The U.S. International Trade Commission is currently in the process of vetting the potential new North American treaty between the US, Mexico and Canada, before Congress is able to ratify the agreement.
The Commission claims that the deal will result in U.S. gross domestic product increasing by 0.35% over time, also entailing the addition of 176,000 jobs into the labor force.
More importantly, the USMCA deal addresses a key tenet of the contemporary economy that NAFTA never did: the notion of e-commerce. USMCA accounts for the fluidity with which consumers are able to internationally buy and sell online, focusing on perishable goods through policies such as zero tariffs on agricultural products for all three nations, improving the efficiency by which farmers can mobilize food products across borders.
The deal also requires that 75% of automotive parts be manufactured in North America to further take advantage of free tariffs. This is an increase from the current requirement of 62.5%. The Trump administration claims this is conducive to bringing in $34 billion in total investment in the U.S. auto industry.
That said, given the scale of the US economy, the values released by the Commission represent but a tiny fragment of the growth the country is already achieving. Putting those numbers in context, USA already has a GDP of $21 trillion-a-year, along with a job market of almost 151 million people.
The real impact of the deal is thus questionable, at least in the short term. What's more is that because the deal entails many concessions being made to pressure groups such as environmental groups, the costs of operating businesses could actually increase.
Moreover, as far as the free-tariff policy is concerned, tariffs between the three countries had already technically been eliminated through NAFTA in the 90s. The Commission has thus concluded that the new deal will not actually be that significant in terms of immediate impact.
To counter these claims, Kevin Hassett, chairman of the White House Council of Economic Advisers, said that some of the more new-age provisions of the agreement, such as stronger intellectual property protections, are currently being underrated.
"I think this is a blockbuster report," he said. "This is the kind of report you need to get people who are on the fence to vote for the bill."