It’s hard to believe we are even having this discussion, but the threat of a destructive trade war with Mexico is suddenly a possibility. Hard to believe, because there exists more real-world evidence of the damage created by protectionism than practically any other tenet of economics. If one really wished to destroy American jobs and reduce our standard of living, this would be just the ticket.
The 1994 NAFTA agreement succeeded in transforming North America into a tripartite auto manufacturing colossus. Component parts frequently cross borders six to eight times before final assembly in the U.S., Mexico or Canada.
Total trade among the three NAFTA partners exceeded $1 trillion in 2015, a 300 percent increase since the pact was adopted. Remarkably, NAFTA countries represent just 7 percent of the world’s population but generate 28 percent of global GDP.
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