I like to start these things with the good news. After an occasionally painful year in the making, it appears we have a new NAFTA in the form of the United States-Mexico-Canada Agreement, or USMCA, that will mostly go into effect by around 2020 after all the necessary approvals happen within each country.

But with any compromise comes plusses and minuses. The U.S. had some wins, including Canada opening its milk market and giving U.S. dairy farmers more market share.

On the flip side, Canada and Mexico will mostly dodge President Trump’s auto tariffs. Canada also had what it considers a victory in that Chapter 19, which allows for a special dispute process to stay in place. Over the years, Canada has used Chapter 19 to successfully challenge U.S. softwood lumber restrictions, which has the potential to impact the supply and cost of lumber needed for construction. (Read more about softwood lumber here.)

And what did not make this round of negotiations were tariffs on Mexican and Canadian steel, which remain in place for now.

While we can celebrate this good news, we still have a long way to go in other parts of the world.

China has dug in its heels on tariffs on U.S. products, and President Trump has continued to threaten tariffs on an additional $200 billion of imported China products. And frankly, at this point I am not sure what would still be excluded from the tariffed product list. Some economists are now saying this trade war could stall the global markets.

What can we do?

In short, not much. The View from Here is that you and I have no direct influence on this as Congress is not involved, and the administration is free to act as it sees fit.

This is why I like to start with the good news – we don’t have control over what comes next as the trade war wages on. All we can do is wait and hope it gets resolved in a way that protects the markets. But for now, we’re facing a lot of uncertainty.

For more on USMCA, this article from The Washington Post does a nice job of breaking down the ins and outs of the deal.

What’s your View? Email me directly at eric.jackson@quanex.com.

Leave a Reply

Your email address will not be published. Required fields are marked *