NAFTA-Was Political and Relationship Damage Caused by Trump Worth It?
Trump announced that Canada, Mexico, and America has agreed to a new trade agreement (still needs to be ratified) called United States-Mexico-Canada Agreement that is intended to be a major overhaul of the "worst trade agreement in American history" - NAFTA.
Trump's diplomacy to reach this point was brutal, to say the least. We use to have very strong allies on our borders, Mexico and Canada. No Longer. In order to fulfill, a misguided (my opinion) campaign promise to get rid of NAFTA. Our allies will never trust America again like they use to. That was the price. What was the prize?
1. A meaningless 16 year expiration date
2. A small change in dairy trade terms with Canada that Canada had already agreed to with TPP, which Trump pulled out of.
3. A requirement that, by some date in the future, 40% of auto parts made in North America are produced in factories that have a minimum wage of $16/hr. (The intended impact of this is to drive jobs from Mexico to America. The other consequence of this is higher car prices)
4. A requirement that for a car made in North America to avoid tariffs the percentage of parts made in North America will increase, over time, from the current 62.5% of a cars content to 75%, (This is also intended to increase auto part production in North America and will also increase the cost of automobiles.)
As more details come out, other significant provisions may appear but I think those are it.And yet of ALL people ,Gov. Cuomo praised Trump's new deal , Why ? Because nowhere is our Canadian trade imbalance so blatantly obvious than in the northern border regions of the USA , NY.* , farmers , crop growers in many states alone will benefit from this say nothing about Mfg.s , mid- term votes alone should reveal this message from states along our borders.
I couldn't find a reference to Cuomo where he praised Trump's new deal. But, I wouldn't be surprised. Democrats wrongly have never liked NAFTA while Republicans did - until Trump, that is. Trump and the Ds are very wrong that NAFTA was bad for America. Here is where I agree with Republicans, even those further to the right, that NAFTA was great for America, Canada, and Mexico.
But that isn't the question. The question is - were the small gains in NAFTA worth the higher car prices and destruction of relations with our allies?
"Brutal diplomacy". An interesting term considering that Obama, Hillary and others have said that NAFTA needed re-negotiation...while never doing it.
Now Trump has accomplished the task and is vilified for doing it. Maybe we need "brutal diplomacy" if that's what it takes to level the playing field. Certainly the policy of appeasement and putting the US at the bottom of the barrel wasn't working.Obama, like most Democrats, wrongly opposed NAFTA because they believe it hurt American workers. And he did want to renegotiate it. BUT, he opposed the unilateral withdrawal like Trump did. The fact is, economically and jobs, NAFTA was a boon to America.
It is never good to turn allies into enemies like Trump has. Do you think that is good diplomacy.
But my main point and question is - was the small gain Trump achieved worth the damage he caused with our relationship with our two closest former allies?"The fact is, economically and jobs, NAFTA was a boon to America."
Don't be silly - NAFTA provided an excellent method of removing jobs from the US and increasing our trade deficit...and that's exactly what happened.
I don't know what gain he achieved...and neither do you. Give it a few years and we may know something, though.
Not sure that the "damage" was actually damage at all. Perhaps it was a wake up call to them that we are not patsies to funnel money into their countries from. I AM seeing more of that as time goes on - other countries beginning to understand that the free ride on American coattails is coming to an end. That will inevitably result in a better relationship; good relationships are never based on monetary donations.You are factually wrong about NAFTA, Wilderness. https://www.thebalance.com/nafta-pros-and-cons-3970481
Bottom line is America did great and Mexico got screwed.
I understand that far-right conservatives like you believe there is no need for allies in this world; that America can go it alone; that everybody is an enemy to be defeated (normal conservatives do not believe this), but a safe world, a good world, does not work that way.
The result of your believe system is chaos and war.
The world you want existed prior to the end of WW II.
This is just another fake phony Trump deal that will destroy jobs and consumer goods just like his fake phony national embarrassment of a meeting in N Korea where Kim Jung Un talked Bozo Trump into stopping our military exercises in the region in exchange for absolutely NOTHING and believe it of not, another meeting between the two might happen again soon: UNREAL:
This fake NAFTA deal is nothing more than another sham which will only cost Americans even MORE for consumer goods if it ever passed congress which it won't:
Minor unenforceable changes in the guise of a real negotiation which will kill America plain and simple, just like Bozo Trump's astronomically high gas prices, record breaking DJIA stock market point crash, and destruction of our healthcare:Personally, I think a couple of the provisions might actually improve jobs in America, but the cost is higher car prices and worse relationships with our former allies.
