Trump’s USMCA – Change Nafta’s Name, Pleasure The Base, Declare Victory, Go Home

President Donald Trump is doing the victory lap as he celebrates his new USMCA trade agreement. Which is, essentially, Nafta with the name changed. Which allows him to declare, a month before the midterms, victory – a victory that pleasures his base – and he can go, and bring them, home. Not bad as a piece of politics even if the economics of it all is both upside down and trivial.

For the thing is, really, not much has changed:

James Pethokoukis Trump’s new trade deal with Canada and Mexico fixes what he broke.

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Apart from a stream of winks and tweets, the most authoritative PowerPoint presentation on the “new Mexican free-trade agreement” is at Reuters.

The North American Free Trade Agreement (NAFTA) drastically reduced trans-border barriers, amplifying commerce even as it disrupted specific jobs. (However, see Tim’s recent article on things that threaten jobs.) President Trump falsely argued that NAFTA was dramatically bad, presumably on the grounds that Clinton-Bush-era negotiators favored commerce while Trump favors workers. Regardless of that, Trump won election, surprisingly carrying the “rust belt” states such as Michigan.…

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As Paul Krugman Says, Trump’s Nafta Demand For Higher Mexican Auto Wages Is Ridiculous

Now it’s entirely true that we don’t have to take as gospel everything that Paul Krugman says in his New York Times column. He is, when writing there, working as a rhetorician for a certain set of political ideas, ideas which – to put it mildly – not all of us agree with. However, Krugman the trade economist is someone we must, at the very least, take very seriously. That’s not to say that he’s absolutely and entirely right upon everything for no human ever is even within their own subject of expertise.…

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Just Call It Free Trade

There is no scam more delicious than restricting trade by devising “modernizations” of a “free trade agreement.”

The only intrinsic problem with the North American Free Trade Agreement is that it is 1000 pages longer than the single sentence that would proclaim free trade. These 1000 pages are transition rules toward free trade, plus hoops to jump through before one can benefit from free trade. And the only evolved problem with NAFTA is that it was designed assuming symmetry between Mexico’s value-added tax and the US’s state sales taxes, both of which hit imports and don’t hit exports.…

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