The End of North America

Paul Krugman: “In what would be major news except for all the other disasters happening, Donald Trump has declined to renew the USMCA — the successor to the North American Free Trade Agreement — which he himself negotiated. This puts businesses on notice that tariff-free shipments within North America, which NