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Free-trade groups urge Trump to drop tariffs on Canada and Mexico, keep NAFTA in place for now

October 3, 2018

Free-trade groups affiliated with the conservative Koch network urged President Trump Wednesday not to pull out of the North American Free Trade Agreement until Congress ratifies the new deal reached this week with Canada and Mexico.

The heads of Americans for Prosperity, Freedom Partners Chamber of Commerce and the LIBRE Initiative also called on Mr. Trump to immediately eliminate steel and aluminum tariffs on Canada and Mexico, and to abandon consideration of new tariffs on auto parts, in light of the new trade agreement.

“From small businesses to the Fortune 500, these tariffs have triggered economic harm on American producers as well as consumers,” wrote Tim Phillips, Nathan Nascimento and Daniel Garza. “Tariffs are taxes on Americans that undermine, and could ultimately undo, the economic gains for which your administration deserves tremendous credit.”

Mr. Trump announced Monday that he has struck a new trade deal to be known as the U.S.-Mexico-Canada Agreement, or USMCA. Congress is expected to take up consideration of the agreement in November.

The free-trade groups said withdrawal from NAFTA prior to ratification and implementation of USMCA “would trigger devastating negative economic consequences for our country. It would subject America to higher tariffs and reduced market access in trade with Canada and Mexico.”

Terminating NAFTA outright, they wrote, “could potentially shrink the economy by up to 1.2 percent annually and reduce net U.S. employment by as many as 3.6 million jobs, while forcing higher costs on working families.”

They said NAFTA has had many positive benefits, including “dramatically higher trade” among the three countries, especially in the agricultural sector. But they agreed that the USMCA “features some positive elements addressing digital trade, e-commerce, and finance.” “We are concerned, however, with increasing barriers for product sourcing (country of origin requirements) and wage standards that drive up costs for everyone, while protecting only a few jobs at the expense of many others,” they wrote. “Inclusion of non-trade policies in a trade agreement is a deeply troubling precedent.”

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