President Donald Trump could jeopardize a trillion dollars in trade and 14 million jobs if he withdraws from a massive trade agreement he is currently renegotiating, warned a report Monday.
The American Action Forum, a center-right nonprofit, released the report to examine the negative economic impact the United States would face if it withdraws from the North American Free Trade Agreement (NAFTA). The research found that withdrawing from the trade deal would have a negative impact on trade, job growth, and consumer costs.
“NAFTA is exceedingly valuable for all those involved in the agreement,” the report stated. “Withdrawing from NAFTA would not only harm the U.S. economy and create complexities in cross-border trade with Canada and Mexico, but would also reverse much of the strategic progress that has been made with our border nations.”
Increase Consumer Costs By $7 Billion
The report adds that withdrawing from the trade deal could cost 187,000 domestic jobs, expose businesses to $15.5 billion in new tariffs, and increase consumer costs by at least $7 billion. Additionally, withdrawing from the trade deal could also send shockwaves through the stock market.
Trump has made immigration and trade critical components of his working-class focused agenda. He argues that cheap foreign labor is undercutting domestic workers. NAFTA has since become the main target for the administration as it has looked to renegotiate trade deals.
NAFTA was implemented in 1994 as a free trade agreement between North American countries — the United States, Canada, and Mexico. President Donald Trump has argued the trade deal has put domestic workers and businesses at a disadvantage against foreign labor.
U.S. Trade Ambassador Robert Lighthizer detailed during a congressional hearing June 22 that the administration plans to renegotiate trade deals to be fairer and more efficient, enforce trade deals more aggressively, and increase domestic exports. Those goals have been consistent talking points as the administration has discussed trade.
Investment Banks Predicts NAFTA Exit
Trump, just last month, wrapped up the fifth round of negotiations which concluded in Mexico City. The administration has stated that the talks are making meaningful progress. At the same time, reports have suggested that the United States, Canada, and Mexico are struggling to reach a conclusion after several contentions proposals were presented.
Investment bank Goldman Sachs expects the administration to ultimately announce its intention to exit from the trade deal. Bloomberg reports that the announcement could come in January. Trump has said he is trying to make a better trade deal but is willing to pull out.
Trump was also able to upend another major trade deal before it was fully implemented by withdrawing from the Trans-Pacific Partnership (TPP). The agreement would have been the largest regional trade deal in history at roughly 39 percent of global GDP.