Foreign trade impact? Not for me!

Categories: 

Tags: 

In the small town of Ely, just around 30 miles south from the Canadian border, foreign trade is not a big issue. The ties with the other side are everywhere, but most locals don't seem to worry about the possible impacts of the review in the North American Free Trade Agreement (NAFTA). The negotiations are being led by the new American administration as part of an effort to reduce the deficit with two of its main trade partners, Canada and Mexico. The argument behind Donald Trump's strategy is to bring jobs back to the United States.

 

Ely's example shows how hard it is to get a broader audience involved in the foreign trade debate. Most people don't realize its effects on their routines. Even when the relationship is part of their lives. In Ely, it is not hard to find locals married with Canadians and boats in the lake going frequently to the other side, one of the famous routes for the many canoers in the city. Changes on the economic connections between both countries, though, haven't yet become a "trending topic". 

 

Recent estimates of the National Association of Home Builders (NAHB) indicates why the subject should be a matter of everyone's concern. According to their calculation, Trump's additional tariff on the Canadian lumber, one of the actions he has taken as part of his protectionist rhetoric, has already increased the material costs of American houses in roughly 20 percent. While it is hard to say whether the figures are accurate, it brings the subject closer to day-to-day life.

 

The additional tariffs on lumber were adopted in the first semester by the new administration. It is an appetizer of the potential impacts to all products that are being benefited by the 25-year-old NAFTA. Experts say the rise in cost seen in the lumber industry would be true for the majority of goods traded with border partners and would potentially have a broader impact in the economy. "It would simply make the pie smaller", says Professor of International Trade at the Hubert Humprhey School of Public Affairs, Robert Kurdle. 

 

Canada is a major partner of the United States in trade, the first destination for the American exports and is responsible for the 11th largest trade deficit. Mexico is the second most important buyer, the third largest trade partner and the second largest deficit for the United States. Trade representative for the United States, Robert Lighthizer, referred to those numbers as a cause of the loss of 700,000 American jobs in his opening statement on the first round of the meetings on the review of Nafta. The meetings are going to last until the end of the year. By then, it might be to late for most Americans to realize the value of trade and help pressure against more protectionism.