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Trump risks more market conflict with the NAFTA threat

Trump said on his way home from Argentina that he would give Congress a choice between his United States-Mexico-Canada agreement…

Trump said on his way home from Argentina that he would give Congress a choice between his United States-Mexico-Canada agreement or USMCA, or none at all.

To kill the 1994 1994 trade agreement without a successor would invite Mexico and Canada – both leading importers of US goods – to impose tariffs on goods coming from the United States and risk a serious economic shock.

“We have continuously told the administration during the USMCA process that it is important that the new agreement be implemented seamlessly so that our companies can learn the new rules and have time to customize our supply chains to take advantage of the deal, Rick Helfenbein, President of the American Apparel and Footwear Association. “Adding further pressure to Congress to sign or fail is not in America’s best.”

The White House Council Adviser has said for months that they are convinced Democrats will approve the USMCA.

But while Democrats, and even some Republicans, have made it clear that they have reservations, it’s not clear if they have the will to call Trump’s bluff by risking a return to the pre-NAFTA world.

“I do not believe that any responsible member of the congress would oppose the USMCA and see NAFTA being revoked. It would lead to complete destruction in the markets, disturb our agreements and disturb our supply chain, “said Welles Orr, who served as Assistant US Trade Representative under President George HW Buske.

But others claimed that Democrats would not be keen on to give a victory to Trump.

“Nobody really loves the new NAFTA. Democrats can say “forget it” and blame Trump when no agreement is in place, “said Phil Levy, senior colleague at the Chicago Council of Global Affairs, who served as trading economist under President George W. Bush.

Trump’s promise to withdraw from the original NAFTA came less than 48 hours after signing his Argentina replacement agreement last weekend.

“I’m formally closing NAFTA shortly,” said Trump to reporters aboard the Air Force One. “Then Congress will have the choice to approve the USMCA, which is a phenomenal deal. Much, much better than NAFTA. A lot.”

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The business requires approval from Congress and legislators in Canada and Mexico before it can come into force. If Trump formally warns the other two countries that he intends to withdraw from the original trade agreement, it will start a six-month clock during which Congress may either approve the USMCA or leave no trading department in place. Legislators can propose minor changes to the agreement, either through the legislation or in any eventual decisions.

Rep. Nancy Pelosi, the Democrats nominee to become speaker in the Chamber next year, has called the deal an “ongoing work”.

Their doubts reflect resistance to the USMCA from several quarters. AFL-CIO has hitherto supported, which may be necessary to bring democrats on board. A number of industry groups – from vegetable and fruit growers to clothing manufacturers – have also raised concerns. In addition, car manufacturers have said that some benefits generated by USMCA could be terminated unless Trump raised its fees on imports of steel and aluminum.

There is a debate about whether Trump is able to withdraw from NAFTA unilaterally. The agreement’s text allows him to formally withdraw from NAFTA six months after he announced the other two parties, but it is unclear whether he also needs congress approval. This means he could face legal challenges from industry groups who feel that they would be hurt by the new deal, as well as in the congress.

New Jersey Democrat Rep. Bill Pascrell, a member of the House Ways and Mean Subcommittee on Trade-Related Reservations, said in a statement to CNN that he did not take Trump’s rapid threat of terminating the original agreement seriously.

“As for Trump’s threat, he is not someone I take on his words,” said Pascrell.

“Trump brag about what a great deal USMCA was, but one day after the signature resorted to threats to force Congress’s hand,” he added. “This does not show confidence in the deal he did.”

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