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islander507

Trump administration outlines negotiating priorities for NAFTA

http://thehill.com/policy/finance/342432-us-trade-officials-outline-priorities-for-nafta

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The United States on Monday said reducing its trade deficits is a top priority for revamping the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

The Trump administration sent Congress its required NAFTA objectives saying the aim is to 
improve market access for U.S. manufacturing, agriculture and services in the three-nation deal.

I support the priority, persuade me otherwise.

Gooberry

The primary source of the problems to the US economy from Nafta is that earnings per hour in Mexico is lower than the earings per hour in the US. This is also the source of the problems to the US economy with China, Thailand, and pretty much everywhere.

When labor is a significant fraction of the cost of goods sold; those same goods can be sold at a lower price if made by a country with lower wages; provided the cost of shipping is less than than the difference in labour.

Renegotiating NAFTA will not change that

The only thing that will change these things, is if China, or Mexico or anywhere else have substantially higher wages. Higher wages mean less competetive manufacturing, and the U.S having a much larger market in Mexico.

Renegotating NAFTA to artificially increase the market of goods in Mexico; may increase the amount of US goods sold there initially, but would damage the mexican manufacturing sector (in area's where they would end up competeing), which would end up lowering wages, which in many cases is counter productive.

Goods and Tarrifs to reduce imports would work; but would raise prices for everyone, which would put pressure on lower wage workers in the U.S: which would end up increasing inflation which would; increase the competitiveness of Mexico.


The elephant in the room, however, is that Robots don't earn wages: the biggest killer of jobs and wages in the U.S. is that robots and automation will do jobs for free that were earning substantial amounts before.

Automation has killed off masses of manufacturing jobs, check-out and till automation will be killing off service jobs; internet and software automation of retail is killing off retail jobs; and you don't have to look very far at self-driving trains and cars and the like to realise that transportation is going that way too.


The jobs that existed even 20 years ago that have gone are likely not coming back; and the type of unhelpful Nostalgia to try and convince people that you can go back is mostly just a canard. In reality, the jobs created due to the trade deficit; out sourcing, factories, etc can't come back because of the above.

ale5

Wrong.  The optimization should happen on maximizing value amd strategic capability, not just overall trade deficit.  US should focus on production of goods and services of strategic importance, not soap and pencils where others have a permanent cost advantage.  If US focuses too much on producing everything ourselves, we will have a disadvantage compared to other counter that can outsource appropriately 

northsouthkorea

No, fair trade is free trade and what he's doing is not.

kmelkevolution17

NAFTA promotes the higher rates on US exports and imports. The treaty must be renegotiated. At times, tax on items can go to 100%.

This is unfair to the US and can not occur.

Gooberry

kmelkevolution17 said:

NAFTA promotes the higher rates on US exports and imports. The treaty must be renegotiated. At times, tax on items can go to 100%.

This is unfair to the US and can not occur.

This doesn't seem to make sense.

NAFTA promotes higher rates on US exports and imports? Of course: it's a trade agreement, it makes it easier to export and import. This is the point; it does not make it unfair.

Tax on items can go to 100%? What items? Where from? Why is that unfair? The whole point of NAFTA is to remove taxes; with the last applicable tariffs being removed in 2008. So it is unclear what you are talking about in this regard.