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What will actually happen if Trump withdraws from NAFTA.

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D

dramatis

Member
Donald Trump plans to bring down the hammer on trade from the first day he enters the White House.
According to a memo drafted by the president-elect’s transition team and obtained by CNN Tuesday, Trump is preparing for a wholesale reevaluation and renegotiation of trade policy that could potentially upend economic relationships the United States has held for decades.

"The Trump trade plan breaks with the globalist wings of both the Republican and Democratic parties," the memo states. "The Trump administration will reverse decades of conciliatory trade policy. New trade agreements will be negotiated that provide for the interests of US workers and companies first."

The document lays out a 200-day plan governed by five major objectives: renegotiating or withdrawing from the North American Free Trade Agreement, or NAFTA; stopping the Trans-Pacific Partnership trade deal; stopping “unfair imports”; ending “unfair trade practices”; and pursuing bilateral trade deals. The memo also notes that the Trump White House will be guided by a commitment to “retain and return manufacturing jobs” by lowering taxes and regulations on businesses.
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Now suppose Trump wants to keep the US in the pact but put his self-professed negotiating skills to work in crafting what he insists would be a better version of the deal. He could, again, carry out his promise of reopening the deal. But it would be very, very risky.

Here’s why. Opening new talks about the deal would mean getting Canada and Mexico to come to the table, and any new agreement would yank Congress into the process. Both those realities are going to create their own sets of complications.

Canadian Prime Minister Justin Trudeau has said that he’s willing to renegotiate NAFTA, but Mexican leaders have indicated that they’re not open to it.

And corralling Congress into signing on to a new deal will be immensely difficult. Trump’s anti-trade sentiment proved popular with the electorate, and some prominent members of both parties — including leading liberal senators like Bernie Sanders and Elizabeth Warren — share the president-elect’s skepticism about free trade deals.
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Let’s assume Trump decided to roll the dice and try to change the deal anyway. His basic goal is to penalize American businesses for sending jobs out of the country. On the campaign trail, he deemed outsourcing practices like Ford Motor Co.’s decision to build a $1.6 billion assembly plant in Mexico an “absolute disgrace.” He wants to find some way to either curb those kinds of moves or reverse them altogether.

There are a number of ways to pursue that end goal, but Trump’s rhetoric suggests he wants to do it by raising tariffs on imports from Mexico. That’s something he’d have difficulty getting Mexico to agree to, so he’d have more latitude to do it if he were to actually withdraw from NAFTA. But withdrawal is a tricky business, given how deeply the countries’ economies rely on each other.

“After the 9/11 terrorist attacks, we sealed the border with Mexico and Canada, and within a week auto plants in Michigan had to begin shutting down because they were not getting access to parts they depended on from Mexico,” Rob Scott, director of trade and manufacturing at the Economic Policy Institute, a left-leaning think tank in Washington, DC, told me.
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Let's be honest. Trump is not going to get Canada and Mexico to bend to him that easily. It's questionable if he could actually get rid of NAFTA or negotiate a better deal.

The article links to longer research about the expected effects of withdrawing from NAFTA and other trade agreements.
In a presidential campaign season filled with anxiety about the effects of globalization on American jobs, Donald J. Trump, the Republican candidate, has gone farther than any other candidate. He has head-lined proposals aimed at reversing many years of trade liberalization embraced by both Democratic and Republican presidents. Trump has, for example, variously proclaimed that he would “rip up” existing trade agreements, renegotiate the North American Free Trade Agreement (NAFTA), and impose a 35 percent tariff on imports from Mexico and a 45 percent tariff on imports from China. In total, the United States has signed free trade agreements (FTAs) with 20 countries, all of them embodying the reciprocal reduction of tariffs and other barriers to trade and investment. A Trump presidency could terminate these FTAs and impose high tariffs on designated countries. In addition, Trump has suggested he might “pull out” of the World Trade Organization (WTO), the core framework for US commerce with 163 countries.
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No matter the outcome of domestic legal battles, if Trump is elected, if he actually withdraws from US trade agreements, or if he imposes high tariffs, even as a threat or tactical maneuver, foreign countries will soon retaliate. They will not patiently wait for US court proceedings or litigation in the WTO to vindicate their claimed rights under international law—specifically the right to export to the US market at low (bound) tariffs or duty free. Enormous economic damage to US firms, workers, and communities could ensue from a trade war long before the legal battlefield is cleared. It would be a mistake to suppose that the US courts will intervene to stop a trade war.
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Amusingly enough since the UK is in some straits regarding trade partners as well right now, if Trump follows through, let us cling together.
 
J

Jarmel

Banned
Trade wars don't really help anyone. It's not bringing those manufacturing jobs back. We just don't have the infrastructure now to compete with Mexico or China.
 
G

Gallbaro

Banned
A lot of ex-congress critters (and some current one's) who invested in cross dock loading companies at the boarder prior to NAFTA creation will loose money.

Among tens of thousands of other effects.
 
T

Toxi

Banned
Jarmel said:
Trade wars don't really help anyone. It's not bringing those manufacturing jobs back. We just don't have the infrastructure now to compete with Mexico or China.
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Even if a miracle happened and manufacturing jobs made a resurgence, they won't go to the Rust Belt; they'll go to the South, because manufacturing is cheaper there for numerous reasons. Whoopsies.
 
