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How large? We'll see. Skeptical on this one.

Wow. Dairy protection is huge up there.>>>>>

You're right to be skeptical. The dairy "concession" was already part of TPP (Trans-Pacific Partnership) which Canada would be part of, along with other 12 countries that include Asia-Pacific countries (excluding China!) so in other words, that part of the NAFTA 2.0 (which includes many provisions of already agreed upon TPP provisions dealing mostly with intellectual property and digital rights) was on the table from the beginning of negotiations — that's the real reason why Jared Kushner had to be sent there to give the final "yes" from daddy-in-law after Canadians refused to give other concessions and were making sure that they were really getting some from the U.S. — Canadians had to be sure that it's the real "yes" coming from Trump, which USTR Robert Lighthizer didn't have the authority to give.

The only reason this "concession" is sold as a "big deal" is that after all the turmoil and uncertainty it allows Trump to save face by presenting the pact as Trump's "historic" achievement (new name / label = "brand") as a "win" and something that "will bring freer markets, fairer trade and robust economic growth" and "will send cash and jobs pouring into the United states".

That's reality TV version. The reality?

It's different under the hood. The new USMCA = (most of) NAFTA + (much of TPP) + some inferior provisions that benefit US automakers' labor unions (something Bill Clinton wanted to include before he had to settle for signing existing NAFTA in 1994) and likely more expensive cars in the US, mitigated by automation, outsourcing or loss of production capacity to foreign countries or automakers (e.g., see Ford Focus and Harley Davidson), longer copyright protections for Hollywood, removal of some protections from the private companies while giving more control to governments (ISDS, i.e., right to sue governments), the sunset clause (16 years) which will only introduce more uncertainties later for private sector regarding capital investment in the trade zone. **

"...Canada to cede large part of dairy to U.S." should come with a laugh track. Here are the facts.

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** Ref: Trump's 'historic' trade deal doesn't look so historic after all - WP, by Catherine Rampell, 2018 October 01

After spending a year and a half alienating our friends, punishing our farmers and manufacturers with devastating tariffs and counter-tariffs, and fracturing the hard-won alliance we had built to isolate and pressure China, we finally got a new trade deal — and a "new" trade strategy.
< snip > ..... As to the substance, well, the best you can say is it could have been a whole lot worse. President Trump didn't, as he threatened, blow up the system. ..... < snip >
There are some new protectionist measures, such as complicated new requirements for auto rules of origin, which could potentially backfire. That is, they may end up being so costly to adhere to that they'll encourage manufacturers to move more of their operations and jobs outside of North America.
Other stuff, such as a "sunset" provision requiring members to regularly reaffirm their desire to continue the three-party deal, is probably also not an improvement. There are better ways to encourage ongoing modernization of the deal that would involve less policy uncertainty for businesses. But, again, this section is not as bad as many businesses and trade experts feared.
Trump also won some modest concessions in tiny industries he's weirdly obsessed with, such as Canadian dairy. He has conveniently played down the concessions he made in exchange: In return for greater American access to the Canadian dairy, poultry and egg markets, we gave Canada greater access to U.S. markets for dairy, peanuts, processed peanut products, sugar and sugar-containing products.
But for the most part, despite Trump's assertion that "it's not NAFTA redone, it's a brand-new deal," the president mostly kept NAFTA intact.

What's more, some of the more significant changes — relating to issues such as labor standards, environmental protections and e-commerce — appear to be cribbed from another trade deal that Trump has demonized: the Trans-Pacific Partnership. ..... < snip >

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** Ref: President Trump creates crises, then claims credit for solving them - WP, 2018 October 01

< snip > ..... Trump was right about the Canadian tariffs. What he didn't mention is that the United States still ran a $474 million dairy surplus last year, with U.S. farmers selling five times more dairy goods to Canada than U.S. consumers bought from Canada. In any case, milk products represent just 0.06 percent of U.S.-Canada trade, 99 percent of which was already tariff-free.
Under USMCA, the Canadians agreed to buy a little more dairy products from the United States. One analyst estimated the new deal "helps our dairy market by 0.015 percent more." In return for this minuscule concession, Trump had to assure Canada and Mexico that he would not pound them with automobile tariffs and would drop his ill-advised demand to eliminate the "Chapter 19" international-arbitration mechanism in NAFTA, which he had claimed was a threat to U.S. sovereignty. Steel and aluminum tariffs imposed against Canada by the United States remain in place, as do retaliatory Canadian tariffs. ..... < snip >

< snip > ..... Trump cites this as a victory, which it is if you're a protectionist, but it's not clear what the real-world impact will be. Automakers could choose to disregard the new requirements and pay a 2.5 percent tariff on cars. They could replace more workers with robots. They could redirect Mexican-assembled cars to markets outside the United States and Canada. Or they could choose to move more production out of North America altogether. Whatever happens, it is difficult to see how American consumers or even autoworkers will benefit. ..... < snip >

BTW, if you take a look at the stock of Ford, it's at multi-year low, and the stock of General Motors is near two-year low. *** Also, agreement only means access, not a guarantee of buying certain tonnage of dairy products.

