USMCA Economic Impact Almost too Small to Measure
Today, the White House and House Democrats have reportedly reached a deal on terms for a trade deal between the U.S., Mexico, and Canada. But CEI Senior Fellow Ryan Young remains underwhelmed:
“If the deal announced today holds and the revised NAFTA/USMCA passes, its economic impact will be almost too small to measure. But compared to likely alternative policies from the Trump administration, ‘nothing’ is almost certainly better than ‘something’.
“The USMCA leaves intact NAFTA’s biggest achievement—near-zero tariffs between Canada, Mexico, and the United States. On the negative side, USMCA would increase car prices for consumers, add to regulatory complexity, and interfere with international supply chains. On the plus side, more than half of USMCA’s language is taken verbatim from the Trans-Pacific Partnership (TPP) that the Trump administration withdrew from on its third day in office. The USMCA’s policy stakes are very small. But in terms of damage control, it is potentially very large.”
CEI Vice President for Strategy Iain Murray states:
“Passing USMCA will be a Band-Aid on the self-inflicted wound of the global trade war. The administration’s trade policies have raised prices for consumers and cost jobs in the heartland. Without them, the jobs, wages, and growth numbers the President celebrates would be a lot better. It’s only because a lot of tariffs have been delayed that consumers aren’t facing huge price rises this Holiday gift-buying season. USMCA goes a small way to fixing these problems but Congress needs to reclaim trade powers it has delegated to the executive. It should also demand the President works with the WTO in solving the world’s trade woes and punishing bad actors rather than treating it as part of the problem.”
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