The Trump administration is in full retreat from its array of right-wing populist promises.
Instead of scrapping NAFTA, they are merely looking for minor adjustments. Instead of showing China who’s boss, they have retreated on Taiwan, and are promising a far more favorable stance on trade in exchange for whatever help China might offer on North Korea — while telegraphing that they know help is bound to be limited.
.. Most dramatically, Trump reversed the overwhelming thrust of his campaign with respect to foreign policy, ordering an attack on Syria and welcoming Montenegro into NATO, saying that the Atlantic alliance is “no longer obsolete.”
.. Most dramatically, Trump reversed the overwhelming thrust of his campaign with respect to foreign policy, ordering an attack on Syria and welcoming Montenegro into NATO, saying that the Atlantic alliance is “no longer obsolete.”
Faced with any difficult problem, he chooses the easiest way out, which in politics will mean appeasing whoever presents the most current threat.
Nafta After All
The Trump administration is signaling to Congress that in coming negotiations with Mexico and Canada it will seek mostly modest changes to the North American Free Trade Agreement, a deal President Donald Trump called a “disaster” during the campaign. An administration draft proposal being circulated in Congress by the U.S. trade representative’s office would keep some of the most controversial provisions, including one establishing an arbitration panel that investors in the three nations can use to resolve civil claims, bypassing local courts.
.. NUMBER OF THE DAY $528.2 billion The amount investors borrowed against their brokerage accounts in February, a record high for margin debt and a fresh sign of bullishness among flummoxed investors trying to navigate the political and economic crosscurrents driving markets.
President Trump’s Mexican Standoff
His approach to Peña Nieto suggests this is one adversary he fails to understand.
.. His strategy has been to soften up the opponent with verbal abuse and extreme threats, including the possibility of tearing up Nafta altogether... “The president-elect has done a wonderful job of preconditioning other countries [with] whom we will be negotiating that change is coming,” Commerce Secretary-designate Wilbur Ross gloated during his Senate confirmation hearing. “The peso didn’t go down 35% by accident. Even the Canadian dollar has gotten somewhat weaker—also not an accident. He has done some of the work that we need to do in order to get better trade deals.”.. Maybe Mr. Trump should have Googled the Treaty of Guadalupe Hidalgo. Mexicans are still smarting over that one... The White House responded by saying it would extract the money for the wall with a 20% tariff on Mexican exports to the U.S. Of course American consumers would be the ones paying. But in any case it would be the end of Nafta.Americans have to hope their new president is not that reckless... “sales of food and farm products to Mexico totaled a record $19.5 billion in fiscal year 2014.” That was 13% of U.S. agricultural exports.
.. Mr. Trump says that the U.S. has been outfoxed in manufacturing because American companies now make things in Mexico. But imports from Mexico contain significant American content, and production-sharing across the continent has given U.S. companies an edge in the global market.
.. But it is being debated whether that would repeal the congressional legislation that put it into effect. If so, tariffs would revert to pre-Nafta levels, which implies using the World Trade Organization tariff schedule. American exporters to Mexico would face greater tariff hikes than Mexican exporters to the U.S., because Mexico accepted much greater tariff reductions under Nafta than the U.S. did.
.. Mr. Trump might try to invoke the International Economic Emergency Powers Act of 1977 to slap his oft-promised punitive tariff on Mexican imports. But it is hard to argue that national security is being threatened.
.. The 45th president has said he wants to craft new bilateral trade agreements. Mexico says it is not interested. It has learned a hard lesson about relying on an unreliable partner, and its aim now is to diversify its trade portfolio. Policy makers are said to be exploring new agreements in the region with countries eager to replace U.S. agricultural suppliers.
Donald Trump Poised to Put Pressure on Nafta
While an abrupt withdrawal from the trade deal is unlikely, the president-elect and his advisers are gunning for big changes
His team may also seek to remove a Nafta provision that allows Mexican and Canadian companies to challenge U.S. regulations outside the court system... Breaking up Nafta would upend numerous industries, and the biggest victim would be Mexico, which promotes itself as a platform offering global manufacturers duty-free access to the U.S... Reopening the treaty would create “a long line” of special interests in all three countries trying to get protection, he added... If the U.S. leaves Nafta, then the two-decade-old agreement could be replaced with bilateral trade agreements, which Trump advisers say they prefer to multilateral tie-ups.