Howes: Unless Trump drops tariffs, NAFTA rewrite 'is dead'
As political markers go, Sen. Chuck Grassley’s ultimatum to President Donald Trump is about as big as it gets.
End tariffs on steel and aluminum imported from Canada and Mexico, the Iowa Republican urged Monday in The Wall Street Journal, or the president’s would-be successor to the North American Free Trade Agreement he hates “is dead.”
“It’s time for the tariffs to go,” wrote Grassley, chair of the powerful Finance Committee charged with shepherding the U.S-Mexico-Canada Agreement through the Senate. “These levies are a tax on Americans” and they imperil passage in the capitals of all three countries. “If these tariffs aren’t lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place.”
Just what the president relishes — a high-stakes game of legislative chicken over one of his signature priorities from the 2016 campaign. Getting what he wants looks increasingly difficult as both Republicans and Democrats raise fresh objections, if for different ideological reasons, effectively inviting Trump to make good on his threat to unilaterally withdraw from the 25-year-old NAFTA.
But as the presidential campaign begins to heat up with 20 Democrats so far vying for a chance to challenge Trump, the president may be increasingly disinclined to exit NAFTA. The reason: the resulting uncertainty, even chaos, could slam the electorally vital industrial Midwest and would roil equity markets, whose bullish run Trump considers a barometer for his presidency.
Neither of those potential outcomes would advance the president's economic argument for re-election — even if bolting NAFTA would deliver on his promise and show, once again, his predilection for staking maximal positions in negotiations (and then caving when the political and/or economic price rises too high).
"Passing USMCA this year is going to be extremely difficult," Kristin Dziczek, vice president of industry, labor and economics for the Ann Arbor-based Center for Automotive Research, wrote in an email. "Canada and Mexico hit back on steel and aluminum tariffs with metals tariffs" and levies on agricultural products. "It's difficult for ... members of Congress from agricultural areas to move forward with a 'free trade' deal when their constituents are subject to retaliatory tariffs."
Last week, Vice President Mike Pence touted the USMCA at a campaign-style stop in southeast Michigan, saying "once we address the inequalities that existed under NAFTA ... we’ll give due consideration to other tariffs that have been imposed." Detroit's automakers support the deal, despite a recent study by the International Trade Commission that concluded the automakers would sell 140,000 fewer vehicles under the USMCA.
Political reality is more unforgiving. The Democratic House led by Speaker Nancy Pelosi, D-Calif., has precisely zero motivation to give the president a political win as at least three House committees intensify efforts to investigate Trump, his business and current and former senior staff in the wake of the Mueller report.
And organized labor remains opposed to the proposed USMCA, saying the current deal does not include effective enforcement mechanisms, does not include adequate labor-law provisions to eliminate wage disparities in Mexico, does not do enough to protect working people and their jobs as it safeguards the interests of corporations, including Detroit's automakers and their major suppliers.
"Bring us a deal that works and we'll fight for it," AFL-CIO President Richard Trumka said in a speech earlier this month in Vancouver. "Look, President Trump gets some credit for putting NAFTA back on the table. George W. Bush didn't do that. Barack Obama didn't do that. And let's be candid: Hillary Clinton wouldn't have done that. Donald Trump recognized early on — whether through political expediency or actual conviction — that our trade regime needed to be massively overhauled."
Grassley's suggestion to the president: drop the metals tariffs to potentially speed passage of the USMCA, to rescue the administration's trade agenda and to secure a bilateral trade deal addressing China's abuses — "from theft of U.S. intellectual property and forced technology transfers to anti-competitive subsidies."
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him at 3 p.m. and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.