Donald Trump’s proposed new-look North American Free Trade Agreement has given him his biggest win in months and delivers an important election promise just over a month before the mid-term elections.
For the US President the breakthrough agreement with Mexico and Canada is a welcome circuit breaker to Supreme Court nominee Brett Kavanaugh’s confirmation circus and the never-ending Russia investigation.
More importantly it gives the President and his fellow Republicans a powerful talking point on the campaign trail where he can argue his crash-through tariff-wielding approach to trade is delivering results.
The reality is the new US-Mexico-Canada Agreement is a long way from becoming law because it faces a difficult passage through congress and must also be ratified by Mexico and Canada.
But for the purposes of campaigning for the November 6 elections, Trump can argue that he has fulfilled his promise to reshape NAFTA in terms more favourable to the US.
If the new deal gets blocked in congress because the Republicans lose control of the House of Representatives, then Trump will place the political blame on the Democrats.
Trump’s promise to scrap or renegotiate the almost 25-year- old NAFTA, which he describes as a disaster for US workers and one of the worst trade deals ever made, was a core promise of the 2016 election campaign.
One of the keys to the mid-terms will be how Trump’s decision to wield tariffs to bludgeon better trade outcomes for the US plays to rural and regional towns that voted strongly for him in 2016.
Although many farmers in these regions admire the big stick approach Trump is taking to trade with China and to other allies such as the EU, some have been directly harmed by retaliatory tariffs.
China, the EU and Mexico have each responded to Trump’s tariffs by strategically targeting their own new tariffs to hit US farmers of soybeans, dairy and others in Trump heartland states.
For the White House an important goal of the proposed new USMCA is to lift the number of vehicles made in the US to slow the loss of US car manufacturing jobs to Mexico where wages and costs are cheaper.
The automotive industry has a sentimental and emotional pull in the US and this deal gives Trump his opportunity to tell voters he is working towards reversing its fortunes.
Trump says the deal, if ratified, would help US manufacturers, including the steel industry as well as farmers.
There is a long way to go before any such benefits could be quantified, but for political purposes, Trump now has a better trade story to tell to voters on November 6.
This will give heart to Republicans who believe that if they focus on the big picture of a strong economy, lower taxes and better trade deals, they might yet do better in the mid-terms than they expect.
Cameron Stewart is also US contributor for Sky News Australia
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