Trump’s New Tariff Plan, Re-Negotiation Of Nafta And Renaming To Usmca

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If there is one thing that Former President of United States, Barack Obama and the current President, Donald Trump had same views about then it was the North American Free Trade Agreement. Obama stated NAFTA as an enormous problem and wanted it to be amended. Even Trump has called NAFTA a disaster. The reason for disliking may or may not have been same.

Although taxes have always been levied on imports on commodities like foreign oil where tax was levied by Jimmy Carter and Gerald Ford, on Japanese TVs and computers by Ronald Reagan, on steel by George W. Bush and on tires by Barack Obama however, consistent efforts to lower trade barriers have also been made.

Trump’s New Tariff Plan

During his 2016 presidential campaign, Donald Trump promised to renegotiate NAFTA and he did the same by signing USMCA into the law. He stated USMCA, United States – Mexico – Canada trade agreement as one of the largest, fairest and most advanced trade deals ever reached by any country, and it will bring enormous prosperity.

As much as Trump’s new tariff plan has brought happiness to American market, it might have upset other countries. For an example; The American steel is exempted from the 25% tax, making it cheaper than the imported steel. This price gap can be utilized by U.S producers for their benefit. Metal producers and workers employed in the industry would be thankful to Trump for this.

On the other hand, considering the 10% tariff levied on most Canadian aluminum entering the U.S might upset the trade relations between both neighbors. To justify the same Trump mentioned that there has been a surge in Canadian aluminum entering U.S. As per the trade agreement between both countries in 2019 it was decided mutually that if there is a surge in aluminum or steel entering U.S then U.S could reimpose the tariff.

With only 3 months to election now, a few people claim the USMCA as a politically motivated trade protection master stroke of Trump to win over public votes. As per the statistics in 2008, around 60% of American voters claimed that they viewed Global Trade as extremely unfair. For them it subjected American companies and its employees to an unfair competition. However, today more than 52% American voters are in favor of new import tariffs.

Conclusion

The United States officials have mostly been in favor of free trade and open market rather than protectionism.

Although there has been a temporary liking for protectionism as per the voting patterns however the buying pattern of American consumers reflects that they have chosen to purchase more stuff from countries like China, Europe, Japan and Mexico as compared to what is sold to them. Jean-Claude Juncker, Former European Commission President and Trump had decided to work towards “zero tariffs” and “zero subsidies on non-auto industrial goods.”

Mexico and Canada have also agreed to open arms for new NAFTA treaty, which is now called the “United States-Mexico-Canada Agreement,” or USMCA.

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