NAFTA "Lite" in the Works 🥑🦅🍁

Mandel Ngan / AFP / Getty Images

Mandel Ngan / AFP / Getty Images

A new trade agreement on the horizon

On Monday, the US and Mexico announced the terms of a North American trade deal projected to replace NAFTA. The agreement notably lifts tariffs for Mexican products whose parts are mostly made in North America. It also requires 40% to 45% of each automobile to be made by workers paid over $16 an hour, discouraging manufacturers from turning to lower-wage plants in Mexico.


Remind me about NAFTA

The North American Free Trade Agreement (NAFTA) lifted tariffs on almost all goods traded between the US, Canada, and Mexico in order to boost business across borders. Last year, President Trump opted to renegotiate the agreement, arguing that NAFTA’s terms put US workers at a disadvantage. The deal is only partially done and still requires Canada’s signature and Congressional approval.


Supporters hail the agreement as a victory over the archaic NAFTA. They condemn NAFTA for allowing American companies to capitalize on Mexico’s low wages at the expense of American jobs. They laud the agreement as Trump bringing prosperity back to the manufacturing industry. Articles also point out that the agreement, though not perfect or complete, is a better alternative than withdrawing from NAFTA entirely. 

Critics caution that it is too soon to tout the agreement as a victory. They point out that Canada has its own list of demands. They predict no tangible change in the upcoming months, focusing on the fact that Congress still has to approve the deal. Articles from this side predict a bipartisan hesitation to jump into this new agreement: Democrats will push for inclusion of Canada while Republicans will want to protect free trade.

The Art of the (Bilateral) Deal

It’s a victory that both sides recognize the agreement’s benefits to US workers, but there remains uncertainty in the short and long term. In the short term, Canada’s potential reluctance to sign a deal may delay a new NAFTA. In the long term, Trump may opt to negotiate separately with Mexico and Canada, though doing so will fragment North America’s economic prowess. 

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