Staff Editorial

USMCA is only one small step toward sensible trade policy

Iowa Governor Kim Reynolds waves to the crowd with U.S. Vice President Mike Pence before Pence delivers remarks on the U
Iowa Governor Kim Reynolds waves to the crowd with U.S. Vice President Mike Pence before Pence delivers remarks on the United States–Mexico–Canada Agreement (USMCA) at Manning Farms in Waukee, Iowa, U.S., October 9, 2019. REUTERS/Brenna Norman

Iowa farmers and businesses have suffered from uncertainty for more than a year, unsettled by inaction on the proposed trade agreement with Canada and Mexico. The announcement last week that federal politicians have reached an agreement is a huge relief.

The new U.S.-Mexico-Canada agreement is expected to replace the North American Free Trade Agreement, which was put in place 25 years ago. The Clinton-era document was in need of an update, and both Republicans and Democrats are pleased with the outcome.

NAFTA allowed for zero tariffs on most goods exchanged between the three partner nations, which has led to lower consumer prices and greater economic growth across the continent. USMCA maintains that policy, ensuring Iowa manufacturers and agricultural exporters can sell their goods across borders relatively uninhibited.

Canada and Mexico are Iowa’s top two trading partners. Iowa leaders are praising new provisions to allow more U.S. agriculture exports and modernize internet commerce. Democrats in particular applaud new environmental protections and labor regulation enforcement mechanisms.

Congress will vote on the agreement in early 2020, and approval from the Canadian and Mexican legislatures is seen as likely.

Unequivocally, USMCA is important. The Trump administration and House Democrats deserve credit for making meaningful progress on a key issue, a rare phenomenon in the modern era.

But to put this in perspective, federal trade authorities estimate the agreement would create 176,000 jobs over the next six years compared to existing policy. The latest federal jobs report showed the U.S. economy added 266,000 jobs in November alone.


USMCA is expected to increase gross domestic product by about one-third of a percent over six years. By all accounts, the U.S.-China trade war initiated by Trump is hampering economic growth much more than USMCA can make up for. That dispute is cutting economic growth for the entire world by about one third of a percent this year, according to International Monetary Fund analysts.

Trump has shown himself utterly contemptuous to the tradition of free trade that has greatly enriched not only Iowans, but hundreds of millions of Americans, Mexicans and Canadians.

Bipartisan agreement on USMCA provides a much greater degree of predictability for Iowa businesses, and ratification of the deal will be a victory for all three countries. However, Americans should remember other international trade concerns abound, thanks to Trump.

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