Goodbye Nafta, hello USMCA: Canada and US reach last-minute deal to save trade pact with Mexico
Donald Trump triggered a review of the 1994 trade pact after he called it ‘one of the worst trade deals in history’
The United States and Canada have forged a last-gasp deal to salvage Nafta as a trilateral pact with Mexico, rescuing a three-country, US$1.2 trillion open-trade zone that had been about to collapse after nearly a quarter century.
In a big victory for his agenda to shake-up an era of global free trade that many associate with the signing of Nafta in 1994, US President Donald Trump coerced Canada and Mexico to accept more restrictive commerce with their main export partner.
Trump’s primary objective in reworking Nafta was to bring down US trade deficits, a goal he has also pursued with China, by imposing hundreds of billions of dollars in tariffs on imported goods.
While the new United States-Mexico-Canada Agreement (USMCA) avoids tariffs, it will make it harder for global carmakers to build cars cheaply in Mexico and is aimed at bringing more jobs into the United States.
Since talks began more than a year ago, it was clear Canada and Mexico would have to make concessions in the face of Trump’s threats to tear up Nafta and relief was palpable in both countries that the deal, sealed on Sunday, was largely intact and had not fractured supply chains between weaker bilateral agreements.