NAFTA

The Protectionist In Chief Will Kill American Jobs

There will be no winners, only losers.

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President Trump is a proud America First protectionist. And yet, the poison pills he injected into the latest round of NAFTA negotiations will not only likely kill

NAFTA
CHINE NOUVELLE/SIPA/Newscom

NAFTA—which he has derided as the "worst trade deal ever"—but also his own agenda of preserving American manufacturing jobs.

Behold America's job killer in chief!

That the latest negotiations weren't going to be a kumbaya session was clear when, on their eve, Commerce Secretary Wilbur Ross penned an op-ed in The Washington Post arguing that the $70 billion trade deficit (the gap between the goods and services America exports to its trading partners and those it imports from them) between the U.S., Mexico, and Canada was costing more American jobs than ever before. Ross claimed that the percentage of U.S. content in manufactured goods coming to America from Mexico fell 10 points and Canada 6 points between 1995 and 2011. What was even worse, in his view, was that these non-American goods weren't even made in Mexico and Canada. Instead, our North American partners were getting them from other parts of the world, especially Asia. This meant that NAFTA was bleeding jobs not only from America, but from North America, defeating the entire purpose of the agreement which was "to advantage those within the agreement—not to help outsiders."

There are holes in Ross' zero-sum analysis big enough to drive several Mexican trucks through.

For starters, there is a fundamental mercantilist fallacy in his concern about trade deficits. He seems to think that these deficits are bad because they mean America is buying more from its partners than selling to them. However, the fact of the matter is that surplus dollars in the hands of foreigners ineluctably make their way back to America in the form of investments, stimulating the American economy and jobs.

But the bigger problem with Ross' argument is that he harps on the annual percentage drop in American-made parts in NAFTA imports while disregarding their rise in absolute terms. Thanks to the treaty, trade between the three countries has increased dramatically. For example, American imports from Mexico have increased from $40 billion to about $300 billion a year. So even if the percentage of American parts in these Mexican goods has decreased, in absolute terms it has increased from $10 billion to $46 billion. Ditto for Canada.

And of course, the Trump administration's flawed analysis leads to flawed remedies.

To keep jobs in America, Ross wants to tighten NAFTA's already stringent "rules of origin" requirements on imports. Currently, the treaty stipulates that 62 percent of the parts in imports, especially cars, must come from North America to avoid the 2.5 percent border tax that non-NAFTA countries must pay. This is among the toughest requirements anywhere. But the administration wants to raise that to a whopping 85 percent. On top of that, it wants 50 percent of the content to be not just North American but American.

This is a myopic demand that will backfire badly.

From the standpoint of maximizing economic efficiency, rules of origin are far from ideal because they force companies to source their components not from countries that offer the best prices, but from where they can get preferential tariff treatment. Still, at the time NAFTA was written, these requirements were not out of sync with the desire of manufacturers to integrate supply chains across North America and expand their regional manufacturing footprint. These rules offered them an additional incentive to do so and stay in the region. Indeed, post-NAFTA, not only did the Big Three automakers expand their U.S. operations, but Asian auto "transplants" also set up shop in America.

But since then, Chinese and other Asian suppliers have lowered the cost — and improved the quality — of their electronic and other intermediate goods used in cars and trucks. Hence, North American content in finished products is declining. Indeed, it is not just Mexican and Canadian manufacturers that are buying more components from China. American manufacturers are too.

Under these circumstances, if the Trump administration insists on tougher rules-of-origin requirements, it would prompt many companies to spurn NAFTA and pay the extra tariff in exchange for more sourcing flexibility. The Toyotas and Hondas of the world would have little reason to stay here, since they already have cross-border supply chains with other Asian countries such as Thailand offering them similar production efficiencies as in North America. From Trump's own standpoint of keeping jobs in America, this move would be totally counterproductive.

And if rule-of-origin demands don't prompt Mexico and Canada to quit NAFTA, other demands surely will.

NAFTA bans preferential treatment for domestic companies in government contracts in their home country. Trump wants to eliminate that ban as part of his "Buy American, Hire American" push, which would effectively mean that Canadian and Mexican companies would be shut out of doing business with Uncle Sam. This would raise the cost of infrastructure and procurement to American taxpayers.

But American workers would win, right? Wrong.

If America insists on such provisions, Mexico and Canada will have to retaliate in kind to appease their own domestic protectionists. That means American companies—and American workers—would lose out as work in Canada and Mexico dries up. Even the U.S. Chamber of Commerce, rarely known to spurn special government treatment for domestic companies, has criticized this demand, along with the one calling for a sunset clause that would allow either country to pull out of the treaty every five years if its trade deficit gets too out of whack with its partners'.

It is hard to accurately estimate the job losses from the collapse of NAFTA because replacement tariffs won't necessarily be uniform across all goods. Trucks are likely to face far higher tariffs than cars. But America produces about 1 million more vehicles annually due to NAFTA which created jobs in the auto industry that now employs about 800,000 Americans. There is no doubt that many of them would be jeopardized if NAFTA is killed and the auto industry retrenches. The worst job losses, ironically, would be in states such as Michigan that helped deliver the White House to Trump.

Most people were afraid that when Trump lambasted NAFTA and promised to drive a hard bargain, he meant that he would use his clout to beat open our trading partners' protected industries (Canada still heavily shelters its dairy, poultry, and eggs from foreign competition, maintaining a 270 percent tariff on milk) without opening America's protected industries such as sugar and citrus. But he's gone way beyond that. It seems like he doesn't want a "better deal" for America. He wants no deal. He wants to build not just a physical wall but also a tariff wall.

The tragedy is that the more Trump tries to isolate America from the world, the louder will be the giant sucking sound of American jobs fleeing overseas from all sides of the border.

