The trade tensions are escalating because the largest business coalitions in the country are sounding the alarm regarding the destiny of North America’s trade. More than 550 trade groups are embarking on an unprecedented initiative to ensure the existence of the crucial trade relationship with Canada and Mexico. Conversely, in the unseen moments, the officials in the Washington office are hinting at the drastic changes that will forever shake the landscape of the North American economy.
The business coalitions begin a massive campaign to save the trade
Industry leaders in the various industries came together in a show of strength in appealing to the Trump Administration to reaffirm the commitment to the United States-Mexico-Canada Agreement in the forthcoming review process that the Administration will undertake. The sector representatives came from the manufacturing, agricultural, and services industries that rely heavily on their cross-border trade relationships for their success and profitability.
More than 500 business groups signed a full letter to the head of the United States Trade Representative, Jamieson Greer, to emphasize the significance of the “USMCA to our economic future because it maintains and enhances U.S. trading relationships with Canada and Mexico.” The question of compliance will be taken into consideration, but the need to preserve the structure upon which billions of dollars in trade flow will be emphasized.
Industry sectors disagree over the reform measures required
Though business groups strongly favor an extension of the USMCA, they are divided in their views concerning the changes that may be sought in the review process. While some sector groups prepare for a totally new makeup in order to be able to cope with the prevailing trade environment and the development of newer technologies, other groups favor a marginal adjustment to the existing structure because their processes are already in operation in North America.
Trump administration signals potential withdrawal from trade agreement
Since then, the United States Trade Representative Jamieson Greer has made it clear that President Trump has the potential to pull his country out of the USMCA agreement in the next year, based on a news publication report. This is a harsh response to the earlier statements made and came at a time when the process of the review of the agreement was in the midst of public hearings to make a case for the retention of the agreement by the groups involved.
The threat of withdrawal has rippling effects in the business communities that value stable rules of trade to make long-term decisions and plans concerning the future in several industries. The companies, through the rules of the USMCA agreement, have their operations, and any changes in the form of withdrawal will be devastating to the operations in a number of industries.
Economic implications stretch much further than the immediate effects of trade
The review process has revealed the necessary tensions that exist in the desire to maintain stability and the political need to take a more aggressive posture in trade policy, which has the potential to fundamentally alter the North American economic order. Industry officials testifying at the hearings demonstrated a need for stability, but the fact that the administration is poised to consider pulling out of the agreement suggests that political calculation will enter into the equation.
“Although there are several important issues regarding compliance that require more focus and correction through the ‘joint review’ process that is currently underway, the USMCA plays an important role in our economic future,” the groups said in their letter to the trade representatives.
This has created a dilemma for companies to lay out their investment strategies in North America, and most of the firms have delayed any long-term strategic action in this context. The threat of policy disruption has already taken a toll on the confidence and strategic planning process of most firms, and some of the firms have delayed their expansion strategies until the status and policy of the said agreement are known.
