deal will limit Mexico’s ability to take U.S. manufacturing jobs by underpaying workers.
Another key part of the new trade deal increases the percentage of a car that must be made in North America to qualify for lower-tariff import into the USA. This will be a major boon to American automotive workers and that industry’s domestic supply chain.
More broadly, the deal vindicates Trump’s approach to trade, which has been lambasted by voices ranging from Wall Street to the national security establishment to the Chamber of Commerce, as well as mavens from both political parties.
They said nothing could come from Trump’s unilateral imposition of tariffs in order to get foreign governments to negotiate seriously. They said a “trade war” would be self-defeating.
On Monday, they have been proved wrong by an unmitigated victory for the USA.
Trump understood the simple math that countries with which we have trade deficits would have to come to the negotiating table. By definition, we buy more from them than they buy from us, which gives us the power any major consumer has over a seller. These countries also cannot afford to lose access to our $20 trillion economy—the world’s largest. Trump realized the power this gives us and decided to use it to level the playing field for American workers—unlike other recent presidents.
This victory will lead to others. The leftwing government of Canada, the other member of NAFTA, had refused to negotiate seriously, perhaps believing their friends in the progressive commentariat predicting Trump’s demise.
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