What Happens to NAFTA & Other Trade Agreements in a Trump Presidency?

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It is now confirmed that Donald J Trump is the president elect for the United States of America after winning the US 2016 elections on November 8th. However, a Trump presidency comes with a lot of uncertainty as to how his proposed new economic policy changes will filter through the economy and their long term impact. Among the top economic policy changes proposed by Trump is the reversing of the North America Free Trade Agreement (NAFTA) between the US, Canada and Mexico.
Market jitters emanating from such potential radical economic policy changes started trickling into the financial and commodity markets. On the night of the elections, the Dow dropped by about 800 points while interest rates in the US bond market started to rise shooting up from 1.77% to 2.3%; the largest margins experienced only three times in the past decade. The US bond price hike was attributed to the remarks made by Trump when giving his victory speech that implied his government would spend heavily on infrastructure development. As markets were dipping and rising randomly online traders took advantage of the election outcome uncertainty and the resulting surprise outcome to make money through binary options trading platforms  (a financial option in which the payoff is either a fixed monetary amount or nothing at all, such as TradePlus.com) among other online trading channels.
When NAFTA was negotiated, the goal for the US and Canada being the developed economies in the trade agreement was to access larger export markets in Mexico with their local products. In addition, Mexico was viewed as a prime destination for companies from the US and Canada; where they could lower their operating costs and eventually improve their productivity. On the other hand Mexico was to have gain from the free trade agreement through a stronger and more stable economic growth, new jobs creation locally and a resulting reduction in illegal migration from Mexico to the US and in some cases to Canada.
However, president elect Donald Trump thinks otherwise with regard to NAFTA and other international trade deals signed by the US and other countries globally. In his submission during the presidential debates and severally in his campaign speeches, Trump argued that NAFTA had been counterproductive by resulting to job loses for Americans which were shifted to Mexico.
A study done on NAFTA’s effect on the economy in 2014 showed that there was an annual loss of 15,000 American jobs as a result of the free trade agreement. However, this loss in jobs is compensated for by increase in productivity and lower consumer prices with a total value of $450,000. Since 1993, the US auto sector lost about 350,000 jobs while on the other hand jobs in the auto sector in Mexico rose from 120,000 to 550,000 with the same period of time.
Based on those statistics Trump argued that even the Trans-Pacific Partnership (TPP) would result with similar negative impact on jobs and he would scrap them when elected the president of the United States of America. The message resonated very well with a majority of citizens who felt that closure of industries in the US for companies looking for cheaper production costs abroad was hurting the local job market. As a result, the people woke up in the Election Day and went out to cast a revolt vote to make America great again.
Tax policy changes
To counter the perceived economic rivals for the US, Trump also proposed restrictive and protectionist economic policy changes that are aimed at protecting local industries boost consumption of local goods and services and preventing imports from China and Mexico. In his proposal, Trump promised to slap China with a 45% tax on imports, and apply the same protectionist strategy with Mexico but at a lower rate of 35%. This in his submission would prevent cheaper products from flowing into the US markets from those two economic rivals. The end result would be higher prices for the imported goods into the US from the two countries while the locally produced products that compete with them enjoy cheaper prices and hence enjoy higher customer demand to boost the local businesses.
However, this strategy is not sustainable since the other countries will be forced to apply the same conditions on the US from their end. This will then result to even more confusion in the international trade deals which add uncertainty in the market and increases volatility. To achieve mutual benefits for smooth global economic growth, the US will therefore need to consider continuing with the existing trade agreements as they are; or repeal them based through bilateral agreements.

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