TPP & EU Free-Trade Deal Give Mexico and Canada Leverage on NAFTA

Donald Trump, Economics, European Politics, North American News, Rundown, Taxes, Trade, United States

The Transpacific Partnership that Donald Trump famously withdrew from has recently been signed by every other country that has previously agreed to the trade deal, including Canada, Australia and Mexico. This significantly opens markets once restricted to many of these countries and may diminish the impact on Canada and Mexico if the US was to leave the North American Free-Trade Agreement (NAFTA).

Mexico, along with many other Latin American Countries have been negotiating a free-trade deal for the better part of ten years, but negotiations seem to be heating up as agreements are reached regarding agricultural products and the agreement could be put into place before the year’s end. This is additional to the fact that over 50% of exports from Mexico to the US are not covered by NAFTA rules, and many other products imported from Mexico cannot be imported from any other country or produced domestically at a reasonable price.

Canada’s leverage stands strong as well with increased access to global markets, access to cheaper international goods, and a free-trade agreement between themselves and Mexico under the TPP.

The leverage of the United State’s current North American trading partners is magnified by the fact that many of the states that would be harmed most by leaving NAFTA are red states with strong support for the president. A strong economic downturn as a result of Donald Trump’s decision to leave the free-trade agreement could severely hurt his 2020 presidential run.

Many believe that Donald Trump had no intention to leave NAFTA, and was taking on an extreme position to achieve the largest amount of concessions possible. Unfortunately for Donald Trump’s negotiators, it seems the number of concessions that will be achieved in the US’s favour has been greatly reduced.

Emilio Garcia
Deputy Editor, The Unshackled
Host of the Front and Center Podcast