This column originally appeared in The Week

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  1. I await all the comments decrying how un-libertarian Shikha is because she support free trade.

    1. I await all the opportunities for you to unleash your brown people rage.

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    2. Please, tell me more about how managed trade is free trade.

      1. Please tell me more about how rules restricting the government from imposing trade barriers count as trade restrictions.

        1. So we’re just ignoring that NAFTA contains actual and real mandated trade barriers? Cool.

          1. Citation needed. And please don’t cite another rule that says “You have to treat the other countries companies the same as your own”, because that’s NOT a trade barrier, retard.

            1. It’s interesting to see a stony-faced tough-as-nails individualist like you defending a trade alliance between the US (which shouldn’t exist), Canada (which shouldn’t exist), and Mexico (which shouldn’t exist). Shouldn’t individuals, by way of free association, have the ability to choose who they’d like to trade with?

              1. We don’t have the option of going immediately to zero trade barriers. The point of NAFTA is to get all the people who are resistant to zero trade barriers to agree to trade off reductions in trade restrictions against each other.

                Obviously, in an ideal world everyone would just unilaterally drop all their trade barriers, but we both know that’s not going to happen.

                1. Obviously, in an ideal world everyone would just unilaterally drop all their trade barriers, but we both know that’s not going to happen.

                  So in the absence of free trade, you’re willing to call a managed trade alliance free trade and then bitch at everyone who doesn’t agree.

                  A bold move, to be sure.

                  1. In the absence of free trade, I’m going to support gradual progress towards freer trade in the form of incremental reductions in trade barriers.
                    Free trade is a long-term cause. NAFTA got us closer.

                    1. In the absence of free trade, I’m going to support gradual progress towards freer trade in the form of incremental reductions in trade barriers.

                      You ought to stop yelling about people not supporting free trade then. Either be principled or be pragmatic, don’t try to be both. But that’s just my opinion.

            2. There are some minor restrictions within NAFTA, but not many:

              From the earliest negotiation, agriculture was (and still remains) a controversial topic within NAFTA, as it has been with almost all free trade agreements that have been signed within the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada?U.S. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products)

              1. Paul,
                That’s not really an “added” trade barrier though. That’s just not including agriculture in the array of sectors where trade barriers were reduced. Sadly, in both Canada and the US, the farm lobby has a lot of political sway, and are able to influence their government to maintain protections.
                NAFTA didn’t add anything to the barriers that were already in place.

            3. Hazel: I already posted the full text of NAFTA a few days ago and clearly you refused to read it.

              As BYODB said, there are trade barriers in NAFTA whether you want to admit it or not.

              1. So cite one.

                1. HazelMeade|10.26.17 @ 2:10PM|#
                  So cite one.

                  Just to shut you up again today…
                  NAFTA full text
                  Chapter One, Part One
                  Article 102
                  (1)(b) promote conditions of fair competition in the free trade area;
                  government interference on what they think is fair competition

                  Article 511: Uniform Regulations
                  A whole section just about rules

                  1. OMG, NAFTA has rules!!!???? Who knew?
                    Cite a rule that increases barriers to trade. Have you figured out that a rule which bars governments from imposing trade restrictions isn’t a trade restriction yet?

                    1. ……and lying progtard skank moves the the goalposts when called on her bullshit.

                      What a surprise.

              2. Not to mention that Hazel is being a bit disingenuous in her interpretation of what’s a barrier, what’s an agreement, and what’s ‘free’.

                Free trade within the Soviet Bloc isn’t exactly free despite the agreement that frees trade within various regions of the bloc. Acting like the agreement is unassailable is idiotic.

                If Google, Amazon, and ber said “Fuck women, fuck African Americans, and fuck the EEOC.” and moved HQs to Mexico NAFTA assures their continued access to US markets. So, free, right?

                1. Let me see if I understand you correctly.
                  Let’s say we have Country A and Country B. Country B has a freer market than country A in some respects. So when country A and B sign a free trade agreement, and Company C relocates it’s headquarters from A to B, are you arging:

                  1) That the ability of B to relocate is a reduction in freedom (if so for who)
                  or
                  2) The A should have the right to impose laws on B to make it less free

                  Back in 1992, I remember libertarians (and the socialists against the agreement) making quite a different argument:
                  3) That allowing C to relocate would incentivize A to make it’s market freer. (Libertarians cheer, socialists jeer).

                  This works pretty much the same way as companies relocating between states. States with unfree markets (CA, NY), lose businesses to states with freer markers (TX, GA), thereby pressuring the unfree markets to deregulate. See right to work laws, and the effect that has had on the distribution of manufacturing in the rust belt vs. the US south, for instance.

                  1. Back in 1992, I remember libertarians (and the socialists against the agreement) making quite a different argument:
                    3) That allowing C to relocate would incentivize A to make it’s market freer. (Libertarians cheer, socialists jeer).

                    And how has that worked out? Mexico and Canada are as free and respectful of human rights as the US? Have we arrived at the libertarian moment yet? Did I miss it? If I did, wouldn’t NAFTA be a pointless waste of paper and manpower in that moment?

                    If Country A and Country B have differing levels of market freedom in some respects (assuming such a thing can be quantized and isn’t just paradoxical) C moving from A to B (or vice versa) isn’t possibly/sensibly morally, economically, and policy-wise neutral nor is the outcome A and B getting more free the only option.

                    Back in ’49 I assume libertarians rightfully cheered the formation of NATO. That hardly makes it a de facto good idea in perpetuity.

