Some believe NAFTA has been a “failure”, including President Trump, and has had negative outcomes, particularly...

Some believe NAFTA has been a “failure”, including President Trump, and has had negative outcomes, particularly for the US. What negative outcomes for the US have been raised?

Expert Solution

There are two main negative outcomes are cited by different people and leaders regarding Nafta, they are:

Loss of manufacturing industries: Nafta has allowed the manufacturers in the US to shift their base to other countries like Mexico where the manufacturing cost is low because of their lower wage rates. This has shifted almost entire manufacturing industries of automobiles and other goods to Mexico. resulting in very less manufacturing activity in the US.
Loss of Jobs: Because the wages are low in the neighboring countries they attract more and more industries and benefit from their comparative advantage. This leaves the people in the US unemployed. NAFTA is seen behind this outsourcing of jobs because under Nafta the US can't impose any tariffs on these incoming products which will give the local industry some leverage to compete in the market.
Wages in the US were suppressed because of Nafta. TO compete against the low wages in Mexico, the wages in the US were suppressed to make the local industries competitive. This reduced wages caused a lot of problems for the local working population.

Rahul Sunny answered 1 year ago

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