If we wish jobs for our people then prices will inevitably rise. Lack of jobs, producing higher welfare rolls and lower standards of living, was the inevitable result of farming out jobs to other nations; if that is not our desire then we WILL pay somewhat higher prices for the products we want.
It's actually pretty simple in that regard - we have a choice between jobs and low prices. If we would rather pay other countries for cheap prices then we will find our neighbors (and ourselves) out of work.What so-called "lack of jobs" Wilderness?? Unemployment is 3.7%. Are you saying because of NAFTA, American welfare rolls increased? (They didn't) and that America's standard of living has decreased?? (It hasn't).
Since we don't need jobs, I will take the low prices.Please show that as jobs moved to Mexico they also remained in the US. OR that as people lost their jobs to Mexico none went on welfare of any kind.
Please show that as jobs moved to Mexico (lost to US citizens) and that none that lost their job lost any standard of living.
Pretending that jobs did not go to Mexico does not mean they did not. Pretending that those losing jobs promptly got other employment at the same or higher wages does not mean that they did.
And pretending that we didn't have very high unemployment just a few years ago, before the tariff war and before the discussions on NAFTA doesn't make it so.
This country has had a massive trade imbalance for years, and it has done great damage to the country. We either fix it or descend to the average standard of living in those countries we get cheap prices from. Eventually it will equalize, with them coming up and us going down, but none of us want that.I already showed you, read my reference, so you need to read it and refute it (don't just complain about it). You, Wilderness, need to work from real sets of data and not far-right conservative media. Even normal Republicans disagree with you, at least those not kissing Trump's feet.
"Massive trade imbalances" - you are as misinformed as Trump is. Trade imbalances are a reflection of ... nothing in particular. That is what his economic advisers keep trying to tell him, but he refuses to learn even the basic concepts of international trade.
The ONLY thing (in 99% if the cases that a deficit means is that in a relatively open market (which is what international trade use to be before Trump) Americans bought goods and services worth more, in aggregate, than Americans sold to China. In case of a surplus, Americans sold more goods and services to Canada than Canadians bought from America.
Put simpler, trade balances are the steady-state result from the law of supply and demand - nothing more.
Trump is upending world order because he is stupid and won't listen to people who know more than him. (As it turns out, he largely a failed businessman but a hugely successful huckster.)
It is extremely disingenuous of you to blame the 10% unemployment rate almost a decade ago on NAFTA. The blame totally lies with the 2008 Great Recession brought on by failed conservative economic policies.OK - let's look at your link (purely about NAFTA).
It boosted growth by .5 per cent per year (obviously all due to NAFTA, not anything else). A big beneficiary was the auto industry.
It cost jobs, and a big victim was the auto industry. It seems obvious that without workers any "growth" is purely imaginary.
Somehow those two don't seem to fit together very well, do they?
It resulted in foreign investment - 240B, while Americans moved 452B to other countries. Not sure how this is a "pro" when net investment (and job creation) is negative, away from American workers, again costing American jobs.
Each nation's government opened bids to foreign countries. Unsaid is how US companies benefitted vs Canadian and Mexican companies - with the massive difference in overall govt. spending one might assume that those two countries got the lion's share of govt. jobs to foreign companies.
Wages were suppressed in the US. As jobs migrated out of the country (according to your link) employers were under no pressure to raise wages; there was a supply/demand imbalance in the worker/job picture.
It produced additional illegal aliens feeding at the American trough and taking American jobs.
30% of Mexico's labor force worked in border area manufacturing, shipping it to the US. Doesn't seem to do much for American workers, though.
Bottom line is that there was precious little overall benefit from NAFTA to American workers. Consumers benefited, though, as particularly Mexican labor was so cheap. At least as long as we don't figure in the loss of taxes and increase in support costs for those jobs that went to Mexico.
I WILL agree, as I've seen in another thread, that a strong trade agreement, opening up very nearly all trade to whoever wants it, would likely be a good thing with Canada. Ditto for the EU. They are very close to the US in lifestyle and wages, although govt. subsidies will always be a bone of contention. Mexico, though - the standard of living and wages are both so far removed from the US that it is very difficult to actually gain anything from Mexico. NAFTA style trade agreements between third world and "first world" countries just aren't going to do well for the richer country - consumers are too stupid and too greedy to realize they are shooting themselves in the foot by buying foreign labor at a tenth the cost it is at home.
I didn't blame the enormous unemployment rate on NAFTA and it is disingenuous of you to say I did OR imply that the jobs lost to Mexico didn't play a part in it. Won't go into the root cause of the housing bubble bursting; I understand the cause and think you do too, and it wasn't "failed conservative economic policies".
