For starters the White House botched the TV gimmick. The Post reports:
President Trump invited reporters into the Oval Office on Monday to punctuate the moment in an unusual way: allowing them to sit in on a celebratory phone chat with Mexican President Enrique Peña Nieto.But when he punched a button on a phone on the Resolute Desk, the line was dead.“Enrique?” Trump said, with television cameras rolling. There was no response. “You can hook him up,” he called out to aides. “You tell me when. This is a big deal. A lot of people are waiting.”The audience, including top White House advisers and Mexican diplomats, would have to wait a touch longer — “Hellooo,” the president tried again. “Do you want to put that on this phone please? Hellooo?” — before an aide finally took the receiver and patched Peña Nieto through.
Ah well, live by the reality TV mentality, die by shoddy production. The Post report continued: “The awkward, real-time sequence in the Oval Office offered another example of Trump’s willingness to discard protocol and conduct his presidency like a reality show playing out in real time, conscripting those around him in service of the spectacle.”
On a more substantive note, just about everything Trump said about the negotiations with Mexico was false, as the New York Times pointed out:
Mr. Trump announced on Monday that the United States and Mexico had reached a preliminary agreement to revise key portions of the North American Free Trade Agreement. That is not the same thing as signing a new bilateral deal.Nor would a United States-Mexico trade agreement potentially rank as the “largest trade deal ever made.”It is premature to consider the bilateral agreement a done deal. Canada, the third country that was a party to [NAFTA] in 1993, has not yet agreed to the changes. Participating in Monday’s announcement via conference call, Mr. Peña Nieto, the outgoing Mexican president, said he hoped Canada would rejoin the negotiations.Congress would also need to approve the changes before the trade deal could go into effect.
Other than that, he was spot on, huh?
It’s impossible to know whether Trump’s deal will be “better” than NAFTA because there really is no deal, no Canada and no ratification. But if you’re hyping a preliminary step with one of two involved parties, you’re also signaling that you are desperate for a deal. So don’t count on Trump to make NAFTA 2.0 any better.
Moreover, let’s remember that NAFTA is not the calamity that the president and his low-information base think it is. In fact, it’s worked pretty well. Here’s a handy recap:
By easing trade between 450 million people in three countries, NAFTA more than quadrupled trade in 20 years. This boosted economic growth in all three countries. It also led to lower prices on groceries and oil in the United States.Grocery prices went down because NAFTA lowers the cost of produce imported from Mexico and Canada. While this means less demand for American agricultural products, there is high demand for lower food prices because food is more expensive every year.Oil prices went down because the United States could now import much of its oil from Mexico and Canada. The elimination of tariffs plus the lack of political tension makes this cheaper than importing from the Middle East.
As an added benefit (again Trump refuses to believe this) the tide of illegal immigration from Mexico has reversed. We are now seeing fewer Mexican-born people entering the country than we see returning to Mexico. Rather than build a wall, we built a free-trade zone that deterred illegal immigration.
The reason trade deficits don’t reduce overall employment is that, in fact, trade deficits are not really deficits at all. Every cent that does not return to the U.S. as demand for American exports returns instead as investment in America. In economists’ lingo: the trade deficit (or, to be precise, the current-account deficit) is matched by a capital-account surplus of equal size.
The fact that we are at virtually full-employment while NAFTA remains in effect should, if one is logical, disprove Trump’s irrational fear of trade deficits. To the contrary, we see as Trump tries to install tariffs (taxes), jobs are put at risk.
In short, Trump has no deal to replace NAFTA. It’s not the biggest deal ever since it’s not even a deal. And if he simply renumbered the pages on the existing NAFTA deal he’d be able to claim he’s creating jobs, lowering prices for consumers and keeping out illegal immigrants. Of course, that’s what NAFTA has been doing for more than 20 years.