America first? Trump need only look south for inspiration.

Published in Spanish: El Pais Journal: OCT-17-2017

Through his election campaign and continued through his presidency Donald Trump has promised to put America first with many of his followers getting behind the “Make America Great Again” rally cry. His plan to improve the US economy is to embrace a protectionist plan by removing the US from the Trans Pacific Partnership, a trade agreement recently agreed upon with 12 nations and more importantly began renegotiating the North American Free Trade Agreement (NAFTA), a 23-year-old free trade agreement between Canada, the United States and Mexico and has threatened to pull out all together.

NAFTA has seen American trade from Canada and Mexico go from $337 billion in 1993 to $1.2 trillion in 2016. It is true that there is a slight trade deficit with these two countries but this is shrinking and Canada and Mexico represent the 1st and 2nd largest importers of American goods so the fact that President Trump is taking such an approach has many worried.

Of course, this rise of protectionism and nationalism is not limited to the United States, most notably with the United Kingdom voting to leave the European Union. If Trump wants to look for notable examples of protectionist countries he should be looking South, namely with the Mercosur trading bloc. This bloc consists of member states Argentina, Brazil, Paraguay and Uruguay and promotes free trade with member nations however also simultaneously promotes many restrictive tariffs with countries outside of this bloc. The bloc has resulted in trade and growth however at a much slower pace to the much more open Pacific Alliance (Chile, Columbia, Mexico and Peru) and exports contribute very little to their respective nations GDP.

As well as a slower economy, citizens of these countries are often forced to pay much more for goods like electronics and automobiles, even those produced locally can cost twice as much as if they were purchased in the US. This forces many to travel to nearby countries with less restrictive tariffs to buy goods there instead of supporting businesses in their own economy.

Of course, there are always people who will support this ideology, claiming it creates jobs in their own country although often they cannot compete with other countries lower labour costs but protective tariffs will only cause isolation in the international markets, shrinking the market for business to compete in while punishing their citizens with costly goods.

NAFTA being cancelled is far from a forgone conclusion, both the Canadian and Mexican governments, along with many states vow to fight for it, but should this agreement see its demise it can no longer be an example for many nations to follow to remove their trade barriers, open their businesses to the world and to see a rise in economic prosperity.

About Matthew Glezos 376 Articles
Matthew is Canadian and has a Master in Business Administration. He has international experience in marketing and strategy. He has a strong interest in technology and combines it with the business side.

3 Comments

  1. Interesting article especially your comments on the Mercosur trading block. I do not believe that we can underestimate the importance of the jobs that have been lost to Mexico and the plight of the working class in Canada and US. Is the goal to be able to buy cheap “stuff” and to grow our economy or is it to provide employment and bring back the businesses that have moved south? I’m in favour of whatever will “Make Canada Great Again” and I hope that includes creating jobs.

  2. I think that nowadays every country wants to have jobs back. I am from Argentina and we are in the same track. I think this has to deal a lot with China. China has collected all the industries (good and bad quality) and is collecting jobs as well that can produce cheap products.
    I think the society has to think in buying cheap or buying back the opportunities to have competitive industries at a national level. Also, we have to think that buying cheap is garbage for our environment.
    And finally, we have to think that a bit of nationalism to gain back industries and defend them is to increase options for work.

  3. I agree with the gist of your article. International trade is a must to the growth of all our economies. It would be interesting to have you comment on the problem that all countries have of large corporations setting up in tax friendly countries so as to avoid paying their share in each country they operate in at the going rates. While we certainly need the large corporations to thrive we more importantly must allow small businesses to flourish as they by far are the largest employers of people. Hoping you will address the importance of these two in relation to each other and the fairness required so that each can flourish.

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