The North American Free Trade Agreement (NAFTA) is fully integrated into our largely service-based economy, making it difficult to quantity just how bad withdrawing from the agreement would be.
Business Roundtable commissioned a study that sought to do that and as you might guess the numbers are very bad. The study found that at least 1.8 million jobs would be lost in just the first year after withdrawing from NAFTA.
Washington – New economic analysis prepared for Business Roundtable concludes that termination of the North American Free Trade Agreement (NAFTA) would result in the net loss of 1.8 million U.S. jobs within the first year. The study – prepared by Trade Partnership Worldwide, LLC – quantifies the harmful impacts of NAFTA withdrawal by examining how the re-imposition of "most-favored-nation" tariffs on U.S. trade with Mexico and Canada would affect the U.S. economy. This decrease in employment is due to direct and indirect impacts of re-imposing these tariff rates, far outweighing any potential employment increases.
The study found that China's GPD would immediately increase by at least 0.2 percent and see 2 million jobs created because demand for imports from China would skyrocket.
Some Americans may not care about that, but the study also found that American exports to Mexico and Canada would fall by nearly 20 percent. The average American would also see their purchasing power drop by over $650 because of higher prices.
It feels obvious to say this would immediately cause a recession or worse. Entire industries could collapse.
No one knows what Trump is going to do, including Trump himself, but we do know his trade representative Robert Lighthizer is advising him that we should withdraw. Considering what's at stake, Lighthizer may be the most dangerous man in Trump's regime.
There's another risk here even if we don't withdraw from NAFTA. Trump is known for firing from the hip and saying things his staff has to walk back. If Trump even says we're going to withdraw it could cause serious damage.