By: Jordan Gilliam
Since President Donald Trump has been in office, one of his main objectives has been to reform the North American Free Trade Agreement.[i] President Trump has labeled the agreement “the worst deal ever made in the history of the world” and has also gone as far to state “Personally, I don’t think we can make a deal…I think we’ll end up probably terminating NAFTA at some point.”[ii] Although there is no definite way of determining the future of NAFTA, there is fear that President Trump will actually call an end to the twenty-three year agreement. This would have an enormous impact on the American economy and could hinder a handful of the markets in this country.[iii]
The North American Free Trade Agreement was enacted in 1994.[iv] The agreement sought to expand trade between the United States, Canada, and Mexico and also help these countries become competitive in the global market.[v] Overall, the deal has been very successful and has eliminated a majority of the tariffs on goods produced by each nation.[vi] However, President Trump has still been very critical of NAFTA due to the negative impact it has had on the job market in the United States, especially related to manufacturing.[vii] Many of the critiques deal with the workforce decline that has occurred since NAFTA was enacted in 1994.[viii] However, economists note that NAFTA has only had a small impact on job loss and developments, such as mechanization, have had a larger impact on job security in the manufacturing industry.[ix] President Trump also critiqued the current trade deficit with our neighboring countries as well as the number of businesses that have closed.[x]
Despite the criticism NAFTA has received from President Trump, it could be detrimental to the American economy if he were to make any “very big” changes, or even worse, end the agreement all together.[xi] First, it is still important to realize that the world operates on a global market. It is also important to realize that there are markets in America that benefit from this global market. For example, the North American Free Trade Agreement has had a positive impact on agricultural trade since its enactment in 1994.[xii] In fact, Canada and Mexico have become two of the United States’ largest export markets for a handful of agricultural products produced in the states.[xiii] In 2014, data showed that overall total exports from agricultural products have increased by $32 billion since 1993.[xiv] The auto industry, as well as other industries, would also feel the impact of any major change to NAFTA.[xv] The main objective for Trump and his administration would be to promote more jobs in the American economy, however, by making large-scale changes or ending NAFTA could negatively impact the job markets in these industries that strive because of NAFTA.
In recent months, there have been renegotiations surrounding NAFTA.[xvi] However, there has been little to no progress during these meetings and the threat of President Trump pulling out of the agreement could become a reality.[xvii] Despite some of the negative impacts that NAFTA has had on our nation, it is important that the leaders be very thoughtful on what impact even minor changes could have on the American economy. NAFTA has had a positive impact in some of America’s most beloved industries, such as the agricultural market as well as the auto industry.[xviii] It is important for the leaders to renegotiate this deal in order to increase the positive impacts NAFTA has on the American economy as a whole and also to our neighboring trade partners. However, it is just as important that they realize that completely changing the agreement or pulling out of the agreement could deliver a devastating blow to the economy as well as our standing in the global marketplace.[xix]
[i] Jacob Pramuk, Trump: We’ll ‘probably end up terminating NAFTA, CNBC (Aug. 22, 2017), https://www.cnbc.com/2017/08/22/trump-well-probably-end-up-terminating-nafta.html.
[iii] Sophie Quinton, Why States Don’t Want Trump to Make ‘Very big Changes’ to NAFTA, The Huffington Post (Aug 18, 2017), http://www.huffingtonpost.com/entry/why-states-dont-want-trump-to-make-very-big-changes_us_5996f0c3e4b033e0fbdec338.
[iv] Kimberly Amadeo, Facts About NAFTA: Statistics and Accomplishments, The Balance (July, 7, 2017), https://www.thebalance.com/facts-about-nafta-statistics-and-accomplishments-3306280.
[vii] Quinton, supra, note iii.
[viii] J. Weston Phippen, How Trump Created a Problem for U.S. Farmers, The Atlantic (Jun 30, 2017) https://www.theatlantic.com/news/archive/2017/06/trump-nafta-agriculture/531573.
[x] Quinton, supra, note iii.
[xii] Phippen, supra, note viii.
[xv] Quinton, supra, note iii.
[xvi] Kenneth Rapoza, Could Trump Really Pull the Plug on NAFTA?, Forbes (Sep. 6, 2017), https://www.forbes.com/sites/kenrapoza/2017/09/06/could-trump-really-pull-the-plug-on-nafta/#7223a8f95e5f.
[xviii] Quinton, supra, note iii.