President Trump recently announced a deal with Mexico and Canada to remove steel and aluminum tariffs on imports and remove retaliatory tariffs imposed on American businesses. This is a big win for American workers and paves the way for swift ratification of the president’s United States-Mexico-Canada Agreement (USMCA).
Ending the 25 percent tariff on steel and the 10 percent tariff on aluminum from Mexico and Canada will have broad, positive effects. On net, the tariffs impacted over $400 billion of traded goods on an annual basis. According to a report released by the American Action Forum, steel tariffs increased imported steel costs by $5.8 billion, and aluminum tariffs increased imported aluminum costs by $1.7 billion.
Retaliatory action by Mexico has adversely impacted the cost of American exports by $3.7 billion. Furthermore, Canadian retaliatory action has adversely impacted the cost of American exports by $16.6 billion.
Trump has been steadfast in his desire to renegotiate trade deals for the benefit of American workers and businesses and the end of these tariffs should pave the way for approval of the USMCA.
The USMCA updates NAFTA to include new automotive rules, new protections for intellectual property rights, and modernizing agricultural trade to benefit American farmers.
A recent report shows that the USCMA would raise U.S. real GDP by $68.2 billion and create approximately 176,000 American jobs.
The USMCA would increase U.S exports to Canada by $19.1 billion, and increase U.S. exports to Mexico by $14.2 billion. Under the new agreement, U.S. imports from Canada are projected to increase by $19.1 billion, and U.S. imports from Mexico are projected to increase by $12.4 billion. The report estimates that the USMCA would have a positive impact on all U.S. industry sectors, with the manufacturing and services sectors experiencing the most gains.
The trade deal would also be a boon for the automotive industry. The Office of the United States Trade Representative estimates that USCMA ratification would add $34 billionin new automotive manufacturing investment, $23 billion in new annual purchases of U.S. automotive parts, and 76,000 jobs in the next five years.
If implemented, the USMCA would contribute to already robust economic growth.
In April, the economy added 263,000 jobs, and unemployment is at a 50-year low of 3.6 percent. Over the past year, the economy has added an average of 218,000 jobs per month, and unemployment for key demographics are at all-time lows. Families all across the country are seeing direct tax reduction — on net, households are paying an average of 24.9 percent in lower taxes according to a report released by H&R Block based on their clients’ tax returns.
Trump’s removal of tariffs on Mexico and Canada is a huge win for American workers. Now, it is time for Congressional Democrats to work with Republicans in a bipartisan fashion to ratify USCMA.