More Progress On Trade

Today the U.S. and Mexico announced a revised, potentially bilateral version of NAFTA that makes some of that treaty’s provisions more favorable to the U.S. At the link, the New York Times engages in predictable hand-wringing, in particular over the need for Canada to be part of the deal. You have to read pretty deep to learn any specifics about the agreement:

Under the changes agreed to by Mexico and the United States, car companies would be required to manufacture at least 75 percent of an automobile’s value in North America under the new rules, up from 62.5 percent, to qualify for Nafta’s zero tariffs. They will also be required to use more local steel, aluminum and auto parts, and have 40 to 45 percent of the car made by workers earning at least $16 an hour, a boon to both the United States and Canada and a win for labor unions, which have been among Nafta’s biggest critics.

So, from 62.5% to 75% to qualify for zero tariffs. Not exactly radical, but positive. And if 75% of a vehicle’s value is being produced in the U.S., a large majority of those involved in its production will be earning more than $16 an hour, a low figure for an auto plant.

Today’s agreement doesn’t include relief for Mexico from the tariffs on aluminum and steel that President Trump has imposed, but the Mexicans don’t seem unduly worried about that:

“I don’t think it was necessary to address them now,” Mr. Videgaray said. “We’d like those to be addressed alongside Canada. It would be great if we could have a trilateral agreement on lifting those and our retaliatory tariffs on U.S. goods.”

At the rate things are going, this could be the shortest “trade war” on record.

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