Has Trump Ever Read the NAFTA Agreement?
He fails to see that the world has changed. He may love Twitter and uses it as a weapon, but that’s only the tip of the technological iceberg that’s floating toward his ship. He has the technology to know every fact, but fails to take the time to use it to our advantage.
His weakest point is the fact that he sells his misinformed opinion before getting the facts. I truly wonder if he has ever read the NAFTA treaty and fully comprehends how it works for American businesses.
Mexico purchased an estimated $2.4 billion of corn from the U.S. in 2015, according to Forbes Magazine. Now Mexico is threatening to take their corn business to Brazil. Mexico is currently our 3rd largest goods trading partner with $531 billion in total (two way) goods trade during 2015. Goods exports totaled $236 billion; goods imports totaled $295 billion.
The United States buys $297.7 billion worth of goods from Canada, which is 76.3% of total Canadian exports. Canada is currently our 2nd largest goods trading partner with $575 billion in total (two way) goods trade during 2015.
What NAFTA did in a nutshell was to create a “National Treatment” of all goods and services from the three countries: US, Canada and Mexico. The agreement basically means that for traders outside the zone, they had to treat all three countries as equal when it comes to the rules and regulations.
It also eliminated any tariffs on goods and services. For example, if Mexico makes a car and sells it in the US, they pay no tax on that good. As well, if Canada produces lumber and sells it in the US, they pay no tariff on the shipment. Why is this good?
Well, imagine that if all the US products and services were taxed by Mexico and Canada. We would be most likely also pay a tax to ship, therefore increasing the price of our goods in those two countries and would stimulate an opportunity for other countries to worm into Mexico and Canada with a better price and displace US companies as the preferred vendor. The additional taxes we might impose would not protect the bulk of profits our companies are making right now by selling goods to Mexico and Canada. This would hurt the US economy.
NAFTA helps settle disputes between our three nations and not to belittle another advantage by mentioning it last, but we have Intellectual Property Rights Protections under NAFTA. Without NAFTA, a Canadian or Mexican factory could produce knock-offs of our products and ideas and sell them around the world without much pushback from a world court.
Like the fat kid at the table, the Donald wants to take all the cookies from the other kids. And after he has taken all the cookies, he gets all huffy when he realizes that the other kids will get their own cookies from someone else and he will get none. He never comprehended that his actions hurt him, even when he felt he was getting his unreasonable share.
Trump floated the threat of signing an executive order (4-26-2017) to withdraw from NAFTA and got calls from the President of Mexico and the Prime Minister of Canada to discuss the renegotiation of the treaty. The President Goof-ball smiles, because he thinks he has won something. He once again has only been shown to be the bully he wants to be.
As these countries look to their Plan B, which means opening up trade with other nations to secure the goods they purchase daily from the US, Trump sits in his little oval office with his big plans that will eventually increase prices on everything we import. He is out-of-touch with the global world that was created by technology, not ideology. If you are a free-market capitalist, then you will certainly see that Agent Orange is putting something in the punch bowl.
If he was truly for the common man and on a quest to create new jobs, he wouldn’t keep cutting the budgets and destroying our relationships with customers for our products. He may think he knows how it works, but when Mexico stops buying corn from US, what will he tell that Iowa farmer?
Can we really afford to stop $500 Billion in trade with our NAFTA partners? I’m still waiting for all the greatness and winning. Markets want certainly, not gamesmanship and insolent deal making.