              3. She’s too fucking stupid to understand it.

            4. I was going to make a snarky comment but instead I’ll just leave this link here, although a Google search will give you tons of sources:

              Why NAFTA Isn’t ‘Free Trade’

              1. You should try readin your own link:

                However, he is signalling the NAFTA should be reworked to provide more advantages to manufacturers in the United States . If his political plan is realized, the costs of it will reflect the extent to which the pattern of production, consumption and trade deviate from that which would have occurred if individuals were left free to pursue their separate self-interests.

                Trump wants to modify NAFTA to add trade restrictions, not lower them.

                1. You didn’t read the article, you skimmed it for a half-assed argument Hazel. Even Milton Friedman acknowledged it would have little benefit (make of that what you will, it’s been over twenty years or so since then) and it’s widely recognized as a managed trade agreement. It benefits some industries with ostensible ‘free trade’ while punishing others by exempting them.

                  It’s almost textbook crony capitalism, even while you can point to it as an example of more free trade than there would be otherwise.

                  1. It’s a reduction in crony capitalism in some areas and not in others. Trade barriers are *by definition* crony capitalist, because they protect some industries at the expense of consumers and other industries. It’s not like without NAFTA we go back to a default state of free trade. Without NAFTA we go back to a default state of more crony capitalism, which Trump thinks is how things ought to be. He genuinely, sincerely, believes that the government SHOULD restrict trade to force US consumers to buy from favored American companies. That is crony capitalism.

                    1. I don’t give a flying fuck about Trump, and you’ll note the only one talking about Trump is you between the two of us.

                      I’m talking about NAFTA itself and the concept of free trade. Everyone should know by now that Trump is an economic retard considering he is apparently with Bernie Sanders when it comes to protectionist trade policies. You don’t need to tell me how shitty he is on the subject, I already know.

                  2. And, for the record, yes NAFTA is more free trade than there would be otherwise which is precisely why people like Milton supported it. He acknowledged it would be a great deal for Mexico, and that the U.S. would see a slight benefit, which isn’t bad at face value but it is also not ‘Free Trade’.

                    That is as honest of an answer that I’m able to provide you with my understanding of the matter. Maybe the semantics have confused you, which is understandable since that was the original intent in the first place. That is, to confuse people and make them think NAFTA itself is free trade. It is not.

                  3. Can we please just call it ‘cronyism’? Attaching the word capitalism just makes capitalism sound bad.

                2. HazelMeade|10.26.17 @ 2:10PM|#
                  Trump wants to modify NAFTA to add trade restrictions, not lower them.

                  At least you finally admit that NAFTA has trade restrictions.

                  You cannot lower NAFTA trade restrictions if NAFTA doesn’t have them already.

                  1. No, adding trade restrictions to NAFTA does NOT imply that NAFTA added trade restriction on top of existing law.

                    It’s possible to “add” something to something that doesn’t have anything of that thing yet. At least that’s generally how the English language works.

        2. NAFTA:

          “The North American Free Trade Agreement Implementation Act made some changes to the copyright law of the United States, … by restoring copyright (within the NAFTA nations) on certain motion pictures which had entered the public domain”

          I think NAFTA is a net plus for the US economy, and I don’t believe we should pull out of the treaty. That being said, if the Trump administration can negotiate a better deal, then they should. They should not pull the US out if they can’t manage a better deal.

          1. This is probably the best that the anti-NAFTA folks can do. Although copyright law in itself is not necessarily un-libertarian. There are plenty of libertarian arguments in favor of having some sort of IP regime.
            That said, I generally agree that copyright protections for motion pictures are too extensive, and the extension of IP law to other countries shouldn’t be part of any agreement. But it’s way too small of an issue to be a deal breaker.

            1. Considering that the United States has a very real economic interest in intellectual property rights, I think you’re way off base. The United States has an ideas based economy, so to speak, even while we also import and export lots of real goods as well.

              China is a great example of what happens when you trade with a country that doesn’t really give a fuck about your intellectual property, as is the United States when it stole designs for industrialization from Great Britain.

              1. You will note that I restricted my comments to “motion pictures”.

            2. Trump gave notice that the USA is pulling out of NAFTA.

              You lefties have zero clue what is happening because you are too busy with election 2016 shellshock.

            3. There are plenty of libertarian arguments in favor of having some sort of IP regime.

              Not really. The only way it’s true is if you concede the fundamental assumption that an idea isn’t an idea or yours until the government says so or if you buy into the false notion that someone else having the same idea as you somehow deprives you of your idea.

              1. Well, a patent is kind of like a contract – the inventor agrees to publicly disclose how his invention works, and in exchange the government grants him a limited term monopoly on the sale of that product. Absent patents inventors would simply keep the invention a trade secret, which would have the downside of preventing other people from studying and building upon the technology.
                That’s said, I’m not going to say that the way patent law and copyright law works right now is ideal.

                1. Absent patents inventors would simply keep the invention a trade secret, which would have the downside of preventing other people from studying and building upon the technology.

                  You know this is an unrealistically rosy picture, right? you don’t have to publish a true and working artifact or method in a patent, right? Just that you reduced it to practice. I say, as a patent holder, at least 60% of everything patented (and trolled) is obfuscation of actual means of production.

                  That’s said, I’m not going to say that the way patent law and copyright law works right now is ideal.

                  The reason you say this is, again, because there is a fundamental disconnect between equitable property rights and economic maximization and equitable intellectual rights and economic maximization. The only way you ‘protect’ intellectual rights is if you construe them as property, which they fundamentally are not. Squeeze the kickball into any shape you like, it will never be a rigid cardboard box.

    3. Shikha is not for free trade. She is for fair trade that she agrees with.

      Free trade still involves national sovereignty where a country can keep illegals out and heavily regulate who can come into the USA.

