Blog 3 Jared Rostkowski Why NAFTA is not "The worst trade deal in the history of trade deals, maybe ever"

Why NAFTA isn't “The worst trade deal in the history of trade deals, maybe ever”
Jared Rostkowski


On September 25th 2016 during the first presidential debate of 2016, then Presidential candidate Donald Trump described the North American Free Trade Agreement as “The worst trade deal in the history of trade deals, maybe ever.” NAFTA is the trade agreement between the U.S., Canada, and Mexico, which eliminated tariffs between the three countries. Trump has continued to voice his displeasure with the trade deal, mostly with Mexico. Anyway, NAFTA is not the worst trade deal in the history of trade deals, in fact, it is actually a trade deal that the 3 countries benefit greatly from the trade deal, and we should not pull out of it anytime soon. 
So what does Trump dislike about the deal. His main displeasure comes with the fact that many companies from the U.S. are moving manufacturing to Mexico, to take advantage of Mexico’s cheap labor. Trump argued that companies like Ford moving their manufacturing plants to Mexico took away American jobs, and he believes that there should be a 35% tax on goods from Mexico, in order to deter companies like Ford from moving manufacturing jobs to Mexico. He specifically mentioned the lost of manufacturing jobs in the Rust Belt, those states helped lead Trump to his eventual victory. So, Trump attributes his hatred of the deal to lost American jobs. But the jobs lost by having NAFTA in place is a lot less than the jobs that would be lost from leaving NAFTA. The U.S. Chamber of Commerce estimates that there are 6 million U.S. jobs that depend on trade with Mexico. While all those jobs wouldn't be eliminated if we left NAFTA, the increased cost of trading with them could cause job cuts which could put people put of work. Also, even if Trump left NAFTA, Ford and other companies wouldn't just come back to the U.S., they would most likely move to the next cheapest country before bringing jobs back to the U.S..
Besides, the other benefits NAFTA clearly outweigh the cost of lost jobs in manufacturing. NAFTA has quadrupled trade between the three countries, which have boosted economic growth and profit for all three. The elimination of tariffs also help grow small businesses. And since companies don't have to pay extra to export to the other countries, its also allows companies to lower prices, reducing the risk of inflation. So with companies benefitting from NAFTA, companies are able to expand, thus creating even more jobs. Its was estimated that 800,000 jobs were created by manufacturing companies in the few years after NAFTA was first agreed upon in the 90s. NAFTA doesn't just benefit companies, it also benefits the government of the U.S.. NAFTA reduces government spending by allowing for more competition on government contracts, causing bidding wars that lower the price of a job more than normal. The U.S. also benefits from lower food prices and lower oil prices. 

NAFTA is not a bad trade deal. The deal benefits the U.S. greatly. It allows businesses to grow and lowers prices of many of the essential things we use everyday. While jobs are lost from NAFTA, many were also created, and the advantages outweigh the disadvantages. So, in my opinion, NAFTA is not “the worst trade deals in the history of trade deals.”

Comments

  1. Tom PilatNovember 12, 2017 at 6:34 PM

    I also believe that NAFTA has been on the receiving end of too much flak. The pros of NAFTA outweigh the cons greatly, and not being a part of it will give other countries greater opportunities for trade and put the U.S at a disadvantage. Also, if the U.S leaves NAFTA and tries to increase rates on Mexico, they would have to adhere to rules put in place by the WTO. So leaving NAFTA makes little sense in every case.

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  2. UnknownNovember 12, 2017 at 7:12 PM

    I agree that NAFTA is a crucial part to our economy and allows many businesses to prosper. However, I do agree with Trump's point of view by trying to keep jobs in United States instead of creating work in cheaper countries. Do you feel that there is anyway for the United States to stay in NAFTA but also keep a majority of the jobs still in the US?

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