Yes, trade balances (or imbalances) are the result of supply and demand. And when the supply side goes to a different country with cheap labor while demand remains in a country with expensive labor, consumers benefit while workers pay the bill in job loss and lower incomes.
Now. Let's look at the job losses you refuse to acknowledge. Joe, working in an auto manufacturing plant in Detroit, loses his job when the plant moves to Mexico (under NAFTA perhaps. Or for some other reason). Mary, graduating from OSU, finds a job in Portland Or. at the same time. You're trying to claim that because Mary got a job and total employment went up, Joe's job loss never happened. Doesn't work for me.
Or Joe works making cars, while Karen, a single mother with a child, draws WIC. Joe loses his job and draws food stamps, while Karen's child aged out of the system and she lost HER WIC as a result. So Joe didn't go on welfare because there was no net increase in welfare payments for the country. Still doesn't work for me. Job loss is very real, whether someone else, someplace else, gets a new job or not. Same for welfare support.
Eso, I've long been an advocate for free trade, but I'm backing off lately. I always felt that if we were willing to take a reduction of our standard of living, we could raise third world countries to our level and equal the playing field. Unfortunately, it hasn't worked - we've seen stagnating (or falling) wages for quite a while now...but no corresponding rise in those of the countries, like Mexico, we trade with, and there are dozens more Mexico's if and when they ever join us at the top. It doesn't work, not for those at the top, as the cost is too high and no one (including me) is willing to pay it.Yes, it is purely about NAFTA - that is the topic isn't it?
Yes, that was the experts estimate, that NAFTA boosted GDP by .5% a year. GDP grew faster than than, but for other reasons.
You left out that NAFTA "it quadrupled trade between Canada, Mexico, and the United States." - what are the implications of that do you think? A poorer America? Not really. It is a growing America because of NAFTA
You left out that NAFTA "created jobs. U.S. exports to the other two countries led to almost 5 million new American jobs. In NAFTA's first four years, manufacturers created 800,000 jobs!!!
You also left out that NAFTA "tripled foreign direct investment. U.S. businesses invested $452 billion in Mexico and Canada. Companies in those two countries invested $240.2 billion in the United States. That helped U.S. manufacturing, insurance, and banking companies."
You left out that NAFTA "lowered prices. U.S. oil imports from Mexico cost less because NAFTA got rid of tariffs." and lower oil prices in America lowered production costs in America which lowered prices and increased profits, in America
You left out that NAFTA "increased competition and lowered costs
Yes, "500,000-750,000 U.S. jobs were lost in certain industries." BUT[/] America GAINED [b]5 million jobs. Do the math, and America gained somewhat MORE THAN 4 million jobs due to NAFTA.
Yes, NAFTA did suppress wages somewhat in a few industries. But the economic and job growth FAR outweighs this negative don't you think. (Or do you think we should have forgone the 4 million jobs and GDP growth in order to keep wages up in a few industries? Is that your point?
Yes, another negative was that NAFTA "Sixth, NAFTA allowed Mexican trucks access into the United States." Is preventing this worth giving up all the other gains.
Finally, and American don't care about this, NAFTA drove Mexican farmers out of business because America was allowed to sell subsidized farm products in Mexico - a Big benefit to American farmers.
Yes, Joe may have lost his job but Jane, Mary, Bob, Jack, and Susan found new jobs. Would you rather that Bob kept his job and the others not gotten work? That doesn't make sense to me. How does it to you? Benefit one American and hurt four others, that is..
Yes, we have seen stagnating or falling wages for sure, primarily due to the recession and poor tax policies. It has almost Zero to do with NAFTA.
Finally, let's say we keep everything in the United States rather than let the laws of supply and demand work. It is problematic that this would benefit American's overall and would probably cost jobs in the end.
Why? Because all things would be so expensive in America that Americans couldn't afford to buy them, even at higher wages. Further, no other country will buy from America because things will simply cost too much here.
Also, keep in mind that 0% to 20% of every extra dollar business earns by forcing Americans to buy American made products goes to higher wages. The remaining 80% to 100% goes in the pockets of shareholders and corporate executives. (I base that off of the current income inequality figures, btw)
Another likely outcome, because all things cost more in America now supply and demand insists that demand will decrease as prices go up. Less demand equals less production. Less production means less jobs, even if everything is made in America. Less jobs means lower GDP growth. This is why nations aren't economic islands onto themselves and why the world moved away from the economic isolationism popular during Adam Smiths youth.I thought it was about job loss due to those jobs going foreign. Which, of course, includes but is not limited to NAFTA. At least that was my intention with the first post.
