by San Francisco Chronicle’s editorial board.
President Trump sent stocks downward on Tuesday, and threatened to rain more tariffs and humbug upon the Christmas shopping season, by suggesting his so far fruitless trade war with China could drag on deep into the next decade. A market rebound followed the next day in response to his revised assessment of the standoff. Hanging on Trump’s words may not be wise given his penchant for invention, but three years of experience with his trade and other policies has primed us for bad news and nerves.
Fortunately, there is more cause for optimism about the end of the long-running and less justifiable trade dispute he provoked with two of our most important allies and trading partners, Canada and Mexico. Despite the usual counterproductive bombast and bluster from the White House, the Trump administration and its counterparts agreed to an update of the North American Free Trade Agreement a year ago. The trouble for Trump is that congressional approval and final realization of this rare and devoutly desired victory depend heavily on the will of his archnemesis, House Speaker Nancy Pelosi.
It’s a difficult situation for the president, whose fraught relationship with the San Francisco Democrat has deteriorated from bad to worse as she has become the reluctant author of his likely impeachment. Trump recently accused Pelosi and her caucus of neglecting crucial legislation in favor of the impeachment inquiry, calling the new NAFTA — which he is remarketing as the U.S.-Mexico-Canada Agreement, or USMCA — “dead in the water because of the Dems!”
Off Twitter, however, the administration appears to be striving to mollify the speaker. Trump’s representatives were reportedly working with their Mexican counterparts this week to remove added patent protections for advanced drugs from the revised agreement, a gift to pharmaceutical companies that would undermine Democratic promises to lower prescription prices. Pelosi and U.S. Trade Representative Robert Lighthizer have been negotiating adjustments in other areas, chief among them enforcement of labor protections that are crucial to the Democratic base.
Trump, however, has already done more than any modern president, albeit with pointless pyrotechnics and limited effect, to advance the misguided protectionism favored by most Democrats in Congress. The administration’s revisions seek to steer more auto manufacturing to the United States by, for example, setting minimums for North American steel and aluminum content as well as worker wages for vehicles to escape tariffs. Democrats will therefore be hard-pressed to oppose the agreement on a policy basis.
At the same time, the revisions would facilitate trade in some respects, including through needed modernization of the agreement’s 25-year-old language and rollbacks of Canadian dairy protectionism. And despite the president’s rebranding, the new NAFTA largely entails incremental adjustments to the current free trade agreement with correspondingly modest economic effects. That is preferable to the significant economic harm that could result from expanding Trump’s reckless trade warfare to other fronts. The battle with Beijing has already roiled California crops from almonds to wine, for example.
Trump and company are obviously eager for lawmakers to approve the new NAFTA so they can claim to have replaced what the president called the world’s worst trade agreement with the best deal ever regardless of whether that’s true. And the House speaker is understandably hesitant to hand them that opportunity. But defusing the potential for further trade hostilities would nevertheless accrue to Congress’ credit and the country’s benefit.
This commentary is from The Chronicle’s editorial board.
.
