Trump's tariffs hurting New England economy
James T. Brett
Soon after taking office, President Donald Trump made good on his campaign promise and announced the U.S. would renegotiate the North American Free Trade Agreement, a multilateral agreement with Canada and Mexico put into effect in 1994. Amid reports NAFTA talks have grown contentious and the U.S. is considering withdrawing altogether, the administration announced tariffs on certain imports directly impacting Canada and Mexico.
Canada and Mexico are significant economic partners for New England states in particular. The U.S. must work toward a modernized NAFTA and should reconsider the tariffs.
The impact of trade with Canada and Mexico on the New England economy cannot be understated. According to the U.S. Department of Commerce, Canada is the premier goods export market for businesses in five of the six New England states – in the sixth state, it is the second-largest market – representing more than $8.3 billion in exports in 2017 alone. Mexico is a top trade partner for our region, with three states counting our southern neighbor as their second- or third-ranking export market for goods. The region exported $4.4 billion worth of goods to Mexico in 2017, and remains a significant multi-billion-dollar market for goods produced in Mexico. Data from the International Trade Administration indicates 10.7 million American jobs are supported by goods and services exports, and it is doubtless tens of thousands of New England jobs rely upon trade with Canada and Mexico.
The tariffs Trump has put into place are already having an impact here in New England. The U.S. Chamber of Commerce released a state-by-state analysis of the impact of the emerging trade war on U.S. exports. As a result of the tariffs, $125 million in Massachusetts exports to Canada and $11 million to Mexico are targeted for retaliation. The hardest hit products include foods, household items and furniture.
It is certainly appropriate to revisit and update major trade agreements. Some elements of our economy did not even exist at the time NAFTA was first negotiated, and we commend the administration for taking steps to modernize this historic agreement. At the same time, the president is right to be concerned about trade imbalances and to seek ways to minimize trade deficits. However, given the importance of trade with these two nations, it is gravely concerning the administration would even suggest withdrawing from NAFTA. Further, the evidence laid out by the U.S. chamber's new report suggests the tariffs are not serving our nation's best interests, and could harm disparate and unrelated sectors of our economy.
Partners and neighbors can have temporary disagreements over policy considerations, including on trade matters. However, The New England Council believes it is crucial the playing field remain open for businesses, workers and families across New England, so that they – through no fault of their own – are not disadvantaged by potential retaliatory trade measures or a defunct NAFTA.
James T. Brett is president & CEO of non-partisan business alliance The New England Council.
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