NAFTA. The Trade Deficit(s).

Heather Noggle   November 2, 2017   Comments Off on NAFTA. The Trade Deficit(s).

NAFTA negotiation.  Will it?  Won’t it?  Tune in next week for completely differing information and an ominous tone. NAFTA talks will continue into 2018.

The demise of Nafta, a deal that has knit together the North American economy over the last quarter century, would be a heavy blow to all three economies. A new study by Impactecon, an American consulting firm, found that the United States would lose 256,000 net jobs if it withdrew from Nafta, with the most severe impact on low-wage employment. Mexico would lose 951,000 net jobs, and Canada 125,000, the report projected.

Source: https://www.nytimes.com/2017/10/17/us/politics/nafta-negotiators-extend-talks-delaying-its-expected-demise.html

Days later, the situation was evaluated by Global Trade:

The fourth round of NAFTA renegotiations have just ended, and the tone of the representatives of the three countries involved—Canada, Mexico, and the United States—summarizing the progress so far in a press conference was, to say the least, not particularly optimistic.

Source: http://www.globaltrademag.com/in-the-news/trade-deficit-not-destroying-jobs

So much attention has been given to the trade deficit and the focus on how this affects the US economy, enough that it’s the prevailing talking point.

Forbes offers agreement here:

Trade deficits are simply a matter of subtracting exports from imports. They are not inherently bad. A country’s trade balance moves toward surplus during recessions and toward deficit during periods of economic growth. The United States had a trade surplus in the 1930s and an unemployment rate of 25%. Which would you rather have: economic growth and a trade deficit, or a recession and a trade surplus?

Source: https://www.forbes.com/sites/johnbrinkley/2017/10/10/trade-deficits-are-irrelevant/#7c1711527d8c

We’ll keep following NAFTA and providing commentary.

To conclude, a broader view on trade deficits: https://www.nytimes.com/2017/10/17/business/economy/trade-deficits-nafta.html

No forthcoming articles on manipulating the dollar, but we’ll think about it.