      1. On the trollometer I give this a B+, with points for hilariousness.

        1. You are one of the biggest trolls around here Hazel.

          Tony and YOU, hanging around and getting paid to post socialist lefty nonsense on Reason. People probably would not call you a troll if you had anything to say that made sense but you just keep spouting incoherent lefty nonsense over and over.

          Even as a troll, Agile Cyborg gives us something in lyrical form to enjoy.

          1. Cite one post where I advocate socialism. One.

            1. It will take me a minute to look through all your sock puppet comments.

            2. HazelMeade|10.13.17 @ 1:34PM|#
              “Silicon Valley is actually very anti-regulation.”
              Silicon Valley is not socialist says Hazelmeade

              HazelMeade|10.10.17 @ 2:20PM|#
              “The fact that drugs are often insured under community rated insurance plans is a big factor. If your premiums and out of pocket costs aren’t related to how much you are spending on prescription drugs then you have no incentive to buy cheaper alternatives. The lack of price transparency is a consequence of consumers lacking a reason to know what anything costs. Thus, price transparency alone is meaningless unless it is accompanied by consumers having more skin in the game when they spend money.”
              Advocating socialism in healthcare and prescription drugs

              HazelMeade|10.10.17 @ 3:02PM|#
              I think the point is more to be worrying about the guy that the dry cleaner is refusing service to.
              It’s not the “wrong think” that matters – it’s the act of refusing service, and the effect of that on the person who is the target of their bigotry.
              Advocating socialism to control who businesses associate with

              1. Ok, so you don’t know what the word “socialism” means. Cool.

                1. You’re a socialist troll. At least have the guts to own your bullshit.

          2. People get paid to post Socialist nonsense on Reason? How much? And where do I sign up? I can make up some Leftish dribble if the price is worthwhile. (It’s not hard.)

            1. Which really is more proof that capitalism works.

      2. @constitutionboi: Mr. Trump: Build Up The Wall.

        Isn’t enough to have the comment threads at Brietbart and the Federalist to spew your anti-Mexi drivel, constitutionboi?

        1. Whose sock are you?

      3. She is for fair trade that she agrees with.

        If NAFTA truly is free trade, why is it consistently spoken of and framed in a manner other that not just skims shy of free trade but actually sounds like one or more parties is getting fucked?

        along with the one calling for a sunset clause that would allow either country to pull out of the treaty every five years if its trade deficit gets too out of whack with its partners’

        All parties’ compulsory participation in perpetuity sounds like the opposite of free to me.

        1. If NAFTA truly is free trade, why is it consistently spoken of and framed in a manner other that not just skims shy of free trade but actually sounds like one or more parties is getting fucked?

          Perhaps because you mostly consume right-wing populist media?

          All parties’ compulsory participation in perpetuity sounds like the opposite of free to me.

          You sound like Tony complaining about being forced to be free.

          1. The other day loveconstitution was literaly insisting that rules imposed upon the government reduce freedom.

            1. “HazelMeade|10.26.17 @ 1:01PM|#

              Citation needed. And please don’t cite another rule that says “You have to treat the other countries companies the same as your own”, because that’s NOT a trade barrier, retard.”

              You said that halfwit. Then you got the citation you asked for, and unsurprisingly, continued to shoot off.

              Issue the mea culpa and shut the fuck up already clown, everyone can see you were wrong.

              1. Which citation was that? The one that said “NAFTA has rules! OMG!” ?

            2. Aw, poor Hazelmeade, getting smacked down for the lies that you constantly spout.

            3. Well, loveconstitution and Tony are the same person, so that doesn’t surprise me.

              1. Aw, poor sock puppet Hail RaTaxes is trying to defend his lefty friend/sockpuppet Tony.

                What’s the lefty agenda for tomorrow Hail RaTaxes?

                1. “Defend”? I mean, I realize you keep getting flustered, but just take a couple breaths before responding so you make some sense.

          2. You sound like Tony complaining about being forced to be free.

            200 yrs. later, we are *constantly* debating and (essentially) re-writing The Constitution. What makes NAFTA so special that it shouldn’t explicitly sunset? What makes it so special that we should limit it to NA?

            The fact that Trump’s proposing that policy sunset after 5 yrs. and libertarians are shunning him for it is absolute proof of the same ole ‘me first, then you’ tribalism.

            1. It was signed by Bill Clinton, expands government power, and calls itself “free trade” right int he name.

              So… sacrosanct for lefties.

            2. Can we sunset all the protectionist regulations that pre-dated NAFTA first?

              if we’re gonna sunset shit, let’s make it a FIFO queue and not a LIFO queue.

              1. if we’re gonna sunset shit, let’s make it a FIFO queue and not a LIFO queue.

                Ah, sensible. Wait, FIFO of Mexico’s, Canada’s, or the US’s queue? Hold on. Is there something in NAFTA that compels all parties to fall back to the previous agreements in its absence or something in those agreements that renders them in perpetuity (that we can’t also ignore/sunset along the lines of NAFTA)? We aren’t going to make sunsetting the outcome of the Spanish-American War a requirement to sunsetting NAFTA, right?

                Actually, come to think of it, this is getting exceedingly un-libertarian rather quickly for an option that’s not even on the table. I’ll go with sunsetting NAFTA.

              2. I would prefer to sunset the presence of you progtards in my country. Which commie shithole would you prefer to be exiled to? Or maybe drop all of you off in Antarctica?

    4. I await for Hazel to get a job and stop dragging down immigrant productivity numbers.

    5. What’s rule number one in politics? Just because the bill/treaty/agreement/group is titled something, it does not mean it actually IS or does what it’s title says or implies.

