Can a renewed, renegotiated USMCA live up to its promises?

Two U.S. senators are calling on the Commerce Department to investigate imports of heavy construction and farm equipment made in Mexico. This comes as the Trump administration reviews the U.S.-Mexico-Canada Agreement.

The USMCA replaced NAFTA, was an economic cornerstone of President Donald Trump's first term, and accounts for more than $4 billion worth of cross-border trade. It's also up for renewal later this year.

For more on this, Marketplace’s Nancy Marshall-Genzer chatted with Lori Wallach, director of the ReThink Trade program at the American Economic Liberties Project, a nonprofit research organization. The following is an edited transcript of their conversation.

Nancy Marshall-Genzer: So the USMCA is up for renewal six years after it took effect. Of course, it allowed for duty-free trade among the U.S., Canada, and Mexico. But its future is up in the air, partly because it didn't live up to its promises for the U.S.?

Lori Wallach: Well, it's a little unclear what will happen next. The agreement, which was something President Trump called "incredible" and was his biggest success of trade in his first term, has had outcomes that were basically the opposite of what we were promised. So we have fewer manufacturing jobs overall in the U.S. economy than before the USMCA, we have fewer auto manufacturing jobs, and our trade balance with our partners — Mexico and Canada — is much, much bigger. And so that is a set of problems that can be fixed in fixing this agreement, but the president has to decide to do that.

Marshall-Genzer: So negotiations have started. Can you tell us where the negotiations are at the moment? I think Mexico is farther along than Canada here?

Wallach: The three countries have started bilateral meetings. Mexico and Canada are not meeting with the U.S. together, but rather U.S.-Canada, U.S.-Mexico. And the meetings with Mexico have gone farther, so far, but the really big fixes, the things that are necessary — for instance, the premise of the USMCA replacing NAFTA was we'd have a high standard, higher-wage agreement, and we get rid of that trade deficit, because workers in Mexico would make more, be able to buy more exports from the U.S., and so the biggest problem with USMCA remains the direly low wages in Mexico. And that is a scenario that a big renegotiation with some new rules, also to make sure that imports from countries that aren't playing by the rules don't get in, that can fix some of these problems.

Marshall-Genzer: So the U.S. and Mexico have a lot to talk about. Where is Canada?

Wallach: Mexico, Canada, and the U.S. all agreed to put up high tariffs against imports of subsidized trade-cheating Chinese electric vehicles. And that has actually helped within North America to try and solidify creating a supply chain here. And Canada unilaterally dropped that and has proceeded to invite Chinese firms to come in, invest, and make Chinese cars in Canada, and that is going to be a huge problem to overcome, because there won't be a successful North American auto market without really a North American auto market. And that's going to require these external tariffs.

Marshall-Genzer: So I guess USMCA's chances of survival are helped because it has some bipartisan support?

Wallach: Absolutely. There is a trans-partisan interest in getting this agreement, in getting North America to be that high-wage manufacturing powerhouse that we need. So there is majority support, I would say, in Congress, probably to pass a renegotiated USMCA that fixes some of these structural issues to actually make it deliver the balanced trade and good jobs and higher wages that was its initial promise.