Since President Trump’s run for office, the tagline was “eliminate NAFTA.” In a wild turn of events in the game known as politics, the exact opposite is now happening. Instead of cutting Mexico out of NAFTA, Canada seems to be getting the short end of the stick.
This year marks 25 years since the inception of the North American Free Trade Agreement (NAFTA). Much like the name says, it is a trade agreement between all of the countries located in North America (Mexico, the United States and Canada). In “A Brief History of NAFTA,” according to a 2008 article in Time Magazine, it is defined as “[the] promoting [of] economic growth by easing the movement of goods and services.” In short, all of this jargon means that taxes and government regulations between the nations are lessened, so that there are not as many obstacles to sending and receiving goods. This does not necessarily mean that tariffs (taxes) and restrictions (government regulations) are not entirely eliminated within NAFTA. And that’s where politics come into play.
There are a few major industries that will be impacted by renegotiations: the manufacturing industry, specifically the automotive industry, and the dairy industry.
The major debacle stems from President Trump’s desire for Canada to ease regulations on the dairy industry. As of printing, Canada had not agreed to terms suggested by US trade representatives. In retaliation, Trump has threatened, “to impose tariffs on Canada’s exports of cars and automotive components” according to an article by the Washington Post. The cherry on top is the possibility of leaving Canada out entirely, and President Trump creating a “new NAFTA” with Mexico.
This concept is intriguing, due to how blatantly President Trump was against NAFTA, during his run for office. But, the key difference is the fact that Mexico was willing to concede to Trump’s demands. Specifically, to push automotive manufacturing back to the US. It is believed that Mexico gave into these demands in an effort to ease American tariffs on aluminum and steel. Analysts say though that this may backfire on President Trump. Domestic companies may have to raise prices to produce goods within the US as outside the US, labor is cheaper.
According to a New York Times article, “Nafta Talks Between U.S. and Canada Turn Tense as Deadline Looms,” this may “create new opportunities for automobile manufacturers in Europe and Asia to have a competitive advantage in the United States.”