      1. I thought the number 9ne rule in politics was to not get caught in bed with a dead girl or a live boy.

  2. How does Shikha manage to get all of her articles posted twice every week?

    1. Because the folks who run this fine website love trollin’.

      1. It’s strange that posting an article in favor of free trade on a libertarian website would be considered trolling.

        1. Well, it’s in favor of free trade agreements, which is not necessarily the same thing as free trade. But the point is that this isn’t the first (or even the second or third) week in which basically the same Shikha Dalmia article is posted twice, a couple days apart, with a slightly different headline.

    2. There so nice they posted twice.
      *pukes*

  3. Shikha Dalmia is the white people of Reason.

    1. And the alt-right is the oppressed victim class. Or at least, based on their whining, they sure sound like it.

      1. We learned from the best- the left.

        Our Constitution is under siege and all my protected rights in that founding document are under attack by lefties.

        I certainly feel oppressed.

        1. Save your whining for the FEderalist where the rest of the oppressed white supremacists can shower you with sympathy, constitutionboi

          1. This is great! A new sock puppet of the lefties on here.

            1. Could be a whole new progtard troll. Hard to say.

        2. Well, do what you did with your dick. Seize it so that no ones will take it away from you.

          1. The alt-right’s massive inferiority complex probably explains the cuckolding fetish.

            Black men are coming to fuck our women … ohh, it’s scary, and yet … tittillating!

            1. Says the woman who is obsessed with black bodies.

            2. The alt-right’s left’s massive inferiority complex probably explains the cuckolding fetish.

              Black men are coming to fuck our women … ohh, it’s scary, and yet … tittillating!

              Its why Democrats kept people enslaved for generations.

  4. Better alt-text: This guy… This guy!!!

  5. Protectionism plays well with under-educated people who don’t understand economics. If you asked Trump’s base to identify Milton Friedman with the following choices

    a) a US congressman
    b) an economist
    c) a character on Office Space

    I feel confident that answer choice b would be the least popular.

    1. And you can’t possibly understand economics unless you know who Milton Friedman is, right?

      1. Also, economists never fall for con men’s schemes nor are themselves con men.

        I’m no economist but nothing says moral and wise (economically or not) like blindly enforcing a multi-lateral agreement in perpetuity.

    2. More likely, they’ll say d) Drumpf’s lawyer

      1. Oh look, another Drumpfer. YAY.

        1. They work so hard to be thoughtful and clever.

    3. Well clearly anyone who voted for,Trump isn’t educated, right?

  6. “The tragedy is that the more Trump tries to isolate America from the world, the louder will be the giant sucking sound of American jobs fleeing overseas from all sides of the border.”

    There’s nothing tragic in having to go overseas to land an ‘American job.’

    1. Isn’t this happening anyway, with GATT and NAFTA?

  7. pulling out is a risky policy but definitely has its benefits.

    1. And what would those be?

      1. Your tears.

      2. Bill Clinton’s signature “achievement” being reversed just like Obama’s signature “achievement” being repealed.

        1. NAFTA was Reagans idea, and was negotiated under Reagan and Bush (I).

          1. Clearly you’re an idiot Hazel. NAFTA was not a “president’s idea” it was cooked up in international committees and think tanks.

      3. Ending the North American Fair Trade Agreement and making trade with Canada and Mexico more free because NAFTA is not US law anymore.

      4. Well I mean not having a condom on just feels better. Is this rocket science?

  8. Cool. Let’s end that disaster of a deal.

  9. I just find it funny we have NAFTA and ‘free trade’ on a macro-level but still have inter-provincial and inter-state trade barriers on a micro-level. For years, for example, we couldn’t’ get Moosehead beer from Nova Scotia here in Quebec because of inter-provincial barriers. Alberta and Quebec warred for years over investment rules and regulations reaching a point where they were just doing things out of spite.

    But NAFTA we need it!

    AND NO THIS IS NOT AN INVITATION TO SHOW OFF YOUR BEER BONA-FIDES.

    1. Interstate trade barriers are illegal you fucking halfwit.

      Sore-y you live in Canada.

      1. So you can take “assault” rifles into Commifornia from other states?

        Didn’t think so. Its against Taxifornia’s unconstitutional law.

      2. No. some interstate trade barriers are illegal. It depends upon the good and whether Congress has occupied the field among other things.

        Did your parents have any children that lived?

  10. We currently run a $63 billion trade deficit with Mexico.

    http://ustr.gov/countries-regions/americas/mexico

    And a $12 billion trade deficit with Canada

    http://ustr.gov/countries-regions/americas/canada

    If America insists on such provisions, Mexico and Canada will have to retaliate in kind to appease their own domestic protectionists. That means American companies?and American workers?would lose out as work in Canada and Mexico dries up.

    Strictly speaking, no. I know Dalmia likely can’t do basic addition, but math remains a harsh mistress.

    It is hard to accurately estimate the job losses from the collapse of NAFTA because replacement tariffs won’t necessarily be uniform across all goods.

    Which is just another way of saying Dalmia has no idea what she is talking about, which anyone who has read her already knew.

    1. AS for the economic effects of walking away from NAFTA, the loss is whatever amount of wealth we have gained because of the comparative advantage of buying our goods from Canada and Mexico plus whatever extra wealth has been created by however many more goods we exported to those two countries that we would not have had there not been NAFTA.

      This will no doubt come as a shock to Dalmia, her being an idiot and all, but the three countries did trade before NAFTA. They traded a lot. And there is no reason to think they won’t still trade even if NAFTA went away. So, the question is how much wealth does the US actually gain from the extra trade it does because of NAFTA. And the answer to that is found by considering the things listed in the above paragraph. Just how much wealth that is, is not an easy question to answer. This is especially true when you consider how the economy will adjust to any new tariffs. Tariffs are nothing but a tax. And the economic effect of them is not so simple to determine since the economy will adjust to them just like a tax.