"You left out that NAFTA "it quadrupled trade between Canada, Mexico, and the United States." - what are the implications of that do you think?"
The implication is that trade imbalance with those two nations increased. What did YOU think it implied? That net exports went up?
"You also left out that NAFTA "tripled foreign direct investment. U.S. businesses invested $452 billion in Mexico and Canada. Companies in those two countries invested $240.2 billion in the United States."
Sure enough, foreign investment increased. So did American investment in foreign countries, at double the rate.
Yes, our oil was a little cheaper. Was it worth massive job loss from moving manufacturing to Mexico?
"Yes, Joe may have lost his job but Jane, Mary, Bob, Jack, and Susan found new jobs."
No they didn't. Juan, Jose, and Frederico got jobs as they entered the country illegally to work the new farm jobs. Remember, those are all jobs that Americans won't work. We gained agriculture jobs (lowest paid of anything) while losing manufacturing (highest paid).
"Why? Because all things would be so expensive in America that Americans couldn't afford to buy them, even at higher wages."
A reasonable thought...except that if we don't provide jobs products will still be too expensive to buy. We did well for a long time with American workers, and we bought our own production. What makes you think we can't afford to keep doing the same thing?
"Another likely outcome, because all things cost more in America now supply and demand insists that demand will decrease as prices go up."
Except that demand rises as prices fall relative to income (ANY income is more than welfare or unemployment). That kind of throws a monkey wrench into the whole scenario, IMO.
Bottom line is that it is a fact that American wages have failed to appreciate significantly in the last decade...AFTER the recession ended. That's telling to me - it says pretty plainly that importing our labor as companies moved overseas was a failed experiment that either ends or we accept a lower standard of living for all rather than just those that lost their job. It doesn't work - endless export of our jobs cannot continue and we either stop the practice, accepting a lower SOL for the upper echelons or we all go down.The title of this forum is "NAFTA-Was Political and Relationship Damage Caused by Trump Worth It?"
You said "The implication is that trade imbalance with those two nations increased. What did YOU think it implied? That net exports went up?" Are you kidding me Wilderness, have you ever taken a class in basic economics? You do know, not that it makes any difference, is that America ran a trade SURPLUS with Canada.
But just to clear your misconception up, let me offer an example;
1. Lets say Canada bought $100 worth of goods and services from America, and America buys $100 worth of goods and services from Canada.
2. Let's say the same thing happens between Canada and Mexico, that's $200 in total trade between them
3. Repeat for Mexico and America, where America supplies another $100.
4. For America, that means we are producing $200 of stuff being bought by Canada and Mexico which employs say 5 Americans to produce it.
NAFTA happens and trade quadruples. That means, among other things, America is selling $800 of goods and services to Canada and Mexico. Assume a linear relationship between dollars and jobs (it isn't but for arguments sake) that means 20 American jobs are needed to supply the demand. HOW is that BAD??
The above assumes, of course, zero trade deficits between any of the countries. But change things around a bit and assume we buy $200 from Canada and $200 from Mexico, resulting in a big, bad trade deficit of $100 with each country. But America is still selling $200 worth of goods and services to Canada and Mexico using the same 5 Americans as above.
NAFTA happens and trade quadruples meaning we are selling $800 as before and employing 20 Americans to do it. How is that bad?
Does that make since to you or do you have an alternate reality.
2."You do know, not that it makes any difference, is that America ran a trade SURPLUS with Canada."
Of course, nearly all of my objection is the same trade deal with Mexico. I even said that I though we could profit with open trade with Canada. Was there some reason you forgot to include Mexico in that trade "surplus" from NAFTA?
"HOW is that BAD??"
Because you insinuated we bought only as much as we sold. Was there a reason you limited to that - that you didn't make the scenario where we traded (evenly) $100 with Canada, bought $1,000 from Mexico and sold $100 to Mexico? And THAT means that the jobs went to Mexico - a bad thing for us. And then you want to say that because we sold $200, requiring American labor...while forgetting to include the $1,000 we bought, using Mexican labor.
So re-run your figures with more realistic ones, where we buy far more than we sell. THEN figure labor=purchases (linear relationship) and see where the workers lived.
Or just forget the buying and selling, just do the equation with net sales - a negative figure for America, resulting in a negative man hours to produce it. Same result in the end - we lost labor hours from the country. Trade could go up by a factor of a million, but if it's negative sales (and hours worked) it is not a good thing. For us - for Mexico it was great! Their people got to work, they got new manufacturing plants built with all the foreign investment, they (presumably) earned more tax dollars...while we did the opposite."Because you insinuated we bought only as much as we sold. " - You apparently didn't read the whole example, otherwise you wouldn't have written that. Let me explain:
There were two (2) parts to the example. One was, and I said this, is assuming trade was equal. The second example gave America a big, bad (but meaningless) trade deficit.
