Iowa’s economic forecast was buoyed this week with the prospect of a revamped North American Free Trade Agreement, announced by U.S., Canadian and Mexican officials.
The announcement may prove to be good news for Iowa, and should provide some level of certainty for the manufacturing and agriculture industries that have suffered under President Donald Trump’s erratic international trade policies. But any new deal still needs legislative approval, and other significant trade barriers remain among North American economies.
Trump, who has called NAFTA the worst trade agreement in history, can count the new agreement as one of few major policy victories as his presidency approaches the two-year mark. Among the highlights, Mexico is making limited concessions on wages and labor policy, which could make U.S. automotive workers more competitive, and Canada is agreeing to open its markets to more U.S. dairy products. Even under a new name, the United States-Mexico-Canada Agreement, the deal is not a drastic change from the existing accord, in place since 1994.
Unfortunately, the agreement will not address the tariffs the Trump administration imposed on Canadian and Mexican steel and aluminum earlier this year. Not only has that policy increased manufacturing and construction costs in the our country, it also triggered Canada and Mexico to impose retaliatory tariffs on U.S. products, including Mexican restrictions on pork. That’s crucial to Iowa farmers, as Mexico is the biggest international buyer of U.S. pork, and Iowa is by far the nation’s largest pork producer. Increased demand for pork also would drive up prices for feed crops such as corn and soybeans.
Additionally, any North American agreement does not include the United States’ biggest trade partner, China. Agriculture industry leaders agree less-restricted trade with quickly growing Asian nations is vital to securing the United States’ economic interests.
Perhaps even more troubling is the long-term damage incurred in Trump’s global trade war. If trade partners secure new sources for agricultural products, there is widespread worry that it would take many years to develop new markets for U.S. exports, if they can be developed at all.
NAFTA 2.0 is an accomplishment for Trump, but the administration’s overall trade policy still lacks any discernible mission or long-term vision. Trump and his loyalists insist stakeholders are willing to weather temporary pain for an ultimate payoff. It’s clear Iowa workers’ and farmers’ patience is wearing thin.
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