Terminating the North American Free Trade Agreement (NAFTA) would carry a net loss of 1.8 million U.S. jobs within the first year, according to a study published by the Business Roundtable.
The study – conducted for the Business Roundtable by Trade Partnership Worldwide – examines how the re-imposition of “most-favored-nation” tariffs on U.S. trade with Mexico and Canada would impact the U.S. economy. These tariffs would result in job losses that far outweigh any potential employment increases, it said.
“Terminating NAFTA would permanently reduce U.S. employment, exports, and economic output, while benefiting our economic competitors at the expense of American workers and businesses,” Joshua Bolten, president and CEO of Business Roundtable, said. “We urge the Administration to take into account the potential damage of withdrawing from NAFTA, and to focus instead on modernizing the agreement so that it remains a cornerstone of American prosperity.”
The study revealed that withdrawing from NAFTA would reduce U.S. exports to Canada and Mexico by 17.4 percent each and lower American companies’ global exports by 2.5 percent. This is due to higher tariffs, which would make American companies less competitive in the global market, it said.
Further, withdrawing would diminish purchasing power of Americans by almost $654 per household due to higher prices and lower wages caused by increased tariffs. Also, economic activity would shift away from North America to competitors, including China, which would see a GDP increase of 0.2 percent and a 2 million increase in employment.