Donald Trump likes to extol the virtues of “good” deals. He also likes to bemoan the tragedy inherent in the striking of “bad” deals. And he would know the difference, right? After all, he wrote the book on this – or actually his ghostwriter wrote it and now regrets it, but those are minor details.
The President-elect has said he will renegotiate or pull out of NAFTA. But as I’ve been keen on reminding readers this month, deglobalization (which includes efforts to back out of trade deals) is a step back in time – it’s anti-progress. It represents a backwards approach that at its most extreme, drives a wedge between countries, fostering a kind of bitter tribalism wherein one country’s loss is another country’s gain. We are all, in a sense, competing businesses trying to get one up on each other when it comes to striking deals.
That is, of course, a needlessly primitive way of looking at society and it will have very real consequences for very real people. What kind of consequences? Well, have a look at the following chart from Stratfor which shows you just how deeply integrated we are with Mexico when it comes to trade.
More from Stratfor:
Declining trade could also have dire effects on U.S. states such as Texas and Arizona that do considerable business with Mexico – and, by extension, on their representatives in Congress (most of whom are members of Trump’s Republican Party). The sheer level of business disruption that a hasty unilateral withdrawal would cause in those states may deter lawmakers from backing such an initiative and could alienate their support on future policy proposals, as well. This is something Trump will likely take into account as he crafts his trade policy toward Mexico.
And don’t forget, global trade is already headed in the wrong direction and is now growing at a more sluggish pace than the already tortise-like growth we’re seeing in global GDP: