At the top of President Donald Trump’s to-do list since coming in to office was to renegotiate or even terminate the North American Free Trade Agreement. Throughout his campaign, he has been quoted multiple times saying that he believes it is the worst trade deal in history, and in addition he blames NAFTA for the loss of manufacturing jobs in the United States. He even went as far as to single out Ford Motor Company during his campaign and accuse them of moving American jobs out of the United States to Mexico. With all of Trump’s hate towards the North American Free Trade Agreement, is it really as bad as he makes it out to be?
The North American Free Trade Agreement is a treaty between Canada, the United States and Mexico. These three countries agreed to remove trade barriers between them, which eliminated tariffs, and ultimately increased investment opportunities in North America. It is the world’s largest free trade agreement whose members contribute more than $20 trillion as measured by gross domestic product. NAFTA created specific rules to regulate trade in agriculture, textiles, and automobile manufacturing. The agreement also wanted to protect intellectual property, establish dispute-resolution mechanisms, and, through side agreements, implement labor and environmental safeguards (McBride). Putting NAFTA into its full effect was no easy feat either, taking three U.S. presidents to finally put all the finishing touches together. It began in 1980, President Ronald Reagan started it during his campaign because he wanted to unify the North American market to compete better with the European Union. In 1984, Congress passed the Trade and Tariff Act, which gave the president authority to negotiate free trade agreements quickly. Republican George H.W. Bush and his administration had negotiated NAFTA, and Bush signed the agreement on behalf of the United States in 1992. When Bush lost his reelection bid, it was up to the next man in office, President Bill Clinton, who was a Democrat, to ultimately add the tweaks necessary to ensure political passage through Congress in 1993 (Amadeo).
If three U.S. Presidents worked to put NAFTA into action then it must be somewhat beneficial to our country, right? Well for starters, it increased trade between the members involved because it eliminated tariffs on imports and exports between the three countries. A tariff is a tax or duty to be paid on a particular class of imports or exports. NAFTA created specific rules to regulate trade in agriculture, textiles, and automobile manufacturing. As one could imagine with this tariff free trade agreement in the years since NAFTA was established, U.S. trade with Canada and Mexico has more than tripled, growing more rapidly than U.S. trade with the rest of the world. Canada and Mexico are the two largest destinations for U.S. exports, accounting for more than a third of the total. Most estimates conclude that the deal had a modest but positive impact on U.S. GDP or several billion dollars of added growth per year (McBride).
On the other hand, President Trump believes NAFTA has caused more harm than good as a whole for the United States. He blames NAFTA for destroying America’s manufacturing jobs as well as in other industries. To be clear, not all of these jobs were lost to Mexico. Advancements in technology in the work place have eliminated the need for workers and cut jobs in every industry and every country, not just in the United States. Another effect that lacks the attention it deserves is excessive pollution. Delivery trucks are in more frequent use throughout North America as well as the factories built on our shores that give off massive amounts of air pollution as well as possibly causing a bigger problem in climate change.
While Trump hammered the U.S. for getting the short end of the deal in NAFTA over the years, Mexico’s economy has actually went downhill too. After NAFTA came into effect in 1994, entire Mexican industries, such as furniture, toys, and corn, disappeared almost overnight because local companies could not compete with foreign multinationals (McBride).
Analyzing the history and the pros and cons of the North American Free Trade Agreement really puts into perspective how important to this country, as well as the ones north and south of us, has been over the years. Trump’s plans to renegotiate the agreement could result in major consequences not just in North America but also in regards to China and the European Union. For the sake of this country, let’s all hope Trump and his administration take into consideration these pros and cons and come out with a better version of NAFTA or an agreement that our nation can say was successful.
