President Donald Trump on Monday announced the end of NAFTA, a trade agreement between the United States and its two neighbors that he has repeatedly called a “disaster,” with a new deal that was made just hours before its midnight September 30 deadline.
“It is my great honor to announce that we have successfully completed negotiations on a brand new deal to terminate and replace NAFTA and the NAFTA trade agreements with an incredible new US-Mexico-Canada Agreement, called ‘USMCA,’” President Trump said at a press conference announcing the new agreement from the Rose Garden. “Throughout the campaign, I promised to renegotiate NAFTA, and today we have kept that promise.”
Late Sunday evening, the U.S. and Canada announced they had reached a compromise in their negotiations to replace the three-nation framework of NAFTA. The United States-Mexico-Canada Agreement (USMCA) was reached just an hour before a self-imposed deadline of mid-night eastern time in order to allow outgoing Mexican President Enrique Peña Nieto to sign it into law before the end of the year.
Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico. The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many……
— Donald J. Trump (@realDonaldTrump) October 1, 2018
In a joint statement, U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland emphasized how the USMCA will give “farmers, ranchers, and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region.”
“It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half-billion people who call North American home,” the statement reads. “We would like to thank Mexican Economy Secretary Ildefonso Guajardo for his close collaboration over the past 13 months.”
The new deal would require that 75 percent of car components be manufactured in the U.S., Canada, or Mexico to qualify for tariff-free status under the deal. A significant percentage of the car being produced by workers is required to make at least $16 per hour, a threshold to bring more auto manufacturing to the U.S.
“This is also a historic win for American manufacturers and American autoworkers who have been treated so badly. We’ve lost so many jobs, over the years, under NAFTA,” Trump said. “With this agreement, we are closing all of these terrible loopholes. They’re closed. They’re gone.”
Deadline to reach a deal amongst the three countries was Sept. 30 as the White House was required to give Congress a revised agreement by midnight to proceed under complicated “fast track” trade rules.
The negotiating process was a yearlong process in which Trump was able to divide and conquer Mexico and Canada to secure a deal from both countries. President Trump said that his administration would not have been able to renegotiate NAFTA without threatening Canada and Mexico with tariffs.
“Without tariffs, we wouldn’t be talking about a deal, just for those babies out there who keep talking about tariffs,” Trump emphasized. “We’re using tariffs very successfully to negotiate. And if we’re unable to make a fair deal, then we’ll use tariffs.”
In the last minute deal, Canada conceded regarding its dairy program that will lead to an increase of U.S. exports of certain products
“The agreement will give our farmers and ranchers far greater access to sell American-grown produce in Mexico and in Canada,” Trump said. “The deal includes a substantial increase in our farmers’ opportunities to export American wheat, poultry, eggs, and dairy, including milk, butter, cheese, yogurt, and ice cream, to name a few.”
The new trade agreement will need to be ratified by Congress — something that could be in jeopardy if Democrats take the House come November. The president doesn’t think this agreement could be in jeopardy, but added “anything you submit to Congress is trouble.”
“I then will submit it for approval to Congress, where, in theory, there should be no trouble, but anything you submit to Congress is trouble. No matter what,” Trump said. “If it’s the single greatest agreement ever signed, they’ll say, “Well, you know, Trump likes it, therefore we’re not going to approve it because that would be good for the Republicans. So therefore we can’t approve it.” But it will be sent to Congress pursuant to the Trade Promotion Authority Act.”
Stocks rose all day Monday since the news of the agreement, a sign that the market has regained confidence.