Trade Deal Won’t Pay for Wall
Trump continued to claim that he is staying true to his campaign pledge that Mexico would pay for the border wall, insisting that Mexico will pay “indirectly” through a new international trade agreement. But that’s spin.
Trump, Jan. 8: The wall will also be paid for, indirectly, by the great new trade deal we have made with Mexico.
The United States-Mexico-Canada Agreement was signed on Nov. 30 by the leaders of all three countries, but it still must be ratified by Congress. Even if it is, though, there is nothing in it specifying that Mexico will pay for any border wall.
The president’s argument is that Mexico will pay “indirectly” because of benefits that accrue to the U.S. through the new trade agreement. But economists told us that while the trade agreement is arguably a slightly more advantageous deal for the U.S. than its predecessor, the North American Free Trade Agreement, it won’t generate enough additional federal revenues to pay for the border wall, and shouldn’t be construed as Mexican payments, anyway.
“Even if we accept conceptually the argument that government revenue attributable to the revised trade agreement constitutes ‘Mexico paying for the wall,’ there are no plausible assumptions of USMCA’s impact that would see government revenue increase by $25 billion,” said Geoffrey Gertz, a fellow in the Global Economy and Development program at the Brookings Institution and a research associate at the Global Economic Governance Programme at the University of Oxford.
Kent Smetters, a professor of business economics and public policy at the University of Pennsylvania’s Wharton School, agreed.
“Relative to NAFTA, the Mexican government would not nearly lose enough tariff revenue that could be constituted as paying for the wall, at least the wall as previously envisioned by the Administration; nor would the U.S. government revenue increase enough based on a dynamic score,” said Smetters, who was an economist at the Congressional Budget Office in the 1990s. “In fact, the additional revenue to U.S. relative to NAFTA would, optimistically, not cover annual maintenance and improvements of the wall much less the original build.”
