The United States-Mexico-Canada Agreement is expected to juice the U.S. economy.
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The trade deal sailed through the House of Representatives on Thursday and now heads to the Senate, which is expected to approve, before arriving on President Trump's desk for ratification.
Trump is “delivering on all his promises, and he’s building a great economy for American companies and American workers,” Treasury Secretary Steven Mnuchin told FOX Business’ Lou Dobbs.
USMCA, which is a larger deal than the phase one agreement with China, encompasses more than $1.3 trillion of trade. The U.S. conducted $671.1 billion of goods and services trade with Mexico in 2018 and $718.5 billion of trade with Canada, according to the U.S. Trade Representative.
Mnuchin expects USMCA to boost U.S. GDP by about 0.5 percent, and that could be a low estimate. The International Trade Commission said the trade deal could provide a 1.2 percentage-point boost to U.S. GDP and add up to 588,900 jobs.
Growth of that magnitude would boost U.S. economic growth above 3 percent, a level that was last seen in the first quarter of 2019 when GDP increased by 3.1 percent. The U.S. economy expanded at a 2.1 percent pace in the third quarter, according to a second estimate from the Commerce Department. The final reading is scheduled to be released Friday morning.
“This deal is so much better than the old deal,” Mnuchin said, referring to the Clinton-era North American Free Trade Agreement also known as NAFTA.
But not everyone is on board with USMCA.
Sen. Pat Toomey, R-Penn., wrote an op-ed for The Wall Street Journal suggesting it is “the only trade pact ever meant to diminish trade.”
He says the trade deal “terminates free trade in cars and auto parts” and would “raise car prices, shrink North American auto exports and eventually reduce U.S. auto employment.”
Toomey also took issue with USMCA’s 16-year expiration date, which he believes will introduce “considerable uncertainty about future terms of trade” and House Speaker Nancy Pelosi’s insistence on “eliminating protection for biologic drugs.”
White House economic adviser Larry Kudlow pushed back against Toomey’s concerns, telling FOX Business’ “Bulls & Bears” on Wednesday evening that USMCA is a “pro-growth deal.”
“I like the domestic-content increase to 75 percent,” Kudlow said. “After we lost, what, 6 million manufacturing jobs, I don't see why we shouldn't protect American workers.”
Kudlow highlighted the parts of USMCA that have never before been included in trade deals of this magnitude, such as intellectual-property protection and digital-services expansion, which he says will “cause tremendous new investment into the United States.”
Kudlow said he hopes Toomey will “take another look” at the deal, which is being coined by trade officials as the "gold standard" for future trade agreements.