      1. According to this the USA has a $13 billion surplus:

        https://ustr.gov/countries-regions/americas/canada

        1. With Canada that is.

        2. Misread the numbers. Good catch

      2. The fact that lefties are against withdrawing from NAFTA raises red flags for me, so I look for motive.

        This was Bill Clinton’s signature “achievement” since welfare reform was more Congress’ doing that Clinton’s. Plus, lefties did not really want welfare reform so its not something they see as an achievement.

        I would bet that NAFTA helping Canada maintain its welfare state is another motive. Its kind of like why Lefties are against any exit of the EU. That weakens the socialist utopia-lite that is the EU.

        NAFTA also makes Mexico to USA business travel easier. The lefties love them some illegal immigration to skew US voting.

      3. You forgot an important part of that math, the upside of increased production in the USA for the domestic market. This is always left out of the discussion. It is theoretically possible for a nation to gain more domestically because of additional jobs, tax revenue, and the recirculation effect money has when it stays in border.

        In truth the math is arguably too complex to figure out for sure, but when you’re running a massive deficit with a country it makes it a lot easier for a country as a “unit” to come out the same, or even potentially better with less overall activity.

        You can’t leave out the upside while counting the loses when thinking about something like this. I don’t think NAFTA will make much dif either way. It’s not a horrible agreement from what I know, but even without it we will trade plenty on the items where Can/Mex have solid advantages and not just shaving 5 percent off of costs or whatever for a widget.

    2. Strictly speaking, no. I know Dalmia likely can’t do basic addition, but math remains a harsh mistress.

      It’s hilarious that a group of people who freely admit that when you ban something you intrinsically create a black market think that if you void an agreement (that isn’t in any real way synonymous or oppressive as a ban) people will suddenly cease to exist or starve to death in the streets for lack of a job to do.

      Mexico and Canada might have to rethink their trade policies based on the fundamentals of the American economy rather than just the good will of the man in charge and libertarians are all over not just American trade policy prescriptions but Mexico and Canada’s as well!

      Shikha might as well have said, “Without NAFTA who will pave the roads between the US and Mexico and Canada?”

      1. They act like if we could no longer import manufactured goods everyone would just stand around and go without. No, those goods would be manufactured here. Demand creates supply. Now, they would be manufactured at a higher cost. That is true. But the loss to the economy would be the delta between the cost of importing them and the cost of manufacturing the goods here, not the value of the goods as a whole, which is what they always try and claim.

        1. All true! But also they ignore the benefits of that cash staying here recirculating in the US economy. One manufacturing job isn’t just one job, it’s several after that guy spends his check. The generic free trade argument completely ignores many real world facts. You can argue it as a moral right, but from a practical point of view I think it is not always guaranteed to benefit all parties. The math simply says otherwise. Also, if we didn’t have a fiat currency we NEVER could have sustained this level of deficit for so long. Our wages would have been forced down to remain more competitive so we didn’t literally run out of cash to import with.

    3. “We currently run a $63 billion trade deficit with Mexico.”

      What do you think Mexico is doing with all those dollars?

      1. Ask the people who have them. What do you think they are doing with them? Let me give you a head start, they are not all magically returning to the US.

        1. US dollars are ultimately only good for purchasing and investing in the US. The fact that they change multiple hands before making it back to the US makes no difference in the ultimate outcome. A trade deficit is an account surplus.

          The fact that people accept dollars is ultimately a reflection that somewhere down the line someone will want them to use here.

          1. …”is an account surplus.”

            *Capital surplus

            1. The books must balance out. What you call an investment can just as easily be called debt. By forever running an account deficit, we are in the process running up an endless amount of debt. In the world before fiat currency, trade deficits were not an issue. With a currency of a fixed value based on gold or silver, a nation couldn’t run a trade deficit indefinitely. Eventually, it ran out of currency, its economy contracted and the deficit solved itself. But with a fiat currency, you can just keep printing and borrowing money forever or certainly for a long time. Somehow Libertarians seem to understand how that is a bad thing when you are talking about government debt but can’t see it as a bad thing when it comes to trade. It’s equally bad in both cases.

          2. US dollars are ultimately only good for purchasing and investing in the US.

            No they’re not. They are a measure of wealth and can be converted into any currency you like and invested in any country that will take the money.

            The fact that people accept dollars is ultimately a reflection that somewhere down the line someone will want them to use here.

            No. It is a reflection of the fact that the dollar is a stable currency not likely to lose its value in other currencies anytime soon. It has nothing to do with people’s intention to re-invest back in the US.

            1. Don’t bother, MWG. John refuses to understand anything about foreign exchange.

              1. No. I understand quite a lot. The problem is you are utterly ignorant about the subject. Just go post somewhere else. We can get an AI bot to spew invective and buzzwords.

                1. John’s very smar Hail, believe me. He’s probably one of the smartest people you’ll ever meet.

                  1. MWG,

                    I am a lot smarter and know a lot more than either of you two retards. That is damning me with faint praise for sure, but it is true.

                    1. Sure John, your opinion of yourself is only outdone by Trump’s opinion of his self.

                    2. Knowing that I am smarter than you are MWG does not require a very high opinion of myself. It really doesn’t.

              2. This is Bernie Sanders level-shit. These guys are right. Trump drives people crazy, but it’s not just for the reasons John thinks.

                1. Why is that wrong MWG? Make an argument. There is no law of international trade or economics that says the proceeds of anything purchased in dollars must be invested back in the US. Oil is priced and traded in dollars. Do you really think every dollar that is used to purchase oil on the international market ends up being invested in the US?

