This week President Trump will try to fulfill one of his campaign promises, which was to repeal the trade agreement known as NAFTA (North American Free Trade Agreement). NAFTA was originally devised and signed by President Clinton in the nineties. Obviously, though, President Trump sees President Clinton’s handiwork as less than inspiring since President Trump called NAFTA “the worst trade agreement in American history.”
President Trump has said that he wants to repeal NAFTA and deliver a better agreement to the blue-collar American workers who voted for Trump last November. The talks for NAFTA’s redraft will start on Wednesday, August 15th. Secretaries of trade from both Mexico and Canada will be present at the sit-down. Each obviously hopes to work out a deal favorable to each country’s respective domestic worker populations while Trump aims to fulfill a campaign promise before time runs out.
President Trump’s inauguration speech repeatedly riffed on images of shuttered factories and blighted communities. A lot of this “carnage” (Trump’s word) is traced back to NAFTA, which the president views as the cause for millions of lost jobs in the United States since the 1990s and the root of much of the blight that can be seen in once-thriving industrial epicenters in the heartland of the United States. It’s no wonder, then, that many in Ohio were enticed enough by Trump’s promises to renegotiate NAFTA to vote for candidate Trump last fall.
All conjecture aside, the U.S. Bureau of Labor Statistics says that upwards of 14 million American jobs hinge on friendly labor relations with the United States’ contiguous neighbors, Canada and Mexico. Casting some doubt on Trump’s claims, though, the Economic Policy Institute said that fewer than one million jobs were lost to Mexico between the years 1997 and 2013, which suggests Trump’s claims of massive job migration to Mexico are slightly overheated.
Trump has historically threatened to leave NAFTA entirely if a good deal couldn’t be reached and to slap an extremely penal 20-percent tariff on Mexican goods. The United States’ trade deficit with Mexico does, indeed, rival the trade deficit many economists worry about between the United States and China. The trade deficit with Mexico sits at just over $60 billion annually.
President Trump will head in to talks trying to dramatically up the number of American factory jobs on offer. Headwinds to that plan are, of course, automation and a changing economic landscape.