According to John Brinkley in an article titled NAFTA Withdrawl Would Increase, Not Lower, U.S. Trade Deficit with Mexico, if President Trump withdraws from the NAFTA agreement, the United States trade deficit with Mexico will increase. Without NAFTA, the three parties will revert to the WTO, which means each country must agree to limit its tariffs to a certain level. Currently, the United States' average applied tariff with Mexico is 4.5% while countries that have no free trade agreement is only at 2.8%. If the agreement fails to continue, tariffs must be raised equally around the entire world.
You can read more about how the NAFTA withdrawal will increase the United State's trade deficit with Mexico HERE.
Source:
Brinkley, John. "NAFTA Withdrawal Would Increase, Not Lower, U.S. Trade Deficit With Mexico." Forbes, 2 Nov. 2017, https://www.forbes.com/sites/johnbrinkley/2017/11/02/nafta-withdrawal-would-increase-not-lower-u-s-trade-deficit-with-mexico/#2ecaf6023d99. Accessed 5 Nov. 2017.
What do you feel about this situation? Have WTO agreements surpassed the purpose of NAFTA?
ReplyDeleteSeems like every theory on impacts in international affairs and business can easily make a 180 degree turn and have an opposite outcome of that predicted. What will be the consequences for the US trade regarding Canada?
ReplyDelete