When he became the Republican candidate for the 2016 Presidential Election over four years ago, Donald Trump promised to ensure that American trade would not be disadvantaged by other countries. He has succeeded in delivering on his promise so far to a certain extent.

Although some critics say there is little substance behind China and America ending their trade war by signing Phase One of their trade agreement, Trump can still claim an achievement heading into the 2020 Presidential Election.

The new deal slashes tariffs on $120 billion worth of products, but most of the steeper duties – which affect another $360 billion of Chinese goods and more than $100 billion worth of US exports – remain.

In another victory for Trump before this year’s election, Republican Senate Majority Leader Mitch McConnell stated that his chamber could approve of the USMCA (United States-Mexico-Canada Agreement) at the end of this week.

These trade deals represent substantial achievements for a President committed to fairer trade for the US, and they can provide the GOP with plenty of ammunition for this year’s election.

Nonetheless, there is one crucial trading partner that Trump has failed to reach an agreement with, and that is the EU. In August, Trump hinted that the US will be able to reach a fair trade deal with the EU without imposing proposed tariffs on car imports. He also said he planned on visiting Germany to discuss a trade pact with German Chancellor Angela Merkel. Merkel said herself she wants trade discussions to be concluded ‘as quickly as possible.’

But the escalating Iranian crisis could now become the latest stumbling block in Trump’s bid to reach a trade pact with Brussels. Washington has threatened to impose a 25 percent tariff on European automobile imports if Britain, France and Germany do not formally accuse Tehran of breaking the Joint Comprehensive Plan of Action.

This is despite the fact that the three nations triggered a dispute mechanism under the agreement on Tuesday, accusing Iran of violating its terms. This could lead to the reinstatement of UN sanctions lifted under the pact.

Iran has now become a bargaining chip for the Trump administration. According to the Washington Post, he wants to use Tehran to receive better terms for Washington within the US-European trade relationship, not to shift European foreign policy.

This is a huge gamble for the President. He has a limited timeframe to reach an agreement with the EU and if London, Paris and Berlin all refuse to shift their positions on the Iran Deal, despite being imposed with a fresh round of tariffs, both sides will only prolong their current stalemate. It will be a devastating double blow for the Trump administration’s foreign policy.

Even if he succeeded in using the threat of tariffs to force those three European nations to support Washington’s position on Tehran, both the US and the EU have failed to make any progress towards a trade pact or tariff reductions. In October, the Trump administration planned to introduce duties of 25 percent for agricultural products like French wines in response to EU subsidies for Airbus.

There is still time for Brussels and Washington to compromise on trade and for European nations to be persuaded to support Trump’s position on Iran. Perhaps Tehran is the ‘trump card’ the President needs to win his trade war with the EU and persuade Europe’s three most powerful countries to support his proposal to renegotiate the Iran Deal.

But Trump must use what time he has left wisely to reach an accord with his European allies on these two crucial issues, otherwise, his opponents will go into the 2020 election claiming he has alienated America’s closest partners. The consequences of the President’s latest threat are yet to become apparent.

L'articolo How Iran Could Affect Trump’s Fairer Trade Pledge in 2020 proviene da InsideOver.

The US Senate Finance Committee has voted 25 to 3 to support a draft of the new North American trade deal known as the US-Mexico-Canada Agreement or USMCA. The House of Representative already approved the draft deal in December 2018 after adding in sections that protected workers more.

USMCA: Best Deal Ever?

According to US President Donald Trump, the USMCA is going to be “the best and most important trade deal” in American history. On the campaign trail in 2015 and 2016, Trump repeatedly slammed the North American Free Trade Deal (NAFTA) as a destroyer of US jobs and the worst trade deal ever made. Trump also referred to the Trans Pacific Partnership which he withdrew from by executive order in 2017 as a “rape” of America and a “job killer.” Democratic House Speaker Nancy Pelosi also said the new deal is “much better than NAFTA.”

This can be properly understood as mainly political rhetoric. The USMCA is basically just an updated version of NAFTA with a few more protections for American interests. It is unlikely to significantly boost US job numbers or fundamentally change the way trade works in North America.

How Is The USMCA Different Than NAFTA?

There are some areas where the USMCA breaks new ground. One is on auto parts. The new deal stipulates that three-quarters of an automobile’s parts have to be made in the US, Canada or Mexico in order to be tariff-free when shipped. Workers also have to get paid over $16 USD per hour, which will mean Mexican companies paying workers low amounts will be overtaken by higher-paying US firms in some cases. The Trump Administration is betting this will have major payoffs in the auto industry and optimistically predicts over 76,000 new auto jobs in the United States by 2025.

Other updates include in the dairy industry, where US dairy, chicken and egg farmers will get access to Canada’s heavily-subsidized dairy industry with their exports. For its part, Canada’s farmers and nut and sugar industry will get better access to the massive US market.

On the tech side, the USMCA protects the ability of US tech companies to store their data on American servers and shields them from being prosecuted for many issues that could occur with their content in Mexico or Canada. It frees up and empowers American tech companies and could set a precedent for deals later on with China and other bigger players.  Additionally, the new USMCA deal helps protect the environment somewhat with $600 million for dealing with environmental issues, although environmentalists say it is just a token and the deal basically does nothing to help the environment.

