Economists Say NAFTA Collapse Would Hurt Economy, with Mexico Hit Most Andrew Mayeda - Bloomberg
go to original October 23, 2017

How NAFTA Change Can Hurt Mexico, Emerging Markets (Bloomberg TV Markets and Finance)

Update: Mexico Has Trading Options Besides U.S., Economy Minister Says (Bloomberg News)

The collapse of the North American Free Trade Agreement would likely damage yet not derail the continent’s economy and business models of global corporations.

That’s the conclusion of economists trying to envisage life after the 23-year-old accord as increasingly tense negotiations over how to revamp it fuel speculation that President Donald Trump will follow through on his threat to withdraw.

Without NAFTA, the U.S. and Mexico would charge each other the higher tariffs they now levy on other members of the World Trade Organization. Those run as high as 7 percent on average in Mexico and 3.5 percent in the U.S., although Canada and America may be able to fall back on a pre-Nafta free-trade deal.



An increase in duties would potentially hurt growth, cost jobs and spur inflation for all three nations with Bloomberg Intelligence and Moody’s Analytics predicting Mexico would be the hardest hit.

But none of the countries would be tipped into recession, according to Moody’s. It forecasts most of the pain would come in the first two years after the breakdown of the deal, assuming the U.S. and Canada would work out a bilateral arrangement.

“It will be bad for business, but it wouldn’t be cataclysmic,” said Mark Zandi, chief economist at Moody’s Analytics. “It will be disruptive to supply chains.”



Mexico has been the biggest winner from the pact among the three countries. Companies from General Motors Co. to Caterpillar Inc. shifted production south of the U.S. border to take advantage of cheaper wages, helping Mexico stabilize its economy after a debt crisis in the 1980s.

Read the rest at Bloomberg

Related: Looking at NAFTA from Mexican View of Negotiations (Radio Canada International)

Related: Mexico Sees "Room" for NAFTA Deal Despite Gaps (Xinhua)

Related: Will Mexican Billionaires Be Affected if NAFTA Negotiations Fail? (Forbes)

Related: Negotiations Over NAFTA Are Weighing on Mexico’s Currency and Bonds (Frontera)

Related: U.S. Hasn't Analyzed Economic Impact of Potential NAFTA Demise (BNN)

Related: NAFTA Talks Must Benefit Agricultural Trade in Region, Says Mexico (Xinhua)

Related: A Contrarian View on NAFTA Renegotiation and Its Impact on Mexico (Frontera)

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