President Trump on Monday hailed the major revisions he was able to extract from Canada and Mexico to the 25-year-old North American trade agreement, as business executives, labor leaders, and lawmakers began poring over details.
“Throughout the campaign I promised to renegotiate NAFTA and today we have kept that promise,” Trump said at a Rose Garden news conference.
Calling the deal “truly historic,” Trump pledged: “It will transform North America back into a manufacturing powerhouse.”
The White House, as well as leaders from Canada and Mexico, announced they had inked the deal late Sunday after Canada’s 11th hour agreement. But congressional approval is uncertain, particularly if Democrats retake control of the House in the November midterm elections.
Trump was able to force Canada and Mexico to make major concessions from their initial position, but in the end the White House pulled back from some of its most stringent demands, including the possibility of terminating the North American Free Trade Agreement entirely.
Business groups appeared to mainly breathe a sigh of relief, in part because Trump had floated the prospect of replacing the North American Free Trade Agreement (NAFTA) with a deal between just the U.S. and Mexico, cutting Canada out of the final discussion. It was unclear if this would be legal or practical, but it injected uncertainty into the outlook for hundreds of businesses, something that has now been alleviated.
“We stand ready to be a collaborative partner to ensure this agreement is ratified in all three markets because it will support an integrated, globally competitive automotive business in North America,” said Joe Hinrichs, executive vice president of Ford Motor Company. “The benefits of scale and global reach will help to drive volume and support manufacturing jobs.”
Congressional GOP leaders, who generally like NAFTA, applauded the announcement of the new deal, with some saying it validated Trump’s approach to trade policy. Many Republicans had winced at Trump’s repeated threats to terminate NAFTA, and had strongly opposed the idea of ousting Canada and doing a deal just with Mexico.
“While many in Washington claimed it could not be done, President Trump worked tirelessly to bring Canada to the table and negotiate a new trade deal that is better for American workers and consumers,” said Rep. Steve Scalise (R-La.), the House majority whip.
Democrats reacted more skeptically and said they needed to see the details to ensure the pact helps American workers.
“Fixing NAFTA means increasing the paychecks of American workers, delivering real, enforceable labor standards, ensuring fairness for American agriculture, and recognizing the connection between economic growth and environmental protections,” House Minority Leader Nancy Pelosi (D-Calif.) said in a short statement. “Democrats will closely scrutinize the text of the Trump Administration’s NAFTA proposal, and look forward to further analyses and conversations with stakeholders.”
There were early signs, though, that some labor groups found the deal unacceptable and would fight for changes, even if that might ultimately scuttle any agreement. The reaction from organized labor is certain to weigh heavily with Democrats.
“There are provisions in the draft agreement between the United States and Mexico that represent improvements over NAFTA, but there are also provisions that must be removed,” said Leo Gerard, president of United Steelworkers International. “Further, we have not evaluated what changes resulted from the just-concluded agreement to include Canada.”
The new treaty, preserving the three-country format of the original North American Free Trade Agreement favored by business groups and congressional Republicans, is expected to be signed by Trump and his Canadian and Mexican counterparts in 60 days, with Congress likely to act on it next year.
But even as he hailed the new deal, Trump acknowledged the tough road ahead on Capitol Hill.
“In theory there should be no trouble, but anything you submit to Congress is trouble no matter what,” the president said. “They’ll say Trump likes it, and therefore we won’t approve it.”
Negotiations with Canada had been touch-and-go, with tensions heightened by Trump’s personal attacks on Canadian Prime Minister Justin Trudeau.
Trump said Monday that the two leaders now have “a great relationship.”
“There was a lot of tension I will say between he and I more specifically, but it’s all worked out,” Trump said.
The new deal preserves a regional economic unit that enables North American manufacturers, particularly in the auto industry, to compete against global rivals. Canada and Mexico rank first and second among export markets for U.S. companies. Total U.S. trade with the two countries last year topped $1.1 trillion.
A central objective for the new agreement is restoring North American manufacturing by encouraging U.S. companies to use domestic suppliers rather than companies based elsewhere, according to Peter Navarro, a top White House trade adviser.
The president, long a NAFTA critic, has complained that the original treaty cost the United States millions of factory jobs and led to persistent U.S. trade deficits with its southern neighbor.
Officials touted auto industry provisions in the new agreement that they said would return “billions of dollars of production” to the United States, improved access to Canadian dairy markets, and a review every six years that would prevent the new agreement from becoming outdated.
The treaty also addressed e-commerce with new intellectual property protections, including decade-long patents for biologic drugs.
The deal also includes stronger protections for labor rights, the environment and intellectual property than did Obama-era trade deals, officials said.
Administration officials have insisted that they needed to release the text of the new deal — with both countries or only Mexico — by Sept. 30. That would comply with a congressional notification requirement and allow Mexican President Enrique Peña Nieto to sign the deal on his last day in office, they said.
Announcement of the new deal does not mean an end to the trade tensions Trump has stoked with U.S. trading partners around the globe. Trump said Monday that tariffs against steel and aluminum imports will remain in place, and he renewed threats of additional rounds of tariffs against China.
“We’ll see what happens with China,” Trump said. “We don’t have a deal with China. There is no deal. They do whatever they want.”
Stock markets on Monday opened briskly on news of the deal. The Dow Jones industrial average rose 200 points in early trading, about 0.8 percent. The Standard & Poor’s 500-stock climbed 0.7 percent. The tech-heavy Nasdaq Composite was up 0.7 percent.
After 20 months in the White House, the president has upended relations with countries that account for roughly two-thirds of the $3.9 trillion in goods that the U.S. buys and sells globally.
He has refreshed existing trade deals with South Korea and, now, his North American neighbors, and threatened China with new trade barriers and investment limits unless it abandons its state-backed economic model.
Like no American president since the 1930s, Trump has embraced tariffs as his weapon of choice in a multi-front trade war that he vows will return prosperity to shuttered American factories even as critics complain they will cost several jobs for each one they create.
The agreement will require that 75 percent of vehicles granted duty-free treatment be made in North America vs. the current 62.5 percent mandate. It will also require greater use of domestic steel and other materials and establish a new requirement for work to be performed by those earning at least $16 an hour, which will benefit the United States and Canada at the expense of Mexico.
NAFTA took effect in 1994 with bipartisan support from President Bill Clinton and former president George H.W. Bush, whose administration negotiated the original agreement.
But the treaty was controversial from the start. Critics included American labor unions and Ross Perot, a businessman and third-party presidential candidate, who warned of a “giant sucking sound” as employers would relocate jobs to low-wage Mexico.
The president last week said he would no longer use the NAFTA name, instead christening the new deal “the U.S.-Mexico-Canada agreement,” or USMCA.
“USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region,” Lighthizer and Canadian Foreign Minister Chrystia Freeland said in a joint statement released less than 30 minutes before the deadline. “It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”
David Lynch contributed to this report.