Here Come the Trade Wars

As the Democratic presidential hopefuls bounce through Ohio with promises to restore jobs by renegotiating the North America Free Trade Agreement, at least one powerful Washington lawmaker is warning the plan will backfire. Sen. Charles Grassley (R-Iowa), ranking member of the Finance Committee, issued a statement today arguing that NAFTA “leveled the playing field” by eliminating tariffs on both sides of the U.S.-Mexico border — to the benefit domestic businesses.

NAFTA is often used as a scapegoat. But without it, Mexico still would benefit from much lower tariffs on exports to the United States than vice versa. And we’d still have the advances we’ve seen over the past 15 years in international supply chain management and logistics. The fact is, companies have become more comfortable taking on the risks associated with sourcing products and inputs from overseas. I doubt a 2 percent average tariff would change that much. NAFTA gives the United States market access that U.S. exporters have enjoyed and continue to enjoy. U.S. exports to Mexico have increased about 2.5 times since NAFTA entered into force. Those exports support a lot of good-paying jobs here in the United States. I wonder what the candidates would have to say about the potential loss of those jobs if the United States opted out of NAFTA.

The comments are indication that NAFTA revisions may not get far off the drawing board. The Finance Committee oversees issues of international trade, and Grassley holds a ton of sway.