Trump Hails Revised Nafta Deal as a Trade Promise Kept

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The rewrite of Nafta will give the United States greater access to Canada’s dairy market, enabling a larger volume of exports.CreditCreditChristinne Muschi for The New York Times

By Alan Rappeport

Oct. 1, 2018

WASHINGTON — President Trump hailed a revised North American Free Trade Agreement as a victory for the United States, Canada and Mexico on Monday, saying his get-tough approach to trade, including his use of tariffs, was bringing results.

“This landmark agreement will send cash and jobs pouring into the United States and into North America,” Mr. Trump said in remarks at the White House. “Good for Canada, good for Mexico.”

Mr. Trump portrayed the new agreement as the fulfillment of a campaign promise to terminate Nafta, saying he had made good on his plan to rip up “the worst trade deal ever made” and help American businesses and workers.

“For 25 years as a civilian, as a businessman, I used to say: How could anybody sign a deal like Nafta?” Mr. Trump said, adding the deal reached on Sunday was “not Nafta redone, it’s a brand new deal.”

The president attributed the breakthrough with Canada and Mexico to his use of tariffs and suggested that would continue to be part of his playbook as he tries to force concessions from other trading partners.

“Without tariffs, we wouldn’t be talking about a deal,” Mr. Trump said. “Just for those babies out there that keep talking about tariffs.”

The updated Nafta, which will be called the United States-Mexico-Canada-Agreement or U.S.M.C.A., represents Mr. Trump’s biggest trade achievement to date and comes after more than a year of intense negotiations with Canada and Mexico.

But while the United States resolved its North American trade differences, it is still embroiled in disputes with China and the European Union and it is unclear whether Mr. Trump’s pugilistic approach will work with those trading partners. Robert E. Lighthizer, Mr. Trump’s top trade negotiator, said that the agreement reached on Sunday night would be a template for future deals, suggesting tariffs will remain part of Mr. Trump’s repertoire.

The agreement came together on Sunday night after a weekend of frenzied negotiations between Canada and the United States, which culminated in keeping the three-country pact intact.

Mr. Trump and Justin Trudeau, Canada’s prime minister, spoke about the agreement by telephone on Monday morning. After months of tension, they expressed hope that the deal would put their relationship on a stronger footing.

“The prime minister and president stressed that the agreement would bring the countries closer together, create jobs and grow the middle class, enhance North American competitiveness, and provide stability, predictability, and prosperity to the region,” a spokesman for Mr. Trudeau said in a statement.

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Mr. Trump acknowledged the “difficulties” that he and Mr. Trudeau have had in recent months as a result of the trade dispute, but offered his “highest regard” for the prime minister.

“We had very strong tensions,” Mr. Trump said, adding that they were alleviated on Sunday night when the agreement was reached.

Mr. Trump also praised Enrique Peña Nieto, Mexico’s outgoing president with whom he has also clashed with in the past.

“I think he’s a terrific person,” Mr. Trump said.

The agreement is largely a refresh of a 25-year-old pact that has brought together the economies of Canada, Mexico and the United States but had become somewhat outdated in the digital age. It makes a series of changes to areas like intellectual property and the digital economy, including protections for patents and domain names.

As part of the deal, Canada will ease protections on its dairy market and provide access that is greater than what the United States would have gained through the Trans-Pacific Partnership, a trade treaty that Mr. Trump withdrew from last year.

The United States also relented on its demands to eliminate an independent tariff dispute settlement system that Canada has said is a red line in negotiations. Keeping that was a major concession for the United States and a change for what was agreed with Mexico.

President Trump said the new agreement was “based on the principle of fairness and reciprocity.”CreditAl Drago for The New York Times

The countries also reached an understanding that would protect Canada from the automobile tariffs that Mr. Trump has routinely threatened.

The agreement builds upon the deal that was reached with Mexico in August. Most importantly it made alterations to rules governing automobile manufacturing, in an effort to bring more car production back to the United States from Mexico. As part of the agreement, a significant portion of vehicles would have to be made by workers earning at least $16 an hour. The wage floor is intended to boost jobs in the United States and Canada, where wages are already higher than Mexico.

In a statement, Ford Motor said it was “encouraged” by the accord, adding that a three-nation trade zone “will support an integrated, globally competitive automotive business in North America” and help keep and add manufacturing jobs.

Ford, General Motors, Fiat Chrysler, Toyota and Honda all have Canadian plants that ship cars to the United States.

Analysts said the agreement might have an incremental impact on American automotive jobs, and may push car prices slightly higher. “The new regional value content requirements mean that automakers will not able to source parts as freely, so there will be added costs associated with vehicle manufacturing,” said Ivan Drury, senior manager of industry analysis at Edmunds, another auto-data provider.

The requirement for 75 percent North American content will likely require relatively small adjustments for the three Detroit automakers. Many of their top-selling models — including the Jeep Grand Cherokee, Ford Expedition and F-150, the Chevrolet Silverado — exceed that level already. Some models that don’t are being discontinued, such as the Ford Focus and Taurus.

Determining whether companies comply with the wage requirement will be more complicated because one vehicle can have parts made by dozens of different companies all paying different wages. In general, a large majority of American and Canadian auto-assembly workers earn more than $16 an hour. Suppliers, especially those located in southern states, often pay somewhat less.

The Alliance of Automobile Manufacturers, the industry’s main lobbying group, said it still has to review the text of the proposed agreement, which has more than 1,000 pages. But the inclusion of Canada was a major step forward. “We have said all along that it is key that the United States, Mexico and Canada maintain this agreement as a trilateral pact,” the organization said.

Markets were pleased to have averted the uncertainty of trade dispute in North America. Stocks rose in early trading in the United States, and the Canadian dollar and the Mexican peso both climbed.

But as lawmakers, trade analysts and industry groups studied the new text, some suggested that it was too soon to celebrate.

The United Steelworkers union urged caution on Monday, lamenting that the Trump administration’s steel and aluminum tariffs had not been lifted as part of the deal. Mexico and Canada say they expect those tariffs to be worked out on a separate track. Also unresolved is whether Canada and Mexico will continue to impose the retaliatory tariffs they placed on American products like whiskey, orange juice and chocolate.

“The key question now is whether this new agreement, when final, will make a measurable difference in workers’ lives and whether workers will have confidence in the new provisions and the commitment of government to enforce those provisions,” said Leo W. Gerard, president of the union.

Wilbur Ross, the Commerce secretary, defended the decision to maintain the metal tariffs.

“Yes, those are separate issues from this,” Mr. Ross said on the Fox Business Network. “There are problems specific to steel and aluminum relating to our national defense. And at this point in time, those stay the same.”

In a news conference, Mr. Trump said that the United States is talking with Mexico and Canada about a separate arrangement to lift the steel and aluminum tariffs and potentially replace them with quotas.

The new agreement could also face political obstacles, as Congress is responsible for granting final approval of trade agreements. If Democrats take control of the House next year, it is possible that they will call for changes or prevent the administration’s agreement from taking effect.

Representative Nancy Pelosi of California, the House minority leader, made clear on Monday that Mr. Trump’s deal would not receive a rubber stamp.

“Democrats will closely scrutinize the text of the Trump administration’s Nafta proposal, and look forward to further analyses and conversations with stakeholders,” Ms. Pelosi said.

Despite his optimism about the deal, Mr. Trump acknowledged that passage in Congress could be a problem.

“I’m not at all confident,” Mr. Trump said, referring to Democrats. “They might be wiling to throw away one the great deals for people and the workers for political purposes.”

Neal E. Boudette in Ann Arbor, Mich., contributed reporting.