New Study Reveals a NAFTA Withdrawal Would Hit Trump Constituencies the Hardest
November 7th, 2017
A new report by the American Enterprise Institute shows that the states with the highest levels of engagement in international trade are Michigan, Kentucky, Louisiana, Tennessee, South Carolina, and Texas. These six states rely on international trade because of their robust agriculture, automotive, and energy industries.
All six of these states voted for Donald Trump in the 2016 presidential election, but instead of helping these state economies thrive, President Trump is threatening to pull the United States out of its most important trade deal: NAFTA. Despite Trump’s stated intentions, withdrawing from NAFTA would be a disaster for his own constituency.
For example, in 2016, international trade accounted for 38.9 percent of Michigan’s total GDP. This isn’t surprising given the state’s world class auto industry, but what many people don’t know is that Mexico is Michigan’s top import trade partner and Canada is its top export trade partner. At a granular level, this means that Michigan’s automakers buy a lot of parts from Mexico and export a lot of vehicles to both Canada and Mexico. Without NAFTA, these cross-border supply chains would not exist and Michigan automakers wouldn’t be able to compete globally.
And it’s not just Michigan. A recent article by the Washington Post explains just how detrimental a NAFTA withdrawal would be for America’s Heartland. Farmers overwhelmingly voted for Trump in the 2016 presidential election, but as the President has increased his anti-NAFTA rhetoric, the worries of U.S. farmers have grown exponentially. Mounting debt and decreased profit margins threaten the livelihood of America’s farmers and now with NAFTA in jeopardy, Mexico and Canada are looking elsewhere for staples goods – like corn, wheat, soybeans, beef and pork – that they currently buy from the United States. By eliminating NAFTA, Trump would be cutting off farmers from desperately needed access to foreign markets. If Trump makes good on his promise to terminate NAFTA, it would be an unequivocal disaster for the entire country, but for America’s farmers, it could cost them everything.
This sentiment is reflected in the financial sector, too. The Trade Leadership Coalition conducted a survey of Wall Street investors and found that 72 percent of investors believe a NAFTA withdrawal would harm US economic growth over the next 1 – 2 years. More specifically, though, results from the survey show that top investors also believe that the U.S. agriculture and automobile sectors would suffer the greatest losses in the event of a NAFTA withdrawal.
If President Trump wants to defend the voters that put him in the White House, he should modernize and update NAFTA, not withdrawal from it.