by Peter Schiff, Euro Pacific Capital:
Last week Donald Trump, in his own estimation, succeeded in replacing what he claimed to be the “worst trade deal in history” with what he claims was “the best trade deal in history.” If true, this would not only make good on one of his central campaign promises, but it would be a genuinely significant development. In reality, the unveiling of the United States-Mexico-Canada (USMCA) trade deal is just the latest iteration of the President’s talent for branding. As is the case in other aspects of the president’s view of economic matters, the difference between then and now is almost purely semantic.
As originally written in 1994, the North American Free Trade agreement (NAFTA) comprised hundreds of pages organized into 22 chapters. As Canada and Mexico are the United States’ largest trading partners, the agreement covered countless industrial, agricultural, and service sectors. Since then it has gone through many updates and expansions, adding to its complexity and reach. But during his campaign, Trump continuously faulted NAFTA, which was drafted during the Bill Clinton Administration, as a primary source of America’s economic woes. He promised to scrap it and replace it with something better. In a Rose Garden ceremony he was careful to point out that the new deal was not “NAFTA 2.0” but an entirely new animal. But that is just not the case.