Ahead of announcing his proposed domestic tax code reform, Republican presidential candidate Donald Trump told supporters and reporters he would attack international economics and policy by breaking the North American Free Trade Agreement.
Enacted in 1994, NAFTA is an agreement the U.S. made with Canada and Mexico to eliminate barriers to trade and investment among the three countries. It prevents the participants from imposing taxes on imported goods.
At a rally in Oklahoma City on Sept. 25, Trump told the audience: “I like free trade. The problem with free trade is you need smart negotiators on your side. When you have stupid people like we do, free trade's no good.”
In a “60 Minutes” interview that aired Sept. 27, Trump expanded on his plan to “break” NAFTA, which he dubbed “a disaster.” He said he would enact tariffs that would dissuade manufacturers, such as Ford Motor Company, which are typically considered responsible for middle class jobs, from moving their factories elsewhere — like Mexico.
"We will either renegotiate it or we will break it," Trump said.
"Every agreement has an end," he added. "Every agreement has to be fair.”
The U.S. could withdraw from NAFTA so long as it provides six months' notice, The Associated Press reported.
Some experts argued that Trump’s proposal would have complicated implications for businesses. "You have thousands and thousands of businesses on both sides of the border that are set up to operate the way they are because the rules of NAFTA exist," Edward Alden, a senior fellow at the Council on Foreign Relations and an expert in trade policy, told AP.
Additionally, the countries negatively impacted by the U.S.’s withdrawal from NAFTA could reduce their purchase of U.S.-produced goods to compensate for increased taxes, according to Thomas Bollyky, a former trade negotiator who is also a senior fellow at the Council on Foreign Relations.
Withdrawal from NAFTA could also harm the ability of the U.S. to engage in other international deals — both economic and political. Specifically, it could make the U.S. seem less reliable and trustworthy when it comes to the Iran nuclear deal and the Trans Pacific Partnership, both of which have far-reaching impact and could dictate U.S. standing in the international community for the next several years.
"If we start breaking them and withdrawing from them, people no longer trust our word in those agreements,” Bollyky said.
"We're sort of shooting ourselves in the foot to some extent,” he added.