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.