S

Setsuna

Member
It seems like everyday things get worse, and his presidency hasn't even started yet

Can someone give me some Good news reports
 
K

Kill3r7

Member
They will renegotiate. All parties involved have too much to lose to just outright do away with it. The threat of withdrawing is a tool to use in negotiations.
 
Goro Majima

Goro Majima

Kitty Genovese Member
Trump looking for a quick fix (in the next 5 years really) isn't going to happen even if you could convince everyone to reshore those jobs.

It's a question of capacity more than anything else. All those overseas factories were built 10...15...20 years ago (whenever offshoring really picked up)? The factories available in the United States are probably 20-50 years old and need major reconditioning....which even then wouldn't bring them to match capacity and output of more modern Chinese and Mexican factories.

Okay so what if they start right now and built new factories that will open in a few years? Then you're getting robots and lots of them. Congratulations.

Oh and that's going to cost billions of dollars for most every major corporation selling products. So they're going to have to still charge a lot more for products even once the robots start making them.

All that aside, I'm totally on board with renegotiating NAFTA and other free trade deals. I think there's a legitimate "soft landing" to be had to where some reasonable amount of protectionism can protect US jobs. I'm even fine with eventually building all these robot factories in the US because it at least means that we'd get some new jobs. In an ideal world, these factories would even be held to strict environmental standards which, since they'd be brand new, would be a lot more feasible to accomplish from the ground up instead of retrofitting. It's just that the era of hiring tens of thousands of people for one factory is over. Probably the best time to be an engineer though.
 
K

Kifimbo

Member
Just an example: in Canada, dairy products from the USA are excluded from NAFTA, so we can't import dairy products from the States or anywhere else (technically we can, but there are huge tariffs). The result: the price of our milk and cheese is fucking high.

The same thing will happen for many other types of goods/products if NAFTA is killed.
 
D

dramatis

Member
Kill3r7 said:
They will renegotiate. All parties involved have too much to lose to just outright do away with it. The threat of withdrawing is a tool to use in negotiations.
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The problem is Congress will get involved. Some members are loudly anti-trade agreements (as noted by the article). Furthermore, Trump just got elected on promises like getting rid of NAFTA or getting a better deal. A renegotiation wouldn't pass because of the principled members + the members who want to be reelected and stay in government.
 
A

Ac30

Member
Laevateinn said:
We don't want your cowardly, French electricity. We want our power to speak American.
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American power speaks in coal tar and fumes, apparently. What pussy uses clean, French power.

Also I'd love to see him try and scrap all these FTAs, we're due for another recession, might as well blame it on Trump and cut global emissions while we're at it.
 
K

Kill3r7

Member
dramatis said:
The problem is Congress will get involved. Some members are loudly anti-trade agreements (as noted by the article). Furthermore, Trump just got elected on promises like getting rid of NAFTA or getting a better deal. A renegotiation wouldn't pass because of the principled members + the members who want to be reelected and stay in government.
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Spin is real. Mark my words that they will spin it as getting a better deal.
 
Fox Mulder

Fox Mulder

Member
Even if he brings all the factory jobs back, robots are going to take the jobs.

Working at Walmart sucks, but the people in the mid west are never getting $30/hr jobs making shit anymore.
 
D

Dingens

Member
He isn't going to redraw, just going to play the same blackmail game Reagan played back in the 80s with Japan and the GATT.
It's kinda eerie how similar this is
 
J

Jams775

Member
So I've been wondering what would happen if we got into trade wars with just about every country. Trying to think about positives in any desperate ways however fantastical.

Couldn't it be technically better for the environment if we (USA) got forced out of our consumer habits by getting embargoed by the countries we buy from? Factories couldn't export their wares to the USA so they'd have to stop or lower their production of materials significantly. We could no long just buy a new product because a new prettier one came out.

Because there would be say no new phones or just about any products or materials, we would be in a Cuba situation where people are forced to stick with the stuff we already have and reuse everything. Possibly to the extreme of re purposing parts to make new items.

China and India would probably have to close down many factories and by doing that their pollution should go down drastically right? (I mean there would be a whole problem with people out of work but I'm going more on an environment factor).

Can somebody smarter than I am elaborate on what the situation would bring?
 
M

Mael

Member
Who's the genius who thinks that what's good for a trade-based economy is to impede trade to begin with?
 
I

ItWasMeantToBe19

Banned
Jams775 said:
So I've been wondering what would happen if we got into trade wars with just about every country. Trying to think about positives in any desperate ways however fantastical.

Couldn't it be technically better for the environment if we (USA) got forced out of our consumer habits by getting embargoed by the countries we buy from? Factories couldn't export their wares to the USA so they'd have to stop or lower their production of materials significantly. We could no long just buy a new product because a new prettier one came out.

Because there would be say no new phones or just about any products or materials, we would be in a Cuba situation where people are forced to stick with the stuff we already have and reuse everything. Possibly to the extreme of re purposing parts to make new items.

China and India would probably have to close down many factories and by doing that their pollution should go down drastically right? (I mean there would be a whole problem with people out of work but I'm going more on an environment factor).

Can somebody smarter than I am elaborate on what the situation would bring?
Click to expand...

I.... I guess you could consider those positives?

But 12% unemployment in America and large scale starvation in China and India would outweigh those positives.
 
andythinkpad

andythinkpad

Member
I would love to find out how much Walmart has to charge if everything has to made in the US.

I am all for it the frugal life style btw.
 
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