An independent analysis shows the Trump administration’s revised North American Free Trade Agreement would boost economic growth and lead to job gains in the United States.
The United States International Trade Commission report, released on Friday, says the U.S. Mexico Trade Agreement — or USMCA — would increase U.S. real Gross Domestic Product by 0.35% and add 176,000 jobs when the deal is fully implemented.
Kevin Hassett, chairman of the Council of Economic Advisors, told Yahoo Finance while still thinks the ITC projections are too low — he was pleased with the report.
“We expected them to come out with a really small number because that’s what they’ve done in the past,” said Hassett in an interview with Yahoo Finance.
The report shows the new deal would lead to more trade between the three countries. The ITC estimates U.S. exports to Canada would increase by 5.9% and exports to Mexico would increase by 6.7%. Imports from Canada and Mexico would also increase.
“The model estimates that the agreement would likely have a positive impact on all broad industry sectors within the U.S. economy. Manufacturing would experience the largest percentage gains in output, exports, wages, and employment, while in absolute terms, services would experience the largest gains in output and employment,” the report said.
‘Miniscule projected gains’
Opponents of the deal say the report shows USMCA still needs improvement.
“The minuscule projected gains in this long-awaited official government assessment contradict Donald Trump’s grandiose claims that it will lead to ‘cash and jobs pouring into the U.S.’ and reinforces congressional Democrats’ views that absent more improvements, the revised deal won’t stop NAFTA’s ongoing damage,” said Lori Wallach of Public Citizen’s Global Trade Watch, in a statement.
Each of the three countries’ legislatures still need to ratify the trade deal. Democratic lawmakers in the United States have been critical of the deal, criticizing its labor and environmental provisions.
The ITC report has been highly anticipated in Congress. Many lawmakers have been waiting on the analysis before deciding on the deal.
Hassett told Yahoo Finance he thinks the report will help the administration get the deal across the finish line.
“The ITC report could well have been an obstacle for us, but it’s not,” said Hassett. “It’s going to help us pass the bill.”
Senate Finance Chairman Chuck Grassley (R-IA) said he was pleased to see the report recognized USMCA’s economic benefits.
“Many of the significant improvements in USMCA are reducing non-tariff barriers and implementing rules and fair practices that will help U.S. workers, jobs and businesses tremendously over the coming years,” said Grassley.
But Senator Ron Wyden (D-OR) slammed the report, shortly after its release.
“This report confirms what has been clear since this deal was announced – Donald Trump’s NAFTA represents at best a minor update to NAFTA, which will offer only limited benefits to U.S. workers,” said Wyden in a statement.
The Chairman of the House Ways and Means trade subcommittee, Rep. Earl Blumenauer (D-OR), said he still wants to see stronger labor, environment and enforcement provisions.
“Before the release of the ITC report, I believed that the renegotiated NAFTA, as written, needed to be improved before House consideration. Nothing in this report alleviates those concerns. The House requires stronger provisions on labor, the environment, access to medicine and enforcement,” said Blumenauer in a statement.
Lawmakers in Washington have been very focused on how the deal will impact the auto industry. The USMCA requires 75% of a vehicle’s part to be made in North America — up from 62.5% currently — in order to be exempt from tariffs.
The ITC said the new trade deal would add about 28,000 jobs to the auto sector.
The report estimates USMCA would add 30,000 jobs in auto parts production, while leading to a loss of 1,500 jobs in vehicle production. The price of vehicles would go up for consumers, and vehicle consumption in the U.S. would fall by more than 140,000 vehicles. Consumers may also have fewer options.
“Some manufacturers may decide not to offer vehicles that would be too expensive to bring into compliance, which would ultimately decrease consumer choice,” the report said.
Ahead of the ITC report the office of the United States Trade Representative released its own analysis, saying the deal would add 76,000 jobs in the U.S. automotive sector.
Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.