The Agenda NAFTA 2.0-- What will Trump Want?

North America is headed toward NAFTA 2.0-- maybe? What that means depends a lot on who you talk to. For some, it's a wholesale renegotiation. Others I've read think it should be a simple "tweak" or "modernization" of a 25yr old agreement. Indeed, optimists think they have a template for the "tweak" on hand in the form of the Trans Pacific Partnership (TPP) text-- the same text President Trump walked away from on his third day in office. The more skeptical voices think the whole process could take quite a bit longer, perhaps even colliding with electoral politics in Mexico and the United States in 2018.
 
Trump's outlook on trade policy (among many other things) has been a chaotic work-in-progress. The President is rightly concerned about trade deficits, but has wrongly identified both the causes of those deficits and the means to fix them (Hint: the problem is rooted in macro economics and trade policy won't fix it). With Trump at the helm, predicting what the U.S. position on NAFTA 2.0 may end up being as exact a science as predicting lightning strikes. Indeed, since Trump was reportedly persuaded by his more adult-leaning advisors to seek a "renegotiation" with Canada and Mexico rather than outright withdraw from the NAFTA, it has occurred to me that the "renegotiation" is really a charade. When the bargaining gets tough, a frustrated Trump, looking for deliverables-- even if doing so hurts many of the voters who elected him-- will do as he did with the TPP and withdraw as he promised on the campaign trail.

"We will end NAFTA forever" if we dont get "total renegotiation", says Trump in pretaped weekly address before he left for #G20 pic.twitter.com/P0AxSY8x4O

— José Díaz-Briseño (@diazbriseno) July 7, 2017

If stopping short of exploding the NAFTA becomes a reality, there are already several places to begin looking for clues as to what Trump may want from NAFTA 2.0.