Trump requests approval of NAFTA replacement, retaliatory tariff power

Keith Laing
The Detroit News
President Donald Trump delivers his State of the Union address to a joint session of Congress on Capitol Hill in Washington, as Vice President Mike Pence watches, Tuesday, Feb. 5, 2019.

Washington — President Donald Trump on Tuesday asked Congress to pass his new trade deal with Canada and Mexico and give him the power to unilaterally increase tariffs on countries that charge levies for U.S.-made goods.

In his second State of the Union address, Trump urged lawmakers to back the new agreement, known as the U.S.-Mexico-Canada Trade Agreement. He also said the tariff measure, known as the United States Reciprocal Trade Act, would allow him to protect American workers hurt by decades of flawed trade deals.  

""Our new U.S.-Mexico-Canada Agreement — the USMCA — will replace NAFTA and deliver for American workers like they haven't had delivered to for a long time," Trump said. "I hope you can pass the USMCA so that we can bring back our manufacturing jobs, expand American agriculture, protect intellectual property, and ensure that more cars are proudly stamped with our four beautiful words: made in the USA." 

"Tonight, I am also asking you to pass the United States Reciprocal Trade Act, so that if another country places an unfair tariff on an American product, we can charge them the exact same tariff on the same product that they sell to us," he added of the tariff measure.  

In addition to touting his replacement for the North American Free Trade Agreement, Trump defended his decision to impose tariffs on Chinese goods — which has prompted retaliatory tariffs by the Chinese on goods including Michigan-grown soy beans, cherries and pork. 

"To build on our incredible economic success, one priority is paramount — reversing decades of calamitous trade policies," he said.

"We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end," he said. "Therefore, we recently imposed tariffs on $250 billion of Chinese goods — and now our Treasury is receiving billions of dollars a month from a country that never gave us a dime." 

The president and leaders from Canada and Mexico last year signed a new trade deal, but the pact still has to be ratified by Congress. Trump did not appeal to Congress Tuesday night to approve the new trade agreement. 

USMCA calls for increasing from 62.5 percent to 75 percent the percentage of a vehicle's parts that must come from one of the three countries to qualify for duty-free treatment.

It also requires that 40-45 percent of an auto's content be made by workers earning at least $16 per hour. Vehicles not meeting the requirements would be subject to a 2.5 percent duty.

Democrats have expressed skepticism that the new deal would stem the tide of companies relocating jobs to Mexico, especially in the auto industry.

They point to General Motors Co.'s recent decision to idle four U.S. plants while it moves ahead with plans to build the second coming of the Chevrolet Blazer in Mexico. Trump has sharply criticized GM for the plant idlings, but he did not mention the Detroit automaker during Tuesday's speech.  

GM this week began laying off more than 4,000 white-collar employees as part of a broader restructuring. It earlier laid off 1,500 contract workers and had 2,250 employees accept buyouts. 

America's largest domestic automaker also has decided to idle plants that include the Detroit-Hamtramck assembly factory and the Warren Transmission plant.

The moves have drawn criticism from union and elected officials, who questioned how GM can make the cut while it is profitable.

Critics also have noted GM received $49.5 billion in bailout aid during the Great Recession to help it survive. The Detroit automaker paid back the $49.5 billion ahead of schedule, but the federal government lost $11.2 billion when it sold off its shares of GM stock that it received in exchange for the loans.  

Two United Auto Workers union leaders attended the State of the Union address as guests of two U.S. congressman to protest GM's plans to cut 8,000 salaried employees, idle four U.S. plants and imperil 3,300 hourly workers.

UAW Local 909 President Ghana Goodwin-Dye of GM's Warren Transmission plant was to attend the speech as a guest of U.S. Rep. Andy Levin, D-Bloomfield Township. 

From Ohio, UAW Local 1112 President Dave Green of GM's Lordstown Assembly was expected to attend as a guest of U.S. Rep. Tim Ryan, D-Ohio. 

Goodwin-Dye said she is hoping to send a message to Trump and members of Congress about the importance of protecting domestic auto jobs.

UAW President Gary Jones said the presence of his members in the U.S. House chamber for Trump's speech served as "symbolic reminders of the failure of trade and industrial policies in our nation.

"The dignity of work — of a good job with living wages and benefits — is not a partisan issue," he said. 

GM CEO Mary Barra has defended her company's moves as helping the automaker to prepare for a market where more trucks and sport utility vehicles are being sold and where autonomous vehicles are expected to be the industry's future.

“I’ve been a part of General Motors for 38 years, including through bankruptcy in 2009," Barra said in a recent LinkedIn post.

"This experience makes it clear that the long-term success of this company cannot be taken for granted. I am forever grateful for the second chance we received, and it is one of my primary responsibilities to ensure that it never happens again.”

The restructuring moves are expected to save GM up to $2.5 billion in 2019 and a total of $6 billion by 2020.



Rep. Elissa Slotkin, D-Holly, said she hoped to hear some discussion from Trump of unity and bipartisanship.

"And then what we’re going to do — not just words but deeds on things like infrastructure," Slotkin said.

"We’ve talked about it for two years. We haven’t put any money behind it. It’s time if you’re going to talk about it and use it as an issue that is bipartisan — then tell me what your plan is to actually pass something real that we’ll feel in Michigan."