State of the Union Touches on China Trade, USMCA
In his State of the Union address, President Donald Trump briefly talked about the China deal his administration is negotiating -- he said he's looking for "real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs." But he spent more time talking up the U.S.-Mexico-Canada Agreement, his replacement for NAFTA, which he called a catastrophe. "I have met the men and women of Michigan, Ohio, Pennsylvania, Indiana, New Hampshire, and many other states whose dreams were shattered by the signing of NAFTA," he said. By contrast, he said USMCA will deliver for workers. "I hope you can pass the USMCA into law so that we can bring back our manufacturing jobs in even greater numbers, expand American agriculture, protect intellectual property, and ensure that more cars are proudly stamped with our four beautiful words: 'Made in the USA,'" he said, to applause. He said he's making it a priority to reverse "decades of calamitous trade policies."
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U.S. Trade Representative Robert Lighthizer issued a statement after the speech, saying: "President Trump outlined a visionary trade agenda that resonates across party lines and will accelerate America’s manufacturing resurgence, expand export opportunities for our farmers, ranchers and small businesses, and promote America’s leadership in today’s digital economy.”
The National Association of Manufacturers echoed the president's request to Congress to get USMCA passed. National Retail Federation CEO Matthew Shay called for modernizing North American trade, and said it's an area where Republicans and Democrats can work together.
But Global Trade Watch, a nonprofit that aligns with the trade skeptic wing of the Democratic party, blasted Trump's talk on NAFTA. "Without more improvements, NAFTA 2.0 NOT only WON’T #MakeAmericaGreatAgain, it won’t even slow ongoing NAFTA job outsourcing and it will give Big Pharma new power to lock in high medicine prices. Trump renaming it USMCA doesn’t change that reality," the group tweeted.
On China, the NRF said it commends Trump's efforts so far, "and we hope the U.S. and China will continue to move toward a deal and avoid further escalation," Shay said. "Achieving structural reforms, ending existing tariffs and putting an end to the trade war would provide much-needed certainty and relief for American businesses and families."
Trump also pitched the U.S. Reciprocal Trade Act, a bill that would give him the authority to hike tariffs past the Most Favored Nation rates to match others' tariffs (see 1901240017 and 1902040034). NRF said it wants Congress to assert itself more on tariffs, not cede more power to the executive branch. Freedom Partners was more direct in its condemnation. "There is no way around it: The Reciprocal Trade Act is a step backwards," the free-market group said.
Commerce Secretary Wilbur Ross wrote an opinion piece published Feb. 6 that made an argument for why the Reciprocal Trade Act is needed. "If we could impose reciprocal tariff levels with other countries, it would be easier to negotiate Free Trade Agreements (FTAs) with them," he wrote. "At present, their needs for FTAs is diminished because they already enjoy the benefits of the significant trade concessions we made decades ago. In other words, their gains from us are limited in exchange for opening their markets to our goods. We should not be surprised that they do not."