Donald Trump has already served more than 100 days in the White House and has not performed one of his leading measures: breaking the trade agreement with Canada and Mexico. This agreement is called NAFTA (Free Trade agreement of North America) or NAPHTHA in English, and dates from 1994.
The agreement was signed by another republican president, George Bush senior, shortly before he first came to power, Bill Clinton. Under this agreement were abolished or reduced the trade barriers between these countries, giving rise to much prosperity on the one hand, but losses on the other.
Something had to dissuade Trump to announce the breaking of the agreement to its members six months in advance. According to Bloomberg, the President has seen a map of the united States, relating to the degree of exports with neighboring countries, and putting it in relation with those states where he has achieved highest number of votes with respect to the democratic candidate, Hillary Clinton.
well, this map, which has not been provided by the White House, but remade from official data, shows a conclusion, as a less curious. It turns out that the majority of the states which supported the Republican Party depend heavily on trade with the american neighbors.
In other words, if Trump decides to break the agreement and impose tariffs at the borders north and south, would be with a reduction of the exports of such states, since canadians and mexicans buy fewer goods and services from the united States to increase automatically the price.
Conversely, it turns out that the states that supported more to the democratic candidate are less dependent on their exports. In other words, Trump would lose a lot of support in the states that voted if you put in operation that part of its electoral programme. You can try to improve the conditions, but do not deviate unilaterally: it does you no good!
In election campaign, Trump announced eliminate or limit trade relations with all these countries of your environment
The magnate converted temporarily to politics has seen what the economists take you trying to say months: the NAFTA is good for the american economy although part of the production deslocalice on the other side of the border. For example, in the business auto, plants the mexican and canadian need parts that come from the USA, since they are not self-sufficient in parts.
therefore, get out of NAFTA is perjucicial to USA, less evil that has been realized. Several manufacturers are betting on Mexico, yes, but that does not mean abandoning the united States, where these manufacturers have all -or almost all – of the factories that are already installed. The low-cost labor is attractive, but there are more factors.
The Administration Trump has to put more advantageous conditions to companies of the sector to not look so attractive in the border country to the south, as significant tax cuts. Is more, has already announced the largest tax cut in the history of the nation -states soon-. You can also subsidise or give special loans.
the united States can direct their path towards innovation, such as driving, autonomous, new services for the motorist, connectivity, electric cars… In these aspects, the largest Spanish-speaking country is not competitive. The added value is the key if employees charge more than in Mexico.
Ford, for example, resigned to mount an additional factory in Mexico, and announced a large investment in technology in the US. This is the way, not the threats of brutal taxes (35% tariffs) or to put the economy on the brink of the abyss. Although the united states is very far away, we do not trust, in a globalized economy, we would end up splashing, and not precisely for good.
Possibly Trump already don’t think that the NAFTA was “the worst agreement in the history” of your country. In the coming months you may see some negotiations in which the U.S. comes out better off in some aspects, though you have to give in on others. On the other side of their borders, many breathe more quiet, the breach of the agreement could mean a great disaster in the short term.