When I got assigned the topic of NAFTA at the beginning of this week, I figured it would be a fairly easy topic to research since I learned about it in APUSH. In reality, I had no clue about its impact at all, with only the vague knowledge that it was a trade agreement between Canada, the US, and Mexico.
As a brief introduction to NAFTA, it stands for the North American Free Trade Agreement. It opened up trade for the US, Canada, and Mexico by eliminating tariffs on trade (aka free trade). As a person who had zero interest in NAFTA (considering its creation over a decade before I was born and my disinterest in economics), I had zero idea about the effects NAFTA had on employment. After NAFTA was implemented, 600,000 jobs were lost over two decades. Many manufacturing jobs were lost, especially in the automotive industry. Without tariffs on trade, what’s stopping a company from going to Mexico for cheaper labor? Then, they can just ship products to the US without any tax. With companies trying to spend as little on production as possible, thousands in the US lost jobs as well. As much as NAFTA had an impact on employment, I can’t discount the good it did bring. NAFTA led to a sharp increase in overall trade and cross-border investment, which helped anchor reforms to the Mexican economy. Additionally, it’s not fair to completely blame NAFTA for everything either. It’s arguable that job loss would have happened without NAFTA anyway, considering other economic factors.
Now, with general negative attitudes to NAFTA, I guess it isn’t that surprising that it was eventually replaced in 2020 by the USMCA (United States-Mexico-Canada Agreement). However, I was still a bit shocked when I came across it, considering that it only happened in 2020 and I had never heard of it. USMCA is basically a revised version of NAFTA, intended to modernize it. Some notable changes include provisions on digital trade and intellectual property, environmental regulations, incentives for automobile production in the US (considering all the outsourced production from NAFTA), and quotas on Canadian and Mexican automotive production (again, outsourcing). Now, this is all fine and expected, but while I was researching the differences between USMCA and NAFTA, I came across a very good question: what about the trade war? I’m sure most of us know how Trump has been putting tariffs on trade all throughout this year, but how does that affect the USMCA? Surely, that’s just breaking the whole agreement, since both USMCA and NAFTA are built on free trade. Also, why would Trump do that when he was the one who ratified USMCA in his first term? Well, it turns out that these questions are still up in the air. As of now, Trump has attempted to place tariffs on Canada and Mexico, delayed them, put them back in place, and then removed them from all USMCA-compliant products until April 2nd, 2025. From here on out, who knows what’s going to happen?
Here's some more sources if you'd like to investigate for yourself:
This was such an interesting post to read. I like how you explained NAFTA and USMCA in a way that actually makes sense without sounding too technical. It’s cool how you pointed out both the good and bad sides of these trade deals instead of just one. The part about the trade war and how it affects USMCA really got me thinking about how unpredictable politics and economics can be.
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