                  Look, you fucking moron, if you want to embarrass yourself fine. But for God sake’s stop wasting my time in your quest to do so. And stop fucking pretending you are anything but completely pig ignorant about economics or international trade.

                  1. John, the fact that you share the same views as Bernie Sanders on trade should be enough for self reflection, but nobody here would ever accuse you of being self-aware.

                    Take Trump’s cock out of your mouth for one second and ask yourself this one question: Why are Mexican and Chinese companies accepting billions of pieces of paper in exchange for goods and services that can only be ultimately spent and invested in the US?

                    1. John, the fact that you share the same views as Bernie Sanders on trade should be enough for self reflection, but nobody here would ever accuse you of being self-aware.

                      Ad Homenim is a fallacy. Saying “but Bernie Sanders thinks that”, even if true, isn’t an argument. Again, you are making the claim that something purchased in dollars will result in the proceeds returning back to the US. That is absurd. If you can explain why it is not, do so. But “but Bernie Sanders thinks that” is not an argument. It is wasting my time.

                      Why are Mexican and Chinese companies accepting billions of pieces of paper in exchange for goods and services that can only be ultimately spent and invested in the US?

                      Because those billions cannot only be spent in the US. It is called the international currency market. The Dollar is the world’s reserve currency. The Chinese and Mexicans accept payment in dollars because the dollar is the world’s reserve currency, meaning it keeps its value. They accept payment in Euros too. Does that mean all the money they make selling to Europe goes back to Europe? No.

                      What you are saying makes no sense. Pull your head out of your ass and understand that not every fact is going to fit your narrative.

                    2. John, go find one single economist (conservative or libertarian) who will support your views with empirical evidence. International trade as it relates to capital flows and comparative advantage has been studied ad nauseum since, at least, Adam Smith.

                      Go ahead, I’ll wait.

                    3. Every economist will support my view. This is basic stuff here. Go find me an economist who claims that the proceeds of goods purchased in dollars will necessarily be returned to the US. You won’t find one. If that were true, every dollar traded on the international oil markets would end up being invested in the US.

                    4. You boys are forgetting something very important… Foreigners buying assets in the USA is not a good thing long term. We’re literally selling our country to them for short term gains. Successful people acquire assets, not sell them off.

                      It’s like constantly taking out home equity loans to buy shoes and boats and shit… Starting off with a paid off house you can do this for a long time, but sooner or later your equity is gone and the bank owns your house. Do you really think it’s a great long term idea for China to own trillions of dollars of US real estate, and the associated income? Or for them to own trillions in stock in US companies.

                      In short, a smart person wants to be an investor. They want to own shit that makes tgem money. People who sell things off to buy trinkets don’t get rich. We’re playing consumer/mark/short term thinker while China is playing investor.

  11. The tragedy is that the more Trump tries to isolate America from the world, the louder will be the giant sucking sound of American jobs fleeing overseas from all sides of the border.

    Holy shit is this sentence every manner of absolutely terrible. American jobs fleeing from the Mexican side of the border? NAFTA’s keeping American jobs that would be done in India or China in Canada? Even if you get past the blatant and retarded hyperbole *and* the nonsense distinction between borders, oceans, North America, and Earth it’s still essentially saying ‘the sucking sound of a balloon popping’.

    Trump tweets terrible and worthless crap constantly (essentially) for free. Dalmia, OTOH, gets paid to take the time to carefully craft even more terribly retarded content.

  12. Dalmia writes: “surplus dollars in the hands of foreigners ineluctably make their way back to America in the form of investments, stimulating the American economy and jobs.”

    Anyone who can correctly use the word “ineluctably” in a sentence is okay in my book, but this sentence has to stand alone as one of the great wish-fulfillment fantasies of the decade.

    1. It is a great example of magical thinking. Some of that money will come back but not all of it. Some of it will stay there. Does all of the money that the US makes selling overseas return to the economies from which it came? No.

      I honestly don’t understand how someone who makes a living thinking and writing about these issues can think and write the things Dalmia does. It is just bizarre some of the things she says.

    2. “Investments” = Ownership = Power

      They don’t have to buy widgets, they can buy real property, particularly in government granted monopolies like land and other natural resources. Then they buy the corporations. We end up as nation of sharecroppers on the imperial Chinese plantation.

      Much like in their immigration policy positions, Reason ignores the real power relations involved. Those dollars that come back buy *power* over Americans. When immigrants vote they gain *power* over Americans. It matters who you give *power* over you.

      1. EXACTLY. It’s one of the most glaring problems with long term large trade deficits, and nobody will admit it. A person selling off assets to pay for their shoes and pants etc is obviously in a bad financial spot… So how is it a good thing for a country???

        I’m obviously not against international investing or whatever, but pushing a trillion dollars a year in assets having to be sold off to pay for current consumption… That is NOT a good idea long haul. That’s our entire economy essentially running more than 5 percent in the hole annually.

  13. RE: The Protectionist In Chief Will Kill American Jobs
    There will be no winners, only losers.

    We must have protectionism.
    Otherwise we would have a free market.
    No democrat or republican wants that.

  14. The Free Market Uber Alles, except…
    Corporate limited liability
    Government monopolies in “intellectual property”
    Differential tax treatment for wages and capital gains
    Tax on income instead of property
    Violation of Lockean Proviso

    A lot of rage against violations of the free market. Except when it helps those who Own over those who Labor.

