NAFTA is Critical to the Success of U.S. Textiles
November 10th, 2017
NAFTA is responsible for the integration of textiles production in North America. This has been a major boom for Canada, Mexico, and the United States, and a new study by the Congressional Research Service shows that the U.S. has especially benefited from a consolidated North American textiles market.
The United States currently enjoys a bilateral trade surplus in yarns and fabrics with Mexico and Canada. In 2016, this surplus was more than $4 billion and the value of yarn and fabric exports to NAFTA partners was nearly $6 billion. However, the Trump administration has taken a hardline stance in NAFTA renegotiations and their threat of withdrawing from the agreement puts the United States’ textiles surplus at great risk.
Without NAFTA, exports of U.S. textiles would face high tariffs in both Canada and Mexico. The Congressional Research Service estimates that these tariffs could rise to more than 32 percent in both countries. This would be terrible for the U.S. textiles business and a major opportunity for U.S. competitors in Asia. Higher tariffs on U.S. textiles could cause retailers and apparel producers to start sourcing more goods from Asian manufacturers which would result in a decreased demand for U.S. yarns and fabrics in the NAFTA region.
Ultimately, a NAFTA withdrawal would be a serious blow to the United States’ textiles industry. The Administration needs to be clear about these impacts before making potentially damaging decisions on trade policy.