“We have replaced a disastrous trade deal,” Trump said in the ceremony on the White House South Lawn. “This is something we really put our heart into. It’s probably the No. 1 reason that I decided to lead this crazy life that I’m leading right now as opposed to that beautiful simple life of luxury that I left before this happened. But I love doing it.”
Signing the USMCA into law is a rare legislative achievement for the president going into his reelection campaign. But Trump will not be able to say he fully delivered on his 2016 campaign promise to replace NAFTA until Canada ratifies the deal and all three countries meet many of their obligations — and that could take months.
Still, Trump will take his USMCA victory lap to Michigan on Thursday, where he will host an event at an auto parts supplier to tout the benefits of the pact.
Meanwhile, Democrats and many labor unions have also been largely supportive of the deal after they secured changes that make the USMCA one of the most progressive trade agreements ever negotiated by either party.
The pact was the product of months of negotiations between U.S. Trade Representative Robert Lighthizer and a group of nine Democrats tapped by House Speaker Nancy Pelosi to make changes to the original version of the USMCA that Trump signed in 2018. Democrats had been concerned over the pact’s enforcement, labor, environmental and drug-pricing provisions.
“It puts a smile on my face that he’s really signing a bill that includes Democratic priorities that we’ve been fighting for for decades,” said Rep. Jimmy Gomez (D-Calif.), one of the Democrats closely involved in landing the final deal.
“It puts a smile on my face that he’s really signing a bill that includes Democratic priorities that we’ve been fighting for for decades,” said Rep. Jimmy Gomez (D-Calif.). | Joe Scarnici/Getty Images
“It says a lot that this event is without Democrats because he always wanted it for political purposes. I personally don’t think he ever cared about the policy,” Gomez added.
Pelosi and House Ways and Means Chairman Richard Neal, who led negotiations with Lighthizer, both emphasized on Wednesday morning that while they were not invited to the ceremony, Democrats played an integral role in getting USMCA done.
“The only reason the president is signing this today is because of what we did as House Democrats,” Neal (D-Mass.) said standing beside Pelosi at a press conference on infrastructure.
Pelosi added the deal in its final form is “quite different from what the president sent us.”
“I hope he understands what he’s signing today,” she said.
Democrats were clear that they will not take Trump’s snub personally, and instead, are focused on replicating the success they had in securing changes to the USMCA and translating those priorities into new deals. Some of Trump’s priorities include deals with the European Union and United Kingdom. Those would require congressional approval if they are comprehensive and done under the trade promotion authority legislation. However, Trump opted in his China and Japan negotiations to do mini-deals that did not require Congress to weigh in.
While Trump made no mention of Democrats’ role in USMCA, Lighthizer did make passing reference in thanking them for helping make it a “bipartisan success.” He added that he knew “listing members in an audience like this makes more enemies than friends.”
However, privately, Lighthizer called Democrats ahead of the ceremony to express how he would have wanted them to be present at the signing, according to people close to those conversations. One Democrat said Lighthizer’s call showed he’s a “class act.”
Democrats worked into the deal stronger labor enforcement provisions that will help ensure companies operating in Mexico boost workers’ rights and give the U.S. the power to punish them if they violate labor rights.
They also got the Trump administration to drop a provision establishing a 10-year protection period for biologic drugs, which opponents say would have allowed drug companies to keep prices high. That change left some Republicans and business groups disappointed but not enough to withdraw their support.
One of the biggest changes from NAFTA to USMCA is tighter rules on how North American autos and auto parts qualify for reduced tariffs — a change that Trump has long believed will help bring back American jobs from abroad.
President Donald Trump speaks during a White House event to sign a new North American trade agreement. | Alex Brandon/AP Photo
Those changes, which aim to increase car production within the region, will require that companies make significant and costly changes to how they make their cars. Auto manufacturers are being given three to seven years, depending on the type of car, to fully comply with the complicated new requirements.
But none of those changes will be felt for months.
Canada must still ratify the pact, and is expected to do so by April. Canada’s House of Commons began its ratification process this week, but opposition parties have already said they want to closely examine and debate the deal before voting for it. Passage of USMCA in Canada does not trigger any sort of clock for the deal to go into effect.
After ratification by Canada, the three countries must work to check off all the obligations outlined in the deal that must be met before the deal can take effect. Once they have completed all required procedures, the countries will notify each other in an exchange of letters. Then, it will enter into force about 60 days later.
There will be lots of behind-the-scenes talks within and between each country to ensure the U.S., Mexico and Canada are living up to their commitments. That could take months, especially when it comes to challenging issues such as ensuring that Mexico complies with its major labor commitments and that all three countries have the new auto rules ready to go when the deal takes effect.
Even once the USMCA takes effect, it is not expected to significantly increase trade in the region, given that the original NAFTA already eliminated most tariffs between the U.S., Mexico and Canada.
The USMCA would raise U.S. GDP by $68.2 billion, or 0.35 percent, by the sixth year after it enters into force, according to the independent U.S. International Trade Commission. It would also create 176,000 U.S. jobs, increasing employment 0.12 percent by the sixth year, the ITC found.
But above all, lawmakers, economists and trade experts widely agree that the new deal offers some much-needed certainty for companies and workers in all three countries. Trump had long threatened to withdraw from the original NAFTA, a move that would have devastated the economies of all three countries.
Plus, his ongoing trade war with China has also been particularly damaging for farmers and small businesses. Trump signed a preliminary trade deal with China earlier this month, but it remains unclear if China will be able to fulfill all its commitments to purchase some $200 billion more in U.S. goods over the next two years.
“For much of industry — from manufacturing to ag and services — the USMCA is going to bring a sense of relief that the terms of trade are firmly established,” said John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce.
“The hope for North American trade is that entry into force will instill certainty about the future,” Murphy said.