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Is a NAFTA Showdown Approaching?

Posted October 25, 2017

Under Economic Issues, International Trade Issues

(Robert J. Samuelson – Washington Post)

The NAFTA war is heating up. It’s a confusing conflict because perceptions are driven by political rhetoric, not economic reality.

NAFTA, of course, stands for the North American Free Trade Agreement, which has eliminated most tariffs among the United States, Mexico and Canada. During the campaign, candidate Donald Trump denounced NAFTA as a bad deal for the United States. He vowed to improve or scrap it. The trouble is that NAFTA actually isn’t a bad deal for the United States.

Consider. Canada and Mexico are the first- and second-largest markets for U.S. exports. In 2015, these exports — counting both goods (such as computers) and services (such as tourism) — amounted to $600 billion. That’s more than a quarter of total U.S. exports and almost four times U.S. exports to China.

Why would we want to attack our best foreign markets? But what about the massive trade deficit with Mexico? On inspection, it turns out not to be so large. Click here to read more.