When is a trade deal not a deal? When Donald Trump is the negotiator


Donald Trump needed another distraction yesterday, so he announced that he had reached a trade deal with Mexico to replace NAFTA.

Yeah, not even close.

As Steve Benen notes, Trump doesn’t seem to realize his new trade deal isn’t a trade deal:

Let’s back up to provide some context. For about a year, the Trump administration has engaged Canadian and Mexican officials in renegotiating the terms of the existing NAFTA agreement, which the president claims to hate, despite never fully explaining why. The months-long process has been a struggle, and by all accounts, the countries are not yet close to a trilateral deal.

Recently, however, Trump’s team has been working directly with Mexico on a provision related to auto manufacturing, and yesterday, the White House announced that those talks resulted in an agreement. That’s not nothing, and it may move the administration closer to its goal.

But it’s only a step. The Atlantic’s David Frum joked yesterday, “Congratulations to the Trump administration on reaching a preliminary agreement in principle to begin negotiations with half of America’s NAFTA counterparties with a view to revising one section of the trade agreement!

Austan Goolsbee, former Chairman of the Council of Economic Advisers for President Obama, and professor of economics at the University of Chicago explained why President Trump’s new preliminary trade agreement with Mexico falls far short of “replacing NAFTA.”

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The American president, however, desperate for a win and the completion of some kind of trade deal, made a series of claims that were largely incoherent.

At one point yesterday, for example, Trump said, “This is one of the largest trade deals ever made. Maybe the largest trade deal ever made.” That’s absurd. It’s not really a trade deal – Mexico still expects Canada’s involvement in a trilateral agreement – and even if it were, it wouldn’t be anywhere close to the largest in history.  New York Times fact checker: Trump Falsely Calls Preliminary Pact Between U.S. and Mexico ‘Maybe the Largest Trade Deal Ever’.

The Trump administration isn’t even calling it a deal, choosing instead to describe it as a “preliminary agreement in principle.”

The American president also claimed, twice, that he’ll “be terminating the existing [NAFTA} deal.” That’s wrong, too. In fact, the opposite is true: U.S. officials are still trying to renegotiate the terms of the existing NAFTA deal, even as their boss tells the world from the Oval Office that the trade agreement is being replaced with an incomplete deal Trump apparently doesn’t understand.

Complicating matters, the idea that Trump can unilaterally “terminate” the international agreement, just because he says so, is highly dubious.

What about our neighbors to the north? The American president added, “As far Canada is concerned, we haven’t started with Canada yet.” In reality, U.S. officials have been in talks with Canadian officials for about a year, which meant the comment reinforced concerns that Trump has no idea what he’s talking about.

At the same time, Trump is characterizing the policy effort as if he’s committed to two separate trade agreements – one with Mexico, one with Canada – which isn’t how his trade partners see it and isn’t how his own administration is approaching the negotiating process.

All of which suggests that the American president, while speaking on camera from the Oval Office, peddled nonsensical claims that he appeared to be making up as he went along.

The Washington Post’s Catherine Rampell added, “In other words, it’s precisely the puffery we’ve come to expect from a president who doesn’t understand what his own administration is doing, or doesn’t care.”

The New Republic’s Jeet Heer suggested that the best-case scenario would be for the parties in NAFTA to “just ignore Trump’s misrepresentation and continue with negotiations, treating the president as background noise.”

That would likely increase the odds of success, but isn’t it a shame that everyone has to hope the American president’s ignorance and incoherence doesn’t get in the way of important policymaking?

The “preliminary agreement in principle” may achieve exactly the opposite of the goals Trump claims to be negotiating. Economist Paul Krugman tweeted:

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Chad P. Bown is a Senior Fellow at the Peterson Institute for International Economics in Washington, DC, a Research Fellow at CEPR in London and a Non-Resident Fellow at the WTI.

Paul Krugman adds:

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  1. From today’s (8/29) Wall Street Journal:

    Trade ties between the U.S. and Canada took a sudden optimistic turn on Wednesday as the two countries signaled they were on track to meet a tight Friday deadline to revise the North American Free Trade Agreement.
    “Canada very much wants to make the deal,” President Trump said at the White House Wednesday. He added a deal would be “very good” for Canada and talks are “on track” to conclude by Friday.
    The Trump administration had set that deadline for Canada to join a preliminary accord the U.S. and Mexico had achieved on Monday or risk being left out.

    This is good news for America but bad news for anti-Trump zealots who put hate of Trump above what is good for America, Mexico and Canada.

    • So your basis for proving that we’re all wrong about Trump is a quote from Trump saying Trump’s doing a great job?


      “The Wall Street Journal’s editorial board on Tuesday criticized President Trump over the trade deal he announced Monday with Mexico, calling it “notably worse in many ways” than the North American Free Trade Agreement.

      The editorial board pointed to the exclusion of Canada from the deal as one of its shortcomings. The U.S. and Canada are still in negotiations.

      To break up the current three-country trade agreement, Trump would need approval from Congress, something he is unlikely to get.”

      I really have no idea how you keep getting elected. You do not think things through at all.

      It’s weird.

    • “Another problem with the deal reached Monday, according to the Journal’s editorial board, is that it strips protections from most U.S. investors in Mexico. The editorial board also criticized the deal for imposing “new red tape and costs” on the auto industry, noting that the deal says that cars sold in North America need to have 75 percent of their content made there to avoid tariffs.

      “This is politically managed trade, and its economic logic is the opposite of Mr. Trump’s domestic deregulation agenda,” the Journal wrote.”

      Keep posting Trump quotes about how great Trump is, John, please, and keep cherry picking WSJ quotes, it’s very entertaining watching you fail.

    • ““The deal announced Monday has moving parts and there is still time to make improvements before it is signed and sent to Congress,” the Journal’s editorial board wrote. “We’re glad to see Mr. Trump step back from the suicide of Nafta withdrawal, but on the public evidence so far his new deal is worse.””

      But Trump says Trump is great, so it must be so.

  2. I wonder what The Donald’s white supremacists buddies think about making a deal with the brown people to the south while dissing the white folk up north.

  3. I wonder what The Donald’s white supremacist buddies think about him making a deal with the brown people to the south while dissing the white folk up north.

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