    1. Benjamin Tucker’s critique of Herbert Spencer in 1884 applies to most Reason articles:

      It will be noticed that in these later articles, amid his multitudinous illustrations (of which he is as prodigal as ever) of the evils of legislation, he in every instance cites some law passed, ostensibly at least, to protect labor, alleviate suffering, or promote the people’s welfare. He demonstrates beyond dispute the lamentable failure in this direction. But never once does he call attention to the far more deadly and deep-seated evils growing out of the innumerable laws creating privilege and sustaining monopoly. You must not protect the weak against the strong, he seems to say, but freely supply all the weapons needed by the strong to oppress the weak. He is greatly shocked that the rich should be directly taxed to support the poor, but that the poor should be indirectly taxed and bled to make the rich richer does not outrage his delicate sensibilities in the least. Poverty is increased by the poor laws, says Mr. Spencer. Granted; but what about the rich laws that caused and still cause the poverty to which the poor laws add? That is by far the more important question; yet Mr. Spencer tries to blink it out of sight.

  15. To be clear, Trump and Bernie Sanders have essentially the same views on trade, right?

    1. No they don’t. Sanders wants to stop trade. Trump just wants it on better terms. That isn’t the same thing.

      1. “We have one issue that’s very similar, and that’s trade,” Trump told The News & Observer before a campaign rally in Winston-Salem on Monday. “He and I are similar in trade.”

        Both Trump and Sanders have used the word “disaster” to describe NAFTA, saying it has led to the loss of hundreds of thousands American jobs.

        They have different philosophies for dealing with it, however. Trump has suggested directly violating the terms of NAFTA by setting a 35 percent tariff on goods imported into the United States from Mexico.

        “We will either renegotiate it or we will break it,” Trump said in September.

        Sanders has said he would renegotiate NAFTA but wouldn’t violate it.

        “I believe in trade,” Sanders said in April. “But I believe in fair trade, not unfettered free trade.”

        1. What Bernie calls “fair trade” is nothing like what Trump does. Do they both want to end it? Sure. But Bernie wants to end it because he wants to end trade that isn’t controlled by government regulation. That is a huge difference between the two. Socialism and protectionism are not the same. Stop acting like they are.

          1. “What Bernie calls “fair trade” is nothing like what Trump does. ‘

            That would be news to Trump.

            1. That would be news to Trump.

              “We have one issue that’s very similar, and that’s trade,” Trump told The News & Observer before a campaign rally in Winston-Salem on Monday. “He and I are similar in trade.”

              To what question? How are you and Bernie Sanders alike? How do outsiders like you and Bernie differ from party loyalists?

              You’re own quote/article goes on to show that regardless of what Trump says, he’s not the sine qua non.

    2. Huh?

      Sanders wants children fed and much less than 23 kinds of deodorant no matter where it’s produced. Trump (seemingly) couldn’t care if the children get fed or not and is fine with any number of different kinds of deodorant as long as the best ones are American owned and/or employ some American workers.

      Their views are the same in that Trump does real estate and other business projects around the world and Bernie occasionally sees a business outside Vermont.

      1. “We have one issue that’s very similar, and that’s trade,” Trump told The News & Observer before a campaign rally in Winston-Salem on Monday. “He and I are similar in trade.”

  16. American imports from Mexico have increased from $40 billion to about $300 billion a year. So even if the percentage of American parts in these Mexican goods has decreased, in absolute terms it has increased from $10 billion to $46 billion. Ditto for Canada.

    am i the only one who thinks this statement makes zero sence and does not help in Shikkaki’s argument, where do the numbers come from especially the $10b becoming $40b

    1. That’s like measuring the length of a car’s shift lever to determine if it’s a compact.

      am i the only one who thinks this statement makes zero sence and does not help in Shikkaki’s argument,

      Sadly, no, it’s highly unlikely that you’re the only one here to believe that has any relevance at all.
      .

  17. Can anyone still claim to be surprised that the great businessman whose sole claim to fame outside of being born to wealthy parents, is negotiating with banks who lent him money to reduce the terms of the debt or else he would declare bankruptcy. It was this charming trait that dried up his funding at home and forced him to seek investors overseas, in Russia, the Ukraine, Azerbijan and Cyprus. Now he is taking his take no prisoners style of negotiating to a larger stage. What he did for Trump Air, Trump Steaks, Trump Wine, Trump casinos and Trump University- he wants to do to the whole country. Are we stupid enough to let him?

    1. Nine out of 10 businesses fail. Trump has a better ratio than that, if not much. His father gave him a million dollars and he is now worth at least 4000 times that. He has not been unsuccessful, though many of his past partners have not gotten out of deals as fast as he did when they went south. I would not form a business partnership with him but would take a job as a direct employee. Signing on with one of his businesses is chancy, but he rewards loyalty with loyalty, and responds to all attacks with whatever response is handy, right or not.

      1. More Trump bullshit. He got an initial $1 million loan from his his father, who cosigned a $40 million loan later. Plus Donald inherited a minimum $45 million (his share of dad’s business. Estimates of his total inheritance range form $50-100 million. His dad was a multi-millionaires. He’s dead.

        Based on the minimum actual money from dad, he’d have made 5x as much by investing in common stocks and merely matching the growth of the S&P 500. Then we have all those bankruptcies, and the fraud.

  18. Some of his policies will kill jobs, others create them. Protectionist policies can create some jobs, though generally they hurt more than they help. Still to a large extent other policies can increase jobs more than the protectionism hurts them. Business tax cuts, and removing the overseas tax penalty for bring money back to the states could easily overwhelm his protectionist policies in the area of jobs. His policies so far have led to the lowest unemployment since the Clinton boom years. The fact is free trade does create jobs and lowers the cost of products for the US, It also hurts higher paying jobs in the US.

  19. The Idiot beside him is also great at killing all things successful.

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