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Interview: NAFTA & Jobs

It’s important to understand the lay of the land. In the second half of 2016 Mexican exports growth rebounded to a one-year high, and paradoxically, the plunge in the peso trigged by Trump’s election actually made Mexican exports even more price competitive. Furthermore, ECRI’s Mexican Leading Exports Index, which anticipated that bounce in Mexican exports, is still pretty optimistic.

The Trump administration is likely to tweak NAFTA rather than tear it up and start over. The starting place for negotiations will be in line with earlier-agreed-to TPP conditions addressing items like “dumping” products into the U.S. and non-tariff barriers to U.S. exports.

But many complications, including the tightly-knit supply chains spanning North America, so it’s like pulling on one string that can make the whole thing unravel.

Manufacturing Jobs

The U.S. actually gained ¾ million manufacturing jobs in four years following the January 1994 NAFTA enactment.

Then, in years leading up to and including the 2001 recession, the U.S. lost almost 2 million manufacturing jobs, and another 1½ million between December 2001 (when China joined WTO) and February 2004.

After a period of stabilization, the U.S. lost another 2¾ million manufacturing jobs from spring 2006 to spring 2010 straddling the Great Recession, with fewer than a million manufacturing jobs having since been clawed back during the current expansion.

While unfair trade may be part of the diagnosis of those job losses starting over 15 years ago, it is important to understand that shifting manufacturing back into the U.S. is not going to bring those jobs back. Yes, some jobs will be created, but they’ll be relatively few high-skilled jobs overseeing much more automated production.

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