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Editorial: Playing the no free trade Trump card

Bombast being a growth export from the United States under the current White House administration, it’s not surprising that the new North American trade deal entered into force on July 1 with more whimper than bang. U.S.
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Bombast being a growth export from the United States under the current White House administration, it’s not surprising that the new North American trade deal entered into force on July 1 with more whimper than bang.

U.S. President Donald Trump’s dismissal of the North American Free Trade Agreement (NAFTA) as the “worst trade deal ever made” was a page out of Trump’s The Art of the Deal playbook.

But that playbook is long on bluster and short on substance.

The president’s “nightmare NAFTA,” which had been benefiting the continent’s economies since 1994, had more to offer all participants than its replacement.

At least its title included “free” and “trade.” Neither word appears in what is the Canada-United States-Mexico Agreement (CUSMA) in Canada and the United States-Mexico-Canada Agreement (USMCA) in the United States, and that’s as it should be, because CUSMA/USMCA has far less to do with free trade than NAFTA did.

As an analysis of the new agreement by C.D. Howe Institute Fellow in Residence Dan Ciuriak points out, it does nothing to restrict American imposition of tariffs on imports deemed to be a threat to national security via economic security. That leaves available to an openly protectionist administration wide latitude to apply import tariffs at will.

Trump’s “most important trade deal” in history does more to restrict trade within North America than promote it, and that is to the detriment of the economies in Canada, the United States and Mexico.

Trading rules have been modernized and there are improvements in environmental and labour rights in CUSMA, but overall the biggest upside to the new deal is that it removes the uncertainty of having no North American trade deal at all.  

Sadly, that is the low bar of victory that has been established today for the Canada-U.S. working relationship under the leadership at the helm of the world’s largest economy.