Explaining NAFTA: What is the North American Free Trade Agreement?

Explaining NAFTA: What is the North American Free Trade Agreement?

INDIANAPOLIS (WISH) —   President Donald Trump said he plans to meet with leaders in Canada and Mexico soon, to start renegotiating the North American Free Trade Agreement. Revamping NAFTA was one of Trump’s central promises on the campaign trail.

The White House said Trump will meet with the Mexican President on Jan. 31 to start negotiations. Trump has called NAFTA the worst trade deal in history. He blames it for the losses of many manufacturing jobs in the United States.


NAFTA is a trade agreement between the United States, Canada and Mexico.  It essentially eliminated tariffs between the three countries.  The goal was to lower cost of goods and boost trade between the countries.

Trade has tripled between the three countries since NAFTA went into effect. American consumers benefit from cheaper clothes, food, cars and electronics that are made in Mexico.

There are potential downsides to NAFTA as well. Critics argue the trade agreement is costing the United States jobs.  American manufacturing companies can take advantage of cheap labor in Mexico, and then send those goods back to the U.S. without being taxed.

Before the election, Trump insisted companies would be taxed if they made their products abroad.

“Let’s say Ford moves to Mexico. If they want to sell that car in the United States, they have to pay a tax. Here’s whats gonna happen. They’re not going to build the plant there,” said Trump on CBS 60 minutes, [NAFTA] is a disaster. We’ll either renegotiate or we’ll break it. Every agreement has its end.”

Experts don’t completely agree on the effects of the trade agreement.  A 2015 non-partisan report from Congress found NAFTA did not cause the huge job losses critics had feared. There’s also analysis that shows America has lost more jobs to automation than to Mexico.

Click here to watch a NAFTA explanation from CNN.

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