U.S. manufacturers are wary of President Donald Trump’s threat to abscond from the North American Free Trade Agreement (NAFTA) altogether if the United States, Canada and Mexico cannot reach agreeable terms.
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“If the choice is between NAFTA as it currently stands and no NAFTA, for manufacturers, there is really no choice at all,” Rick Schreiber, National Association of Manufacturers board member and leader of BDO’s Manufacturing & Distribution practice, told FOX Business. “The benefits of the trade pact far outweigh the cons, and manufacturers in all three signatories have seen an economic payoff from the increased intra-nation trade.”
From January through June of this year, Canada ranked as the United States’ top trading partner with nearly $140 billion worth of U.S. goods exported there, and more than $150 billion imported into the country. Mexico was the United States’ third biggest trading partner – behind China – with U.S. exports to its southern neighbor valued at $118 billion and imports at $155 billion.
Schreiber says, without NAFTA or a similar trilateral trading pact, either U.S. businesses or U.S. consumers will suffer.
“American manufacturers depend on raw and component imports traded at NAFTA terms,” he told FOX Business. “Withdrawal from NAFTA would likely reduce U.S. manufacturers’ net income, unless higher costs are passed on to the customer.”
On Tuesday night during a rally in Phoenix, Arizona, President Trump said he was not convinced the three countries could foster a workable agreement.
“Personally, I don't think we can make a deal ... I think we'll end up probably terminating NAFTA at some point," he said, nearly one week after the first round of renegotiation discussions began in Washington D.C.
Mexico’s Foreign Minister Luis Videgaray brushed aside Trump’s comments on Wednesday, saying during a television interview that the U.S. president was only employing a negotiating tactic, as reported by Reuters. Canada also responded that it was undeterred.