Monday, President Donald J. Trump (R) announced that the United States has secured a preliminary trade agreement with Mexico. During the election, Trump was critical of existing trade agreements and vowed to renegotiate. The news was welcome both on the stock market and in the livestock markets. U.S. Representatives Robert Aderholt and Bradley Byrne both welcomed the news.
Congressman Robert Aderholt, R-Haleyville, said on social media, “All throughout the 2016 campaign, Democrats laughed at the idea we could renegotiate our trade deals. With this important step towards a new NAFTA deal, President Trump has once again proven these critics wrong. The strength of the American economy, and the American consumer, comes with a lot of negotiating power. Power that has too often not been used, to the detriment of American workers. Those days are over.”
Congressman Bradley Byrne, R-Montrose, said, “I applaud President Trump and his administration for their work toward a strong trade agreement with Mexico that benefits American workers. Today’s announcement is good news, and I look forward to reviewing the details of the agreement.”
Throughout the election, Trump was critical of existing trade agreements, including the North American Free Trade Agreement (NAFTA) and vowed to renegotiate. The President set about his ambitious goal earlier this year by placing tariffs on countries he believed did not have free trade with the United States. Numerous countries responded by placing retaliatory tariffs on American exports and many feared a trade war could plunge the global economy into a recession. Undaunted the president insisted that NAFTA and other trade agreements be renegotiated. When Canada balked at the U.S. position, Trump insisted on bilateral talks with Mexico. Canada has since returned to the negotiating table with the U.S. and Mexico.
The White House responded to Monday’s news in a statement: “A PROMISE KEPT: President Donald J. Trump is delivering on his promise to renegotiate the North American Free Trade Agreement (NAFTA) so all American workers can benefit.”
Under the terms of the preliminary United States–Mexico Trade Agreement that modernizes and rebalances the trade relationship to reflect the realities of the 21st century.
The administration claims that the preliminary agreement will benefit American workers, American manufacturing, and American agriculture, through provisions including:
New “rules of origin” requirements to incentivize billions a year in vehicle and automobile parts production in the United States, supporting high-wage jobs.
The strongest, fully enforceable labor standards of any trade agreement.
New commitments to reduce trade-distorting policies for agricultural goods.
Improvements enabling food and agriculture to trade more fairly.
Strong and effective intellectual property protections.
The strongest disciplines on digital trade of any international agreement.
The most robust transparency obligations of any United States trade agreement.
The Trump Administration claimed that the 24-year-old NAFTA was “outdated and unbalanced, hurting American jobs and businesses and that many Americans have been hurt by closed factories, exported jobs, and broken political promises resulting from the old NAFTA.
Alabama’s once booming textiles business was devastated by the original NAFTA. Renegotiating NAFTA is not going to bring those jobs back; but free trade will benefit Alabama’s booming automobile manufacturing industry.
The Administration wrote that: NAFTA has contributed to our ballooning annual goods trade deficit, which grew from $115 billion in 1993, the year before NAFTA’s implementation, to nearly $800 billion in 2017. The United States went from a $1.6 billion goods trade surplus with Mexico to a $70 billion goods trade deficit during that same time period.
“The old NAFTA includes many outdated provisions that have not been updated to reflect modern standards, new technologies, or the 21st century global economy,” Pres. Trump said. “America has … finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our Nation’s wealth.”
The administration is hopeful that it can successfully renegotiate trade agreements with Canada and Europe. Sources think that negotiating with China could take a little longer.
This is the first time that a trade agreement has been renegotiated.
The Dow Jones index closed up 259 points on Monday to close at 26,049.64. The Nasdaq was up 72 points to close at 8,017.9. The S&P 500 was up 22 points to close at 2,896.74. November feeder cattle was up 3.6 on the news to close at 150.575. Wholesale boxed beef was up with Choice up .31 cents to close at $213.63 and Select up $1.03 to close at $204.85. October hogs was up 3.00 to 54.775. Grains were unchanged to slightly down.