MACLANE: Scrapping NAFTA would be disastrous
Opinions Column: Conservative Hot Corner
The most recent election cycle revealed the dissatisfaction with the establishment on both sides of the aisle. Populist movements emanated from both the Democratic and Republican Parties in the form of Sen. Bernie Sanders (I-Vt.) and President Donald J. Trump respectively. Sanders was unable to obtain the Democratic nomination, but Trump was successful in winning both the Republican nomination and the presidency. His right-wing populist message was sharply critical of trade deals, including the Trans-Pacific Partnership (TPP), of which he has already disposed and the North American Free Trade Agreement (NAFTA). He even went so far as to call NAFTA, “the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country” in one of the presidential debates. Now that he is president, Trump is maintaining his stance on the trade deal advocating for its renegotiation. Revoking or renegotiating the trade deal with a protectionist mindset would be damaging to the American consumer and both the American and Mexican economies.
NAFTA is the trade agreement between Canada, Mexico and the United States that was signed in 1993 by former President Bill Clinton and went into effect Jan. 1, 1994. It removed many of the tariffs and non-tariff trade barriers between the nations, which allowed for the increase in trade and investment between the three nations.
The United States withdrawing from the deal would primarily hurt American consumers, considering that “Mexico was the United States' third largest supplier of goods imports in 2015.” The United States' imports primarily include vehicles, electrical machinery, machinery, mineral fuels and optical and medical equipment. Americans would have fewer options for goods to consume as well as be forced to pay higher prices due to increases in tariff barriers. This invokes the idea from Henry Hazlitt’s book "Economics in One Lesson," in which paying higher prices on certain goods gives consumers less money to spend on other industries inhibiting economic growth, specifically if Americans are forced to pay more for cars. If Americans are forced to pay more for cars, then they have less money either to invest or spend on another industry. Americans should expect significantly higher prices in economic sectors such as auto, oil and machinery if Trump revokes NAFTA.
The United States does not just import goods from Mexico, but also exports goods to Mexico. In 2015, Mexico was the United States' second largest market for exports. Revoking NAFTA would consequentially remove the availability of that market for the American industry. Not only would it distort trade with Mexico, but also Canada. Canada was the primary importer of American goods in 2015. It was also the second largest supplier of American imported goods in 2015. Disrupting trade with these two nations would be devastating for American exporters and consumers.
NAFTA has actually created an economic zone between the three nations. Ending NAFTA would erode the interdependence created between the nations and actually hurt American jobs. According to Morris Cohen, Wharton professor of operations and information management, thanks to NAFTA, “these plants are integrated. Some components or sub-assemblies are sent back to the U.S. It is as if there is no border, as if it is one economic zone.” American manufacturing jobs are primarily in assembling parts built in Mexico. Withdrawing from NAFTA would kill these assembly jobs because the plants in place in Mexico would most likely move to China, taking the assembly jobs with them. The reason the assembly jobs exist is because of its proximity and convenience to the Mexican plants that built the components.
NAFTA has been critical in accelerating the development of the Mexican economy considering the United States is the top importer of Mexican goods. Contrary to popular belief, this economic growth has actually created a net outflow of undocumented Mexican immigrants with the increase of employment opportunity in Mexico since 2009. So trade deals and economic interdependence can help combat illegal immigration that Trump stood so strongly against during his campaign.
So please, President Trump, from one Republican to another, please reconsider your position on NAFTA. Free trade is essential to international cooperation and economic growth. Protectionism also never works. Just look at the trade war that was accelerated by former President Herbert Hoover in 1930 with the Smoot-Hawley Tariff. Introducing tariffs on particular countries leads to retaliation and economic devastation for each country involved. Protectionism and economic nationalism will not revive the American manufacturing industry that was once burgeoning half-a-century ago, it will only decelerate economic growth and hurt current American industries.
Daniel MacLane is a School of Arts and Sciences junior majoring in political science. His column, "Conservative Hot Corner," runs on alternate Mondays.
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