Answer:
Christine McDaniel, George Mason University
On Jan. 19, 2017, we had the Trans-Pacific Partnership, the TPP. The TPP was set to open up new markets for U.S. farmers and U.S. businesses, small, medium and large. It was designed to do everything NAFTA (the North American Free Trade Agreement) did and more across the Asia Pacific region. Four days later, the U.S. quit the deal.
Today, we have a revised NAFTA in front of us. The revised deal does nothing for our U.S. farmers or businesses across the Asia Pacific region. So, today, I’m going to talk about the economic implications of a situation where the USMCA (United States–Mexico–Canada Agreement) does not pass and the U.S. does withdraw from NAFTA. The key takeaways are going to be the following.
First of all, the U.S. would lose preferential access in our two largest markets, as speakers today spoke about at length. It would be devastating, especially for the small- and medium-sized businesses that rely so much on recent developments in trade preferences. It would also be a strain on every culture for sure. Ironically, we could actually have free trade in autos—that could be a bright spot—but greater uncertainty overall.
Without USMCA or NAFTA, U.S. exports lose preferential access to markets in Mexico and Canada, as you all know. Nearly 30 percent of U.S. exports go to these two markets, and we would be facing not only their MFN (most-favored nation) tariffs, but also bound tariffs (an additional tariff on specific goods that is above MFN rates), which could go as high as 45 percent for