NAFTA Exit Would Hurt Ag, Auto Industries: Rove

As President Trump’s team, led by U.S. Trade Representative Robert Lighthizer, currently engages in pivotal trade talks with Mexican and Canadian leaders in Montreal, they would do well to heed the advice of Republican strategist Karl Rove.
This round of talks is the sixth and last scheduled to negotiate updates to the North American Free Trade Agreement. The U.S. is pushing hard for concessions on the part of the other two nations, and President Trump has gone as far as suggesting that it “would frankly be a positive for our country” to “terminate” the agreement.
Following the first session Tuesday, Mexican and Canadian officials expressed optimism and Trump commented that the day’s efforts went “pretty well.” However, the session is still young and plenty of tension remains regarding American goals at the conference.

Dangers of NAFTA Withdrawal

In a commentary piece published in the Wall Street Journal, Rove highlights the practical and political dangers of Trump’s supposedly serious statements on pulling out of the agreement altogether.
The most significant effects, writes the Deputy Chief of Staff for President George W. Bush, would be felt by American employees and consumers.
Rove first touches on the potential impact to farmers and ranchers by pointing out that 30% of American farm exports go to our two neighbors.
In addition to the obvious negative implications this would bring to the industry, Rove also cautions against the political fallout it would create for the Republican Party.
In states with substantial agricultural production like North Dakota, Missouri and Indiana, there are plenty of races – namely for Senate seats – which Republicans are hoping to flip in their favor. Rove states clearly that ending NAFTA would rule out any chance of achieving those goals.

Exiting NAFTA Would Harm Automakers

Rove next turns his attention to the auto industry, which has perpetually been a sticking point in discussions in the past and is one of the key topics of negotiation in this round of talks.

He argues that canceling NAFTA would end the current supply chain for auto manufacturers in states like Michigan, Indiana, Ohio and Tennessee and make the new system of production fall further behind the European and Asian markets. This, he says, would make “American-made cars more expensive at home and less competitive abroad.”
Rove focuses last on, quite simply, the effects that would be felt in key shipping states, especially those close to the borders.
According to him, states like Texas and Arizona “would face major [economic] difficulties if NAFTA disappears.”

NAFTA Needs Updating

Rove writes that, in each instance, those who are damaged by the shift in trade policy will understand very clearly that Trump is to blame. He believes that those groups would then make their disaffection known come election season and punish Republicans across the ticket.
Rove concludes on a pragmatic note: “Any trade agreement that is two decades old needs updating. NAFTA is no exception, especially given the growth of e-commerce and the digital economy.”
But, he argues, eliminating the policy altogether is both bad policy and bad politics.
To read Rove’s full comments to President Trump, click here: Killing Nafta Would Ruin American Farmers