The latest trade agreement between the U.S. and Mexico to replace the North American Free Trade Agreement is nothing more than a publicity stunt for President Trump, according to a former economic adviser for President Ronald Reagan.
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“This whole thing about NAFTA is much ado about nothing,” David Stockman said during an interview on Friday with FOX Business’ Dagen McDowell. “There wasn’t really anything wrong with NAFTA, and what’s going on now is negotiations because Trump wants to have some kind of big PR stunt.”
On Monday, after a year-long negotiation process, the U.S. and Mexico agreed to a new deal to replace NAFTA. Some of the new provisions include a mandated $16 per hour wage for 40 percent to 45 percent of Mexico’s auto industry -- Trump has previously claimed that American companies fled to Mexico because lower wages -- as well as a stipulation that requires 75 percent of auto parts to be produced in North America.
The decades-old trilateral trade agreement has been a frequent target of Trump, who has criticized large trade deficits the U.S. has with Mexico and Canada, as well as the relocation of American jobs and companies.
But these new decrees will not only raise the cost of autos and auto parts in the U.S., but require officials in Washington to waste time determining whether the deal is being followed or not, Stockman said. He urged the president to instead focus on solving Washington’s trade dispute with China.
Already, the White House has imposed a 25 percent tariff on $50 billion worth of Chinese goods containing ‘industrially significant technologies” in an escalating tit-for-tat conflict between the world’s two largest economies. The Trump administration is also weighing an additional round on $200 billion of Chinese goods. In response, China slapped tariffs worth $34 billion 545 American goods.
“This is really minor, technical stuff down in the weeds that doesn’t matter,” Stockman said. “The big deal is we import $600 billion a year from Canada and Mexico, we export to them $520 billion, there’s a gap of $80 billion. It’s not the end of the world, compared to our real trade problems, which are with China.”