President Donald Trump may not fulfill his campaign rhetoric and leave the North American Free Trade Agreement. He can still do plenty of harm.
The second round of talks to renegotiate NAFTA just ended amid discord. That the $1.5 trillion North American trade zone is being renegotiated comes from President Donald Trump’s demands for America First. Guess what, Canada and Mexico get a vote, too.
Trump has threatened to withdraw the United States from NAFTA if he doesn’t get his way. And I believe he would attempt to do just that. Remember, he wrecks things. He is incapable of being constructive.
In theory, the president can’t do this. Only the Congress could. And even enough Republican members realize that the biggest losers would be American exporters. Especially in the bulls-eye are the auto industry and other manufacturers in the industrial Midwest, part of a complex three-nation supply chain. To be sure, Congress hasn’t been too vigilant about the Constitution (e.g., failing to call Trump to account for his business interests that violate the emoluments clause).
But now we’re talking real money, and the business interests that thought the good times would roll under an all-GOP government are starting to get afraid. Even if Trump can’t formally withdraw from the agreement, he can undermine it from within, as is happening across the federal government. See Obamacare.
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The damage may already be done. Mexican dictator Porfirio Diaz famously said, “Poor Mexico, so far from God, so close to the United States.” But Mexico today is richer, more educated and more globally connected than in 1994, when NAFTA (a brainchild of Ronald Reagan, by the way) came into being. Mexico has options, even if it would face terrible pain from U.S. protectionism. China, for one, would love to add Mexico to its One Belt One Road, a 21st century maritime Silk Road economic world order.
See how Americans like it when the People’s Liberation Army Navy starts doing freedom of navigation patrols in the Gulf of Mexico.
We’ll know who to thank.
Today’s Econ Haiku:
With Rockwell alarms Boeing
Pot, meet the kettle