The NAFTA replacement deal: the excitement is because we didn't go full protectionist

James Pethokoukis of the American Enterprise Institute explains that it's just a mildly-tinkered-with update of what we already had:

If President Trump is correct, the new and supposedly improved North American Free Trade Agreement — inelegantly renamed the United States-Mexico-Canada Agreement by Trump — is a “historic transaction.” Like, what, the Louisiana Purchase or the 1848 Treaty of Guadalupe Hidalgo or some such?

Maybe a lowering of expectations is called for here. To believe that the agreement is even just a good, solid deal for the American people requires accepting several things to be true that almost certainly aren’t — despite what the president has said in the past.

The Very Stable Genius's hyperbole doesn't stop with "historic," though. We were saved from the "worst deal":

First, the president has claimed that NAFTA Classic, signed in December 1993 by President Clinton, was the worst trade deal in American history. Of course, maybe by “worst” what Trump means is that all the U.S. trade deals have been pretty good and NAFTA was really just the least pretty good — kind of like how “Solo” is the worst “Star Wars” film but is actually totally fine, especially as a rental.

But obviously that is not what Trump means. His (perhaps sole) long-held, core economic belief is that decades of dumb trade deals such as NAFTA have impoverished America. Recall that, as a presidential candidate, Trump said America was once “a very powerful, very wealthy country. And we’re a poor country now.” (Actually, U.S. household net worth is over $100 trillion and middle-class median incomes, adjusted for inflation, are up 42 percent since 1979.)

NAFTA has been a gentle tailwind pushing the economy forward: A research review by the Congressional Budget Office found that NAFTA and other U.S. trade agreements overall boosted growth, worker productivity and wages. And a University of Chicago survey of top economists found that 96 percent agree or strongly agree that, on average, Americans have been “better off” with NAFTA than if the previous trade rules had remained in place.

It’s also just odd to think NAFTA could really have ruined the U.S. economy when the combined Canadian and Mexican economies are only an eighth the size of America’s.

And, although Trump claims NAFTA 2.0 “greatly opens markets to our farmers and manufacturers, [and] reduces trade barriers to the U.S.,” that was already the case with NAFTA 1.0: The whole point of the agreement was to make the entire region a free-trade zone. And it worked wonderfully, tripling trade flows between the three nations to more than $1 trillion.

The greater access to Canadian dairy markets and the 75 percent must-be-made-in-North-America vehicle content may be mild boosts, but nothing earth-shaking.

The exuberance exemplified by the soaring stock market is pretty much a sigh of relief, actually:

So why, then, did investors and business groups seem so happy with the new deal if it was only a minor tweaking of the old one? Simple: Cosmetic changes, even if they make the deal a bit worse in some places, are vastly preferable to the U.S. leaving NAFTA or hitting Canada with auto tariffs if it continued to reject the U.S. proposal. In other words, Trump is taking credit for eliminating the uncertainty that he created, much like a firefighter who douses the fire he started and then wants a medal from the mayor.

But it gives him something to tweet about.