President Donald Trump is not waiting for Congress to approve the new NAFTA before he terminates the current NAFTA, leaving the United States and our Mexican and Canadian allies without a trade deal in place if the new deal is rejected.
Any of the three nations can reject the new deal, which Trump has rebranded the USMCA so he can claim credit despite the fact that the USMCA is basically a slightly tweaked NAFTA.
And if any of the member nations reject the updated trade deal, there won’t be any trade deal in place at all because Trump intends to kill NAFTA as soon as possible.
“I will be formally terminating NAFTA shortly,” Trump said on Air Force One on the way back to Washington DC after attending the G-20 in Argentina. “Then Congress will have a choice of approving the USMCA, which is a phenomenal deal. Much, much better than NAFTA. A great deal.”
But it’s basically the same deal with a few minor differences that won’t make much of an impact on the economy, especially since Trump’s trade wars have wiped farmers out and is causing automakers to cut jobs and move production elsewhere.
Rather than admit his trade wars are to blame, Trump blamed NAFTA for the losses instead.
“It’s caused us tremendous amounts of unemployment and loss and company loss and everything else,” Trump claimed. “That’ll be terminated. And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well. You got out, you negotiate your deals. It worked very well. Okay?”
NAFTA currently supports 14 million jobs in the United States and most businesses are affected by it, especially the agricultural and manufacturing sectors.
Without it, millions of jobs could be in peril, and our economy would take a major hit. And that’s why Trump should not scrap NAFTA until all three nations ratify the new NAFTA. Trump thinks he being smart by pressuring all three national legislatures to approve his deal, but the reality is that he is being reckless by putting the entire North American economy at risk. Just because the new deal is signed does not mean it automatically goes into effect. Congress could reject it in 2019. If not, the deal could also be rejected by Canada or Mexico, which would have the same effect.
Playing chicken with our economy is not a strategy and Trump should be stopped from doing it.
Thankfully, Trump can be stopped by Congress and the law.
Multiple experts agree that while he can unilaterally withdraw the United States from NAFTA, it wouldn’t exactly wipe it off the books. Since Congress ratified the landmark trade deal, which means it’s implemented via congressional statute.
Roosevelt Institute’s Todd Tucker says that what we would have them in a “zombie NAFTA, where America’s formal participation is dead, but our domestic law would still treat Canadian and Mexican products as if it weren’t.”
Still, jobs would be lost and businesses would be affected, but the impact would not be catastrophic, unlike Trump’s current trade wars. Trump would whine and claim that Congress is hurting the economy, but not much will have changed otherwise.