And guess what, the answer came out the same, America grew the same number of jobs. My point is, of course, is that running a trade surplus or a trade deficit, means nada, nothing, zero, to the economic welfare of the nation running either.
OK, let's take your example, I think you said we sold $200 (using 5 Americans to produce that much) to Mexico and Canada. We also bought $100 from Canada and $1,000 from Mexico.
Then NAFTA happens and the the figures become: we sold $800 (4 times $200) and bought $400 from Canada and $4,000 from Mexico. So, the question is, how many new Americans were employed by having to produce $800 worth of goods and services? It is the same 20, isn't it. What does that mean?
It means how much we buy from Canada and Mexico has no bearing on what it takes to produce the stuff we sell to Canada and Mexico.
For Mexico it was NOT great; they lost their entire farming industry to American farmers.
Now lets work with your "equation".
Net Trade = Exports - Imports - Agreed?
So what are Exports?
Exports = Labor Hours x Labor Cost + Cost of Materials + Profit (all American)
And Imports? Who cares, it doesn't effect American Labor does it?
NAFTA happens and quadruples trade. It makes no difference what the distribution of the increase except that American sales can't go down, and they won't. Even if aggregate exports go up just 1% for America, it means more jobs (maybe not in the industries you prefer, but in aggregate).
So, let's say exports do increase just 1%, what does that mean to American jobs?
New Exports = 1.01 x Old Exports = (Old Lbr Hours + .01 * Old Lbr Hrs) x Lbr Cost + 1.01 x Material + 1.01 * Profit
Bottom line - labor hours grew 1%."And guess what, the answer came out the same, America grew the same number of jobs. My point is, of course, is that running a trade surplus or a trade deficit, means nada, nothing, zero, to the economic welfare of the nation running either."
You didn't catch that your point forgot to mention that it would have had many more with equal trade rather than a deficit? And that imports translates to jobs that would have been there without those imports?
"It is the same 20, isn't it. What does that mean? "
Again, minus the jobs that moved to Mexico, and that produced the product we bought. Somehow that keeps slipping by you - that when jobs move, but products get shipped back, it doesn't matter how many new jobs might have been produced: it would have been that many more had the jobs stayed here.
"New <net>Exports = 1.01 x Old Exports = (Old Lbr Hours + .01 * Old Lbr Hrs) x Lbr Cost + 1.01 x Material + 1.01 * Profit" - old exports X factor of, say, 5. Total net exports = -4.99 X Old Exports.
Once more, the jobs lost to imports is being ignored. Put them in there!
- Ed Fisherposted 6 years ago
0Trade agreements should be torn up and revised every couple of decades , It only makes sense , they have to be just as adjustable and interchangeable as national and international economies are themselves , mfg's change , fisheries , crop growers , natural resources , technologies , E- sales , auto industries , ..........Name me one industry, corporation or area of an economy that doesn't change .What about the volatility of national economies alone ? Look at the US dollar and the Canadian dollar alone . Very few people understand the complexities .
Mexico has never been a strong ally, as the Mexican government has forever been wildly corrupt. Canada can't be thought a strong ally with left wing extremist Castro's son running the show. He's an international embarrassment to everyone. Justin of 'peoplekind.'
Everything Trump is doing will benefit us, as the US has much more leverage than, literally, anyone on the planet. It's so wonderful to have a masculine POTUS, rather than a feminine one like Obama.Your crazy Todd, I bet you believe Trump tells the truth, lol.
- Ed Fisherposted 6 years ago0
Canada can at times be like grouper or pilot fish at the head of the whale , scrambling , grouping , stealing and feeding from within the feeding pattern of the whale . Massive , major offsets in tariffs AT American's expense has been around for a century or more , dairy , wood products , whatever born of cheaper labor markets and so cheaper products , Today auto industry , dairy , wood products ,specialty food products , building products like doors , windows , roofing and siding products .
Mexico on the other hand has sold out to the cheap , cheap , cheap labor market of mostly subcontractor products to again , the auto industry , appliances , tech , high labor inclusive products like anything to do with steel , welding , fencing , steel building products , enough is enough with American jobs going down the toilet to unappreciative cultures ,, in the meantime THEY export their cultures of poverty , prisons and welfare to America ?
Not anymore .Ludicrous, lol. I can't really believe you think that bunk is true.
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