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** Ref: Economic Upside of Revised Nafta? Just Avoiding Downside Is Good - BLQ, by Katia Dmitrieva, 2018 October 01

< snip > ..... The renamed USMCA updates 1994's Nafta with changes including higher wages for workers making auto parts and improved access for U.S. farmers to the Canadian dairy market. While economists weren't rushing to boost their forecasts for gross domestic product, they said the trade pact eliminates the downside scenario of no deal or just a bilateral agreement, and should support expansion over the long term. ..... < snip >
< snip > ..... "If you're looking at what they agreed to, versus the baseline of Nafta, for the U.S. it's not really that much difference at all," said Jay Bryson, global economist at Wells Fargo & Co. "For Canada and Mexico, maybe it's eliminated some uncertainty there."
On the U.S.: "Since we are subtly shifting from Nafta to rebranded Nafta, the economic consequences are quite small. I think the strongest positive from this is the sense that is shows the administration being flexible on trade issues, and amenable to compromise, not pursuing a sharp, isolationist turn." — Carl Riccadonna
On Canada: "It is a win for Canada because of what didn't happen. The agreement doesn't really change the rules in a meaningful way at the macro level, but the consequences of not reaching a deal would have been disastrous." ..... < snip >

< snip > ..... The trade gap in goods widened in August to a six-month high and was close to a record. "As long as you have expansionary budgetary policy, I see imports going up rather than going down," Leering said.

In other words, more, larger "trade deficits" to come... which is no surprise to anyone who understands the basic trade issues and how they relate to economy. Did anybody notice that while we had higher "trade deficits" our economy actually grew and unemployment fell significantly? Exactly the opposite of what we are being told now — that trade kills jobs, when the data keeps telling us otherwise. And while we are chasing this shining object of "trade deficit" we have no time to notice or care that our actual budget deficits are growing by nearly a trillion dollars a year. But I guess it only matters when the President or Congress are Democrats - 'cause we are busy fighting the "trade wars". So what happens after we made all these new "great" trade deals and "trade deficits" keep growing or at least don't shrink? Find new diversions from growing fiscal budget deficits and higher national debt?

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** Ref: Donald Trump tweaks NAFTA and it's not better - UT, 2018 October 01

< snip > ..... This deal's big "win" for the United States is an agreement by Canada to remove some protections for its domestic dairy industry. ..... < snip > What's more, Canada had already agreed to similar language with other countries in Asia and the Americas as part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. ..... < snip >

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Andrew Bates (American Bridge): "The moment Trump took office, he could have immediately solidified these standards not only with Canada and Mexico but 9 other countries, including Japan, the world's third-largest economy - and with whom Trump is now struggling to make any progress. That makes it very important for the public to get a look at the cost of Trump's catastrophic mistake for the U.S. economy and American influence in the world to jettison standards that he now trumpets as a major win, just with fewer countries."

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Chris Krueger (Cowen): "NAFTA has been re-branded ... The last-minute agreement is a political achievement for US and Canada, made possible by significant negotiating concessions from the US (and to a lesser extent Canada) at a difficult moment. ...

"We believe the deal will be passed by the various legislatures, though if Big Labor comes out opposed that would change our view. Your assessment of who wins, and by how much, depends on what you compare to (e.g., present rules, the threat of blow-up, or Trans Pacific Partnership baseline)."

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*** Ref: Ford CEO: Trump metals tariffs cost company $1B - FoxBusiness,by Thomas Barrabi, 2018 September 26

FBN's Cheryl Casone on Ford's decision to not build its Focus Active in the U.S. .....
..... Ford CEO Jim Hackett urged the Trump administration to resolve its trade disputes with China and Europe, noting that import tariffs have cost the Detroit-based company $1 billion profits.
"The metals tariffs took about $1 billion in profit from us – and the irony is we source most of that in the U.S. today anyways," Hackett said in an interview with Bloomberg. "If it goes on longer, there will be more damage."

Earlier this year, the Trump administration imposed import tariffs of 25 percent on steel and 10 percent on aluminum, arguing the duties were necessary to protect U.S. interests. A further $250 billion in tariffs were imposed on other Chinese goods. China, the European Union and other nations have responded with retaliatory tariffs. ..... < snip >

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** Ref: The Real Pain From Trump's Tariffs Trickles Down to Consumers - BLQ, by Peter Coy, 2018 September 28

< snip > ..... The logic of the "optimal tariff" is that "the U.S. is often a large enough importing country that we can throw our weight around," says Thomas Pugel, an economist at New York University Stern School of Business.

The theory of optimal tariffs, which has figured in economic thinking since the 1840s, fits snugly into the worldview of President Donald Trump, who often says America's trading partners have taken advantage of the U.S. ..... < snip > ..... The truth is more complicated. Tariffs that are optimal in theory can be suboptimal in practice. Trading partners tend to retaliate. Plus, it's tough to design a tariff whose costs are borne mostly or entirely by supplying nations.

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