The NAFTA stands for North American Free Trade Agreement it is one of the biggest trading blocks. Why was NAFTA created?
NAFTA is created to eliminate the barriers of import and export between the countries. The NAFTA consist of three countries that is Canada, Mexico, and the United States.
How has NAFTA affected the U.S. economy?
As it is into the NAFTA, the barriers are low and the tariff which was implied on the import and export are less. So it also increases the trading between the countries and which has a positive impact on the GDP of the U.S by around 0.5 percentage ($80 billion).
It is also having a negative impact on the U.S because as the trading increase the people are losing their job because of availability of the cheaper product from the other countries (15 to 20 percent more on average than the jobs that were lost ).
How has it affected the Mexican economy?
The Mexican economy is very diverse in nature. There are two parts which were divided the Mexican economy. As it is a fast-growing economy with globally competitive multinationals with which having cutting-edge manufacturing plants and other is traditional enterprises. Here both the economy is moving in a different direction the traditional market is going into a huge loss due to global tradings in NAFTA and the other multinationals are growing with having sustainable growth
What impact has it had on Canada?
The NAFTA helped in boosting the Canadian economy. Which is also helped in lowering tariff barriers between the countries in cross-border gains. The Mexican investment in Canada becomes almost triple after the NAFTA. As well as the U.S investment holds more than 50% in total FDI (foreign direct investment) stock of Canada.
The Canadian export to the U.S also grew ($110 billion to $346 billion) under the effect of NAFTA.
What’s next for NAFTA?
In 2016 Donald Trump criticizing the pact for bringing U.S. job losses. Trump increased the import tariff coupon on steel and aluminum.
In early 2018 and threatening to do the same with autos.
In August 2018 U.S administration struck a deal with Mexico and Canada which Trump has labeled the U.S.-Mexico-Canada Agreement (USMCA). And all the parties agreed to the number of changes. Instead of having a sixteen-year timeframe, with a review after six years. There are New labor stipulations that are added to automobiles factories which are paying at least $16 per hour.