Why The Trump Admin Shelved His Signature Trade Deal

President Donald Trump’s administration Wednesday decided not to renew his signature trade deal, saying there is “more work to do.” But while the administration continues to iron out wrinkles in the trade agreement, American manufacturers could face uncertainty.

The administration cited concerns about rules of origin, intellectual property, and market access with Mexico and Canada, prompting them to continue negotiations rather than simply renewing the trade deal. Although the administration decided not to renew the United States–Mexico–Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA), the pact will remain in effect until 2036 or until another deal is negotiated.

“We are focused on ensuring the USMCA benefits US manufacturers, farmers, ranchers, workers, service suppliers, and businesses of all sizes,” a senior administration official told reporters Wednesday. “While there has been some progress over the past year, there is more work to do.” (RELATED: Trump Admin Puts Signature Trade Pact On Ice)

“We have already spoken on the subject with Mexico about strengthening the rules of origin of the agreement, about enhancing economic security alignment, and resolving bilateral issues. Mexico, although we have many challenges in our relationship, including on trade, they do understand the administration’s tariff policies in many ways.”

David Clement, Policy Director for the Consumer Choice Center, told the Daily Caller that the decision to renew didn’t mean the deal was scrapped altogether, but simply an opportunity for all parties involved to “continue the conversation.” A non-partisan consumer advocacy group, the Consumer Choice Center describes itself as “defending choice, innovation, and economic growth worldwide.”

“I think not renewing the deal just leaves more room for negotiation,” Clement told the Caller. “It doesn’t mean that the deal is dead, and the administration has not walked away from the USMCA in its entirety. If they did that, that would be economically ruinous for American consumers and manufacturers, but that is not what happened.”

The administration official reiterated that the deal needed some “rebalancing” with respect to things like trade deficits with Mexico and Canada.

“When USMCA was adopted six years ago by a bipartisan majority and the president’s approval, the idea is that we would modernize the agreement and it would also lead to rebalancing. The agreement did succeed in modernizing the agreement,” the official said. “But with respect to rebalancing, our trade deficits with both Mexico and Canada shot up during the Biden administration.”

“We’ve started to get it under control, but we believe that the USMCA did not operate to control the deficit like the president intended, so that’s really the heart of it,” the official added.

With key aspects of the trade policy still up in the air, Clement warned that the decision not to renew will leave business owners and manufacturers with uncertainty. (RELATED: How US Leaders’ Attempts To Dominate The World Are Weakening One Of Our Greatest Advantages)

“It does create a lack of certainty, which is really important for American exporters,” Clement told the Caller. “Especially American exporters who rely on steel and aluminum, because the administration has at points shifted the goalposts on tariff policy.”

“Basic inputs for goods that are manufactured in America have those basic inputs shift week to week, month to month, you name it. That is not a very easy economic circumstance for a business to operate under, because your input costs are consistently shifting.”

The upcoming election cycles add to the growing uncertainty, in some ways leaving the fate of the trade agreement up to the voters.

“There’s no guarantee that Republicans win the election, and even if they do, their nominee may not actually be someone who comes from this brand of politics historically,” Clement told the Caller. “So if I’m an American manufacturer who relies on inputs from Canada and Mexico under the USMCA, I just ride it out because the not renewing conversation just continues.”