Politicians Weigh In On USMCA

Some American politicians are worried it doesn’t look after American workers and companies enough, especially Democratic presidential candidate Bernie Sanders of Vermont who said he will vote against the final bill. On the Republican side, Senator Pat Toomey of Pennsylvania is concerned for the opposite reason, saying the USMCA is “designed to restrict trade and investment” and would cut back on free trade growth, especially in the automobile sector where the USMCA puts tariffs on parts whose workers weren’t paid up to standards to stop one country from flooding the market and tariffs on origin companies whose products don’t meet certain standardized benchmarks. Others on the committee like Republican Senator Bill Cassidy of Lousiana and Democratic Senator Sheldon Whitehouse of Rhode Island expressed concern that businesses won’t have adequate ability to dispute deals and unfair treatment under the deal: therefore they voted no.

Senator Rob Portman called the deal a “big improvement” despite admitting it isn’t perfect, while Democratic Senator Sherrod Brown of Ohio, for example, particularly emphasized the deal’s enforcement of better work standards and wage protection for Mexican workers. If Mexico pays workers more and has to produce better products it will help slow down outsourcing and protect American jobs.

The USMCA faces the full US Senate vote for ratification next week, but this could be rescheduled depending on the timing of US President Donald Trump’s impeachment trial. It has a 16-year sunset clause meaning the deal will have to be renegotiated at that time. While some of the improvements and changes made in the new USMCA will undoubtedly help American workers and can also give various benefits to Mexican and Canadian companies and workers, the slow progress of the deal and its largely underwhelming advantages show just how slow trade negotiation and progress is in the real world once you cut through the political rhetoric.

L'articolo New North American USMCA Trade Deal One Step Closer To Passing proviene da InsideOver.

Ever since he was elected US President, Donald Trump has made it his mission to make trade fairer for America. Whilst his enemies have branded him as a protectionist for imposing tariffs on China and even close allies like Canada, it has always been his short-term strategy to inflict retaliatory tariffs on those countries until they lower their own. George W. Bush made a similar decision in 2002, but he did not see it through to the extent that Trump has. The President’s experiment with tariffs has had mixed results.

Reforming the North America Free Trade Agreement (NAFTA) was one of Trump’s signature policies during the 2016 general election. He has succeeded in replacing it with the United States-Mexico-Canada Agreement. In March 2018, the President imposed tariffs on steel (25 per cent) and aluminium (10 per cent) for most countries, including Canada, Mexico and the EU. In May 2019, he said he would impose a 5 per cent tariff on all imported goods from Mexico beginning June 10, a tax that would ‘gradually increase’ until the flow of undocumented immigrants from across the border stopped. Despite this, the fact that Trump has been able to persuade Canada and Mexico to support a new trade deal that will reduce tariffs in the long-term is a substantial success for his administration.

Furthermore, Mexico has already ratified the agreement while Canada is yet to do so. The US sent approximately $300 billion and $265 billion in goods to Canada and Mexico, respectively, last year. This demonstrates how important these two markets are for American businesses and why it is vital all sides can approve of this trade deal immediately.

Considering House Speaker Nancy Pelosi is leading an impeachment inquiry against the President, it is impressive that Trump has been able to win her approval for the USMCA to a certain extent. Unfortunately, the Democrats and the Trump administration were not able to reach a compromise on the trade deal during a meeting on Thursday due to Pelosi’s concerns about labour and environmental standards under the agreement. However, the House Speaker expressed her anxiety about not approving of the USMCA before 2020, which is when Trump is up for re-election.

If the President fails to convince the Democrats to vote for the USMCA before the election, he can accuse the latter of deliberately thwarting his prized trade agreement whilst the Democrats could say Trump has failed to deliver one of his key election promises. Either way, the USMCA is likely to dominate the 2020 general election.

Trump has been able to sign a limited trade deal with Japan recently. Japanese Prime Minister Shinzo Abe signed the trade pact hoping to avoid further US tariffs on cars. Japan’s lower house approved of the trade deal last Tuesday. Although both sides have been able to conclude a trade agreement, they must resolve their differences over auto tariffs before it can be concluded as a complete success.

US National Security Adviser Robert O’Brien also expressed his confidence that America and China can end their 16-month trade war by the end of the year, but he said he was concerned protests in Hong Kong could be an obstacle to signing a trade agreement. Trump’s success with China depends upon the outcome of Hong Kong’s district elections ending peacefully, or not.

The President’s negotiations in resolving trade differences with the EU see no end in sight. Trump administration officials are considering whether to investigate the EU as the window closes for slapping Brussels with auto tariffs. Neither side has entered discussions to reach a trade agreement and Brussels has made no offer to lower its 10 per cent tariffs on US vehicles. This trade war is likely to continue into the new decade.

Trump is close to succeeding in resolving his trade wars with Japan, China, Mexico and Canada. His success here will be determined by his concluding negotiations with those countries. This will improve his chances of winning the 2020 general election. But there is still more work to do with the EU and if Brussels wants to avoid being investigated by Trump administration officials, they need to budge at some point.

L'articolo Has Trump Succeeded in Making Trade Fairer for America? proviene da InsideOver.