Leaked remarks of President Trump’s harsh private tone in North American Free Trade Agreement (NAFTA) talks with Canada underscore the fact that his determined negotiating style gets results.
All one has to do is look to the south. An ebullient Trump announced on August 27 that he was scrapping NAFTA and entering into a new pact with Mexico. Canada, for the moment, is not part of the deal.
“We’re going to call it the United States-Mexico Trade Agreement, and we’ll get rid of the name NAFTA,” Trump said from the White House. “It has a bad connotation because the United States was hurt very badly by NAFTA for many years. And now it’s a really good deal for both countries, and we look very much forward to it.”
U.S. Workers Win
A highlight of the new deal is the increased mandate that 75% of a car be constructed of U.S.-built components to qualify for importation into the U.S. without high tariffs and that 40-45% of cars and trucks be made by workers earning at least $16 an hour. Both provisions will reduce incentives for manufacturers to build their cars in Mexico in order to save on labor costs.
Christian Whiton, a senior fellow for strategy and public diplomacy at the Center for the National Interest, says the new trade deal is a major win for the nation in general and for the president’s economic policies in particular.
“They said nothing could come from Trump’s unilateral imposition of tariffs in order to get foreign governments to negotiate seriously,” Whiton wrote in an op-ed for Fox News. “They said a ‘trade war’ would be self-defeating. On Monday, they have been proved wrong by an unmitigated victory for the USA.”
Whiton succinctly summed up the president’s strategy in the negotiation with Mexico:
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.
Art of the Deal
Jeff Ferry, research director at the Coalition for a Prosperous America (CPA), also agrees that tariffs work. His organization has created a Tariff Job Tracker which shows that 11,109 U.S. jobs were created or announced “in four major sectors affected by tariffs” in the time period between February 1 and August 16, with only 514 jobs lost.
The CPA data “identified job gains in four sectors, all affected by Section 201 and Section 232 tariffs: steel, aluminum, solar panels and cells, and washing machines.”
Echoing Whiton, Ferry states that “[i]t should not be surprising that gains outnumber losses by a large margin. It is standard economic theory that tariffs will stimulate domestic production. That is precisely what the tariffs in these four industries are doing.”
Fresh off his success with Mexico, Trump says he will soon start up negotiations with Canada, if they are willing to act in good faith. “You know, they have tariffs of almost 300% on some of our dairy products, and we can’t have that. We’re not going to stand for that,” the president declared.
“I think with Canada, frankly, the easiest thing we can do is to tariff their cars coming in. It’s a tremendous amount of money and it’s a very simple negotiation. It could end in one day and we take in a lot of money the following day.
“But I think we’ll give them a chance to probably have a separate deal. We can have a separate deal or we can put it into this deal.”
Negotiating from a position of strength on behalf of the American worker.
What a novel thing for a U.S. president to do.