- President Donald Trump told House Speaker-designate Nancy Pelosi that Mexico would pay for a wall along the US-Mexico border through the updated North American Free Trade Agreement.
- The deal does not include any provisions compelling Mexico to pay for a border wall.
- Trump also argued that increased economic growth from the agreement would pay for the wall, but Democrats pushed back on that idea.
President Donald Trump told House Speaker-designate Nancy Pelosi and Senate Minority Leader Chuck Schumer that Mexico would pay for his proposed wall along the border, but the president made a head-scratching claim about how that would happen.
According to sources with knowledge of private portions of Trump’s contentious meeting with the Democratic leaders, Trump insisted that Mexico would eventually pay for the wall. He said that would happen via the newly updated North American Free Trade Agreement (NAFTA), now named the US-Mexico-Canada Agreement (USMCA).
One person familiar with the meeting told Business Insider that the president said the USMCA will bring so much money into the US that it would be almost as if Mexico paid for the wall.
A Democratic aide told Business Insider that the idea, as put forth by Trump, has a lot of holes.
“The proposal doesn’t make sense, and it’s unclear how it would work,” the aide said.
In the public portion of the meeting, the president and the two Democratic leaders repeatedly clashed over the issue of funding the border wall as part of a package to keep the government open.
If Congress does not pass a funding bill by December 21, or if Trump does not sign it, the federal government will enter a partial shutdown.
The Democratic leaders were quick to push back on Trump’s line of thinking. Pelosi later told Democrats at a meeting of the party’s Steering and Policy Committee that she argued diverting money to fund a border wall would still mean Americans were losing out on the benefits, according to a person present for her remarks.
“I said, ‘You’re going to take the money we made from the trade agreement. Well that’s an opportunity cost, Mr. President, for American workers and our economy that’s supposed to benefit from that. They did not know you are passing a bill so that you could pay for a wall and say Mexico paid for it with our profits from our workers and our businesses and the rest,'” Pelosi said, according to the person.
Schumer also pushed back on the idea, arguing new money from a trade deal isn’t the same thing as the Mexican government funding the construction of a wall. Studies have also shown that the USMCA is likely to do little to budge the US GDP needle.
The Democrats are correct that increased economic activity because of the trade deal would not be the same thing as Mexico directly allocating funds for the wall.
Pelosi also seemed to note that spending these revenues on a border wall, as opposed to some other government program, would represent an opportunity cost. The economic fallout from building a wall would likely outweigh the stimulus from its construction, according to the Brookings Institution.
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