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Kudlow’s Unsupported USMCA Jobs Claim


White House economic adviser Larry Kudlow claimed without evidence that the United States-Mexico-Canada Agreement would add “180,000 new jobs per year” in the U.S.

Kudlow may have been referencing an April analysis done by the U.S. International Trade Commission, which estimated that the USMCA trade deal, if fully implemented, would increase U.S. employment by 176,000 in its sixth year. It didn’t project job increases on a yearly basis, an ITC spokeswoman told us.

Kudlow made the claim during a “Fox News Sundayinterview on Aug. 18. When asked about reports that the U.S. may soon experience an economic recession, Kudlow responded in part by saying that the USMCA trade deal — which has not been approved by Congress — would help the economy by increasing gross domestic product and employment.

“We are looking at the USMCA, NAFTA 2.0 trade deal,” said Kudlow, who has been director of the U.S. National Economic Council since early 2018. “That would be very important and would add a half a point of GDP and 180,000 new jobs per year if we get that through.”

He has made the claim before, too.

In a July Fox News Radio interview, Kudlow called the USMCA a “huge growth contributor” that is “estimated to add … something like 180,000 jobs per year.”

We asked, but the White House did not provide any support for his claim.

As we said, Kudlow may have been thinking of the ITC’s report assessing the “likely impact” of the USMCA “on the U.S. economy as a whole and on specific industry sectors.” The independent commission’s model estimated the trade agreement “would raise U.S. real GDP by $68.2 billion (0.35 percent) and U.S. employment by 176,000 jobs (0.12 percent),” according to the report.

But those are not “per year” figures. The report said those are estimates of job growth and GDP six years from whenever the deal may be implemented.

Page 43 of the report says:

U.S. International Trade Commission report, April 2019: The economy-wide model estimates the U.S. economy’s complete adjustment to the full implementation of USMCA, which is assumed to be year 6 after USMCA enters into force. Therefore, the estimates show the impact of the modeled provisions after the economy has responded to the changes in USMCA. The estimates show the incremental effects of USMCA relative to a baseline that reflects the U.S. economy in 2017 and assumes that no other changes to the economy unfold.

We confirmed that with an ITC spokeswoman.

“The analysis did not look at job gains on a year by year basis – it only estimated the increase in jobs in year 6 relative to the baseline,” she wrote in an email.

It’s also unclear how those 176,000 estimated future jobs could help during a recession that many economists believe could hit the U.S. in 2020 or 2021.

In fact, the ITC report said the trade agreement’s overall impact on the U.S. economy is likely to be “positive” but “moderate.”

A Congressional Research Service report issued in February said other analysts view the potential impact similarly.

“If the USMCA is approved by Congress and it enters into force, many economists and other observers believe that it is not expected to have a measurable effect on U.S. trade and investment with other NAFTA parties, jobs, wages, or overall economic growth, and that it would probably not have a measurable effect on the U.S. trade deficit,” CRS said.