Donald Trump continues to lambast Mexico and China.
He threatens to slap tariffs on America’s second and third largest trading partners, to “terminate” trade deals like NAFTA and go after American companies like Ford that build cars across the border.
Trade experts agree with Trump on one point but largely disagree with him on his policies, tactics and rhetoric. Here’s what Trump has said on trade recently and what you need to know about the issues.
1. Trump: ‘NAFTA has destroyed our country’
The free trade deal between Canada, Mexico and the U.S. is one of Trump’s favorite punching bags.
Trump said Thursday he would “entirely renegotiate NAFTA” or he would “terminate it.” He and his supporters argue that NAFTA, which became law in 1994, triggered a flood of good-paying manufacturing jobs out of the United States.
America has lost 5 million manufacturing jobs since 2000…but not entirely due to NAFTA or trade deals. Technology has eliminated jobs too, and it’s difficult to pinpoint exactly how many were lost due to trade versus technology.
Still, experts admit NAFTA has played a role in the loss of manufacturing jobs. Mexico’s manufacturing sector has grown significantly since NAFTA became law.
However, they also argue that NAFTA integrated the three countries’ economies, opened up Mexico to American exporters and helped improve U.S. national security by fostering growth in Mexico.
Tearing up NAFTA would be “horribly disruptive. The fear would be that we would lose jobs, and we wouldn’t regain jobs,” says Doug Irwin, a Dartmouth College professor who worked in President Reagan’s administration on trade deals. He believes ending NAFTA would hurt U.S. companies that ship products to Mexico and wouldn’t guarantee jobs come back.
American firms sent $236 billion in goods to Mexico last year, up about 470% from the pre-NAFTA export value in 1993, according to the U.S. Trade Representative.
2. Trump on China: ‘They’re not playing fairly’
Trump is right: China breaks the rules of free trade. His critics agree too. The Obama administration filed a case against China with the World Trade Organization on Tuesday for what it claims are unfair agricultural subsidies to Chinese farmers.
But this is only the latest issue. China has stolen business secrets and software from U.S. firms and manipulated its currency, meaning it adjusts the value of its money to keep its goods cheap and gain an unfair advantage on trade.
Many U.S. leaders agree that China is tilting the playing field. Trump has said he wants to hit Chinese goods with a 45% tariff. And that’s where trade experts disagree, arguing that such threats risk the potential for a trade war.
When the U.S. slapped tariffs on countries in the past, they retaliated with tariffs of their own. In the 1930s, a trade war with other countries hurt the U.S. economy even more during the Great Depression.
Trump and his team have cited the Reagan tariffs as examples of what he would do, but even those were tamer than this, experts say.
“Reagan always said trade wars are not good for the economy,” says Dartmouth’s Irwin. He says Obama’s WTO case is “more the Reagan-esque approach.”
3. Does Ford plan to ‘fire all its employees in the United States,’ as Trump claims
The Republican nominee made that claim after Ford announced it was moving its small car production to Mexico over the next two years. While it will add over 2,000 jobs in Mexico, Ford’s CEO Mark Fields told CNN the company won’t cut a single U.S. job.
“It’s really unfortunate when politics get in the way of the facts,” Fields told CNN’s Poppy Harlow.
Ford still employs 85,000 American workers, up 50% over the last five years. It currently has about 8,800 Mexican employees.
Trump threatened to throw a 35% tax on Ford’s cars made in Mexico and sold in the U.S. Trade experts say car companies would just pass on the cost to their customers by raising the price of cars. They also say the tax wouldn’t bring jobs back.
“Mr. Trump is trying to help American workers, and unfortunately it would end up costing American consumers,” says Christopher Rogers, a research analyst at Panjiva, a global trade analytics firm.
