Experts: Trump Administration Trying to Do Too Much in USMCA Review

Inu Manak, a senior fellow for international trade at the Council on Foreign Relations, said that when it comes to trade "the administration is trying to do too many things all at once, and not doing them all very well because of that." She said that the administration should focus on preserving USMCA "as it is, because it is working," something she said the Trump administration has tacitly acknowledged when it applied a lower tariff rate on Canada and Mexico "compared to what they announced as the IEEPA tariff."

There are areas to improve, Manak said, but that doesn't mean "we should load it with all these new things that are shiny and interesting to the administration to toss in there." The administration shouldn't try to embed "all these new sort of economic security tools in the USMCA," she said, and instead should "leave that aside as a separate conversation that should not be embedded in the agreement at all."

Derek Scissors, a senior fellow at the American Enterprise Institute, agreed, saying that the U.S. "does not have a coherent economic security strategy at the moment," because there is a "blurring of concepts between" economic and national security. Those concepts are not interchangeable, he said, and the Trump administration must "think very carefully" about what the threats are and what measures are best to address them.

Scissors defended the USMCA, saying that it accomplished the Trump administration's stated goal of redirecting trade from China: "We have succeeded in reducing our dependence on China." Because of its effectiveness, "we're going to have USMCA. We're going to keep it," he said.

Scissors said he has "improvements I want, but I would sacrifice those improvements right now" if President Donald Trump would sign a status quo renewal. Instead of focusing on areas to improve, "let's get through the USMCA review first, because it's a huge problem for us that there's an extended disruption," he said.

The administration has acknowledged that its tariff strategy is too blunt, Scissors said, because it has walked back tariffs on coffee: "We even got this from the administration yesterday when they said, 'Oh, coffee, sorry about that. Tariffs don't raise prices on anything, but somehow the prices of your coffee, are going to go down when we remove the tariffs.'" He said that it should be more targeted in its application of tariffs "rather than thinking all trade is equal, which the president sometimes seems to do."

Emily Kilcrease, a senior fellow at the Center for a New American Security and a former deputy assistant U.S. trade representative, said the administration has a chance to use the review to "think creatively about essentially denying benefits of the agreement to Chinese invested firms" by tightening rules of origin, but seems more keen on tearing up the agreement. She wondered if there are "targeted updates" to USMCA on "things like economic security that maybe kind of increase the overall political attractiveness of using USMCA."

Mexico and Canada need to find a way to "make USMCA as a platform more compelling" to the Trump administration in a way that makes clear "that it's not just integration for integration's sake." She suggested highlighting security and supply chain resiliency because "the administration is quite interested in this idea."

Manak dismissed the idea of making USMCA more compatible with an America First trade strategy, saying that the U.S. "has always sort of had an America First strategy." She said that the approach has changed and that previous administrations used a mix of carrots and sticks to promote American interests, "today it's all sticks and no carrots." She lamented the change in strategy, saying that "unilateral, asymmetric, coercive" negotiation tactics "work against U.S. goals."

Scissors concurred, saying that the administration should rethink its decision of "attacking Canada and Mexico as the starting launch point of [its] trade policy." He said that if the U.S. wants to counter non-market economies like China, "then maybe [it] should be nicer to the market economies than the non-market economies."

Manak said that by playing hardball, the Trump administration may get in its own way: "The bottom line is that this review process is going to be tough if the Trump administration approaches this in a very zero sum way." She said that alienating Canada and Mexico "could lead to a lot more problems that we haven't anticipated. So we have to be really, really careful about that."