USMCA could influence future trade deals’ focus

Significance

US President Donald Trump has left the Trans-Pacific Partnership and escalated trade frictions with China. The USMCA, by contrast, shows a trade deal renegotiated, the implementation of which will be watched for its implications for other US trade activity, especially with the presidential election coming in November.

Impacts

• COVID-19 disruptions mean some aspects of the USMCA, such as rules of origin, will be delayed.
• If Trump is re-elected, he will continue his tariff-driven efforts to secure Chinese economic reform for US firms.
• Biden would aspire to strengthen US-Asian trade ties but would focus first on smoothing trade with existing partners.
• China and neighbours should assume a Mexican challenge to their production, especially of autos, steel and textiles.
• Trump will tout the USMCA as evidence his trade reform agenda works.