 "Dynamic Capital")
Throughout his campaign, Donald Trump made clear that he is no fan of free trade agreements that he believes ship American jobs overseas, specifically naming NAFTA and the TPP (still under negotiation). With only two full days in office, he is wasting no time beginning the process to make NAFTA more favorable to American workers with the announcement on Sunday that he intends to bring the leaders of Canada and Mexico to the table to get the process started.
NAFTA, which took effect in the 90s under Clinton has been under fire in communities across the Midwest where the industrial jobs have fallen victim to cheap labor in Mexico. Studies have shown that the agreement has lowered prices for consumers, boosted economic growth overall, and increased jobs elsewhere in the country, however in the communities were the factories were originally located there were insufficient opportunities for them to replace their old income – forcing many workers to suffer significant pay cuts at new jobs with less advancement opportunities. Trump recognized this concern in those communities, and focused on it throughout his campaign and won states that historically went to the Democrats – which analysts say is one of the main reasons he was victorious.
Speaking to journalists in Calgary, Canada, ahead of the of a conference between Canadian officials on the Canadian-American relations with the new Trump administration, David MacNaughton stated that their correspondence with the Trump team just far has led them to believe Trump is concerned with the American deficit to both nations. However, as the deficit is larger with Mexico, and there is a larger perceived immigration problem coming from Mexico, he is of the belief that Mexico will be the target of the negotiations – not Canada.
Trade experts and government officials are predicting the negotiation will not be done overnight, but will likely take several years because of Canada and Mexico are expected to oppose changing the zero tariff currently in place. Pena Nieto, the President of Mexico has been under heavy fire recently due to alleged corruption scandals and his lack of a clear plan to counter Trump’s call to limit trade and deport illegal immigrants. However, Trump has also refrained from laying out a clear plan on what he would like to see come out the trade deal, only implying he would like to limit trade and halt the movement factory jobs to Mexico.
Since winning the election, Trump has been clear in his intent to impose tariffs on companies attempting to export jobs to Mexico to increase profit margins, and on his plans to build a border wall with Mexico, which he will make them pay for. However, Nieto has remained steady in his response making clear that his country will not be paying for the wall dating back to when Trump was on the campaign, reiterating it again last week during a press conference. Trump plans on meeting both the leaders of Mexico and Canada over the next week, it seems like they will have significant ground to cover before arriving at a mutual agreement.