(Standing, from left to right) Mexican President Carlos Salinas de Gortari, US President George HW Bush, and Canadian Prime Minister Brian Mulroney, ready to sign NAFTA, October 1992.
By: Maya Lewis-Hayre
Protectionism is the practice of putting tariffs on imports to protect domestic industry from competition. On the surface, President Donald Trump’s protectionist stance on trade may appear beneficial for the United States. However, his plans to renegotiate the North American Free Trade Agreement (NAFTA) and increase tariffs could be detrimental to the US economy. Free trade is a far better option for our country’s economic growth and prosperity.
Firstly, free trade allows American consumers to buy more at a lower price. Higher tariffs will raise the price that countries have to pay to continue selling their goods in the US. If high tariffs are imposed, foreign countries will either stop exporting or raise the prices of their exports into the US. As a result, production and manufacturing would increase in the US, where the cost of labor is expensive and the amount of raw materials is lacking. With an increase in money spent on hiring workers and buying raw materials, the price of goods would be higher, and consumption would plummet. Prices of essential items like food might become too expensive for many Americans to afford. Additionally, protectionism poses a risk of retaliatory tariffs placed on American goods, hurting companies based in the US. Free trade generates revenue for other countries to spend in the US economy. Americans buy goods that foreign countries can produce at a higher quality or lower cost, and the revenue those countries receive from selling their goods allows them to buy goods and services, in which America has a comparative advantage, such as corn, planes, new technology, or pharmaceuticals.
Of course, free trade leads to one considerable problem: manufacturing jobs that could otherwise go to Americans end up overseas. Trump uses this point to support his protectionist stance on trade, saying in his campaign, “We’re bringing our jobs back,” and, “We’re gonna get our businesses back.” While free trade creates some jobs, these are not enough to compensate for those lost to foreign countries. However, revenue generated from increased consumerism could go back into creating more jobs in the US. Additionally, Trump’s stance on NAFTA would only deepen the lack of jobs and labor force participation in the US. According to the US Chamber of Commerce, the agreement has created over 5 million jobs, which would all be in jeopardy without free trade.
The US government and economy must not overlook the issue of trade. Trump’s protectionist policies will do the most harm on the American consumer, who will be forced to buy fewer, lower-quality goods at a higher price. Free trade in the US remains critical to the expansion of its economy. Therefore, Trump’s protectionist attitude is not the answer for the future of the United States.