News, notes, and observations from the James River Valley in northern South Dakota with special attention to reviewing the performance of the media--old and new. E-Mail to

Friday, January 27, 2017

A whopper about NAFTA and American trade told by Trump and the GOP

The focus on Trump's wall and the fight between Trump and the Mexican president has resulted in an extremely misleading idea about Mexico.  That idea is that Mexico is so dependent upon the U.S. as a customer for its exports that it is really not in a position to withstand a trade war with the U.S.

Some mention that Mexico is the U.S. biggest trade customer, but then the talk slides off into the advantage that the U.S. has over Mexico.  What is left out is that Mexico is not the only country in the Americas that would be involved in a trade war.  When Trump signed his order to build the wall,  the 33 countries of the Community of Latin American and Caribbean States were meeting and they vowed to resist Trump's trade protectionism.

Trump has consistently called NAFTA a bad deal and has blamed Democrats for its deficiencies.  The facts are that NAFTA had huge bipartisan support but the Republicans were more avid for it than the Democrats.  When it was brought to Congress  it was passed by 132 Republicans and 102 Democrats in the House, and 34 Republicans and 27 Democrats in the Senate.  

The majority of farm organizations support NAFTA because it has been huge benefit to agricultural states such as South Dakota.  Smaller businesses like NAFTA because, as the U.S. Trade Representative's office points out 140,000 small- and medium-sized businesses in the U.S. are supported by trade with Mexico.

Labor unions are most critical of NAFTA because their members have borne the most negative effects as jobs were lost to Mexico.  One of the reasons that more Republicans than Democrats supported NAFTA was because it was an extension of the Reagan initiative to shift from a manufacturing to a service economy and to undercut labor unions.  The large corporations were avidly in favor of NAFTA because they saw it as a way to reduce labor costs and enhance their profit margins.  The Republicans represented their interests.  They are being reticent about bringing up their history in shipping jobs out of the U.S. as Trump grandstands about ordering them to bring jobs back to the U.S.  

The renegotiation of NAFTA, which is an agreement between the U.S., Canada, and Mexico, could be perilous for the U.S.  if Mexico becomes hostile to any further dealing with Trump.  The people of Mexico are urging their government to firmly resist him and were urging him to cancel his meeting with Trump regarding the wall and trade.   Mexico's former president Vicente Fox has said Mexico is ready for a trade war.  Fox, a former businessman, has said the  relationship between Mexico and the U.S. is at its lowest point since the two countries were at war with each other.  Mexico could refuse to deal with the U.S. and instead form a trade pact with Canada and the Community of Latin American and Caribbean States.

Furthermore, Trump has withdrawn the U.S. from the Trans Pacific Trade Agreement, which leaves China as the largest economy among the nations involved in it.  China is working with the Asia-Pacific Economic Cooperation (APEC) initiative which met in Peru late last November.  Mexico with the support of its neighbors and inclusion of Canada could realign its economy away from the U.S.  Some Latin and South American leaders think such a realignment could expedite the development of their countries.  

When the U.Sl creates so much ill will and resentment among its neighbors,  it is not anywhere near as powerful as it thinks it is.  The lies told by Trump and his GOP allies can damage the U.S. economically as much as they have morally.  



Roger Cornelius said...

What are the direct and immediate impact of Trump's 20% tariff on Mexican imports?

David Newquist said...

NBC News and Bloomberg says it would raise prices for Americans: 10 percent on cars and produce, 20 percent on appliances.

Produce would be further restricted as to availability. If Mexico puts more effort into aligning itself with ithe Pacific alliance, more of its produce would ship into that region if the Pacific nations can expand air delivery. And the restrictions on migrant labor threatens to limit the harvesting of U.S. grown produce.

The other aspect is that Mexico is the U.S.s biggest market and that would diminish as Mexicans look to other sources.

Blog Archive

About Me

My photo
Aberdeen, South Dakota, United States