Following Sunday’s signing of a trade deal with Canada, President Donald Trump declared victory, saying that dairy markets are now open to U.S. farmers, but the actual gains of the deal may be more insignificant than they seem.
Nonetheless, the United States-Mexico-Canada Agreement (USMCA) was hailed by President Trump, who took to Twitter Monday to say it was a deal which would “greatly open markets” for American farmers and manufacturers.
“…deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world. The USMCA is a historic transaction!” the President’s tweet read.
Bank of America Merrill Lynch global economist Ethan Harris, however, does not agree with Trump’s claim, noting that some of the concessions in the new deal, such as the one Canada made for American dairy farmers, were “mainly symbolic.”
“The deal includes a small reduction in protectionism for Canada’s dairy farmers. Under the new USMCA, American dairy producers will have access to 3.59% of Canada’s dairy market — slightly higher than the 3.25% they would have gotten had the U.S. signed the Trans Pacific Partnership [TPP],” Harris said in a note to clients on Tuesday.
He believes that compared to the TPP the U.S. withdrew from last year, the USMCA will only increase U.S. dairy exports to Canada by $70 million, or 0.0003 percent of GDP. The economist further added that the trade deal won’t affect the ongoing trade war with China in any way.
“The completion of the NAFTA deal does not alter our view that the U.S.-China trade ‘war’ will get worse before it gets better,” Harris said.
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