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Trump claims victory in new free trade deal, but so does Canada

Can you say you've won a trade war if the other side also claims victory?

President Donald Trump speaks during a press conference to discuss a revised U.S. trade agreement with Mexico and Canada in the Rose Garden of the White House on October 1, 2018. CREDIT: Chip Somodevilla/Getty Images.
President Donald Trump speaks during a press conference to discuss a revised U.S. trade agreement with Mexico and Canada in the Rose Garden of the White House on October 1, 2018. CREDIT: Chip Somodevilla/Getty Images.

Canada has agreed to join the trade agreement drafted by the United States and Canada, which, if approved by Congress as well as lawmakers in Canada and Mexico, will make the North American free trade agreement that has been in tatters for a year, whole.

President Donald Trump, who called for the renegotiation of the North American Free Trade Agreement (NAFTA) and insisted that it be called the already-mocked USMCA (America first!), had given Canada a deadline of midnight on Monday to agree to sign on to the deal he’d made with Mexico in August.

The trilateral deal (covering an annual $1.2 trillion in trade) to which Canada agreed, though, was somewhat different than what was agreed upon by Canada and Mexico just over a month ago — the latter version did away with the Chapter 19 trade remedy system (an anti-dumping clause) and included the 6-year sunset clause President Trump wanted in the deal.

While he didn’t get into the details of the deal he called the “single greatest agreement every signed” in a Monday morning press announcement at the White House Rose Garden, Trump used the news as an opportunity to praise his protectionist policies in the other trade battles he’s pursuing, calling his critics “babies”:

The president said the steel and aluminum tariffs remain on Canada and Mexico pending an agreement on quotas.

Things had gotten acrimonious over the past year as President Trump did to Mexico and Canada what he has done to other trade partners (China and the E.U. countries): Accuse them of being unfair and “taking advantage” of the United States.

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If Congress approves the USMCA deal, the new rules-of-origin standards for automakers won’t kick in until 2020, by which time 75 percent (up from 62.5 percent) of a car or truck’s components will have to be manufactured in North America in order to avoid tariffs.

The other big change is that by 2023, 40 percent of the work done on automobiles in North America will have to be done by workers earning at least $16 an hour.

How foreign car companies will deal with these new rules without either eating the costs of the tariffs or raising prices remains to be seen.

Now, politically, everyone will spin this as a win. Certainly, the Trump administration will. The administration wanted a renegotiated deal, and got it, though perhaps at the expense of causing quite a bit of damage to very important trade relations with the U.S.’s only two neighbors.

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Canada will also cast this as a win because while it had to open up its protected dairy market (giving the U.S. access to 3.5 percent of the $16 billion annual market), it got what it wanted, and then some: It got the anti-dumping clause and did away with the sunset clause.

Canada’s move to open its protected dairy market will likely cause a storm in its domestic politics. The province of Quebec, where the dairy industry is a big deal, is holding elections now. It has attempted to secede in the past and is currently in the grips of serious anti-refugee fever.

The deal won’t go over well in Quebec, but the rest of Canada is breathing a bit more easily today with the threat of U.S. tariffs lifted.

It’s also worth noting that while President Trump spent much of last week at the United Nations General Assembly in New York trashing the concepts of globalism and multilateralism, he’s started this week by celebrating a multilateral deal.