Reversing NAFTA

The most important pro-business development, outside of reducing corporate and personal income taxes, in the US may happen and it could affect the entire franchise industry. Repealing, or at the very least renegotiating, the North American Free Trade Agreement (NAFTA) could undo or reverse the flow of capital and the drain on US employment that has been occurring since the agreement’s signing over a decade ago. Originally, the stated goal of NAFTA was to eliminate the barriers to trade between the US, Canada, and Mexico. Mexican tariffs on goods exported to the US were lifted, leaving the country with an unfair business advantage. Mexican labour costs are a fraction of what they are in the US and thousands of US companies shut their factory doors, choosing instead to manufacture goods in Mexico and then ship them back to the states at lower prices than they could be manufactured in the US. Those supporting NAFTA argue that prices have been falling due to the collapse of the oil market, but that collapse can largely be due to the economic slowdown in the US. Another con of the agreement was that the wage growth was slowed in the US due to manufacturers in textiles, automotive, and other hard goods industries moving their factory jobs to Mexico. To be fair, NAFTA allows US farmers to export fruit and vegetables to Mexico, all but killing off small Mexican farms.

President Trump started negotiations with Canada and Mexico over the agreement in the August of 2017. NAFTA has exacerbated the trade deficit between Mexico and the US, which now imports over $50 billion more from Mexico than Mexico does from the US. The same can be said for the US and Canada although the amount is slightly smaller.

In charge of renegotiating NAFTA is United States Trade Representative Robert Lighthizer who stated recently, President Trump continues to fulfill his promise to renegotiate NAFTA to get a much better deal for all Americans, said Ambassador Lighthizer. Too many Americans have been hurt by closed factories, exported jobs, and broken political promises. Under President Trump s leadership, USTR will negotiate a fair deal. We will seek to address America s persistent trade imbalances, break down trade barriers, and give Americans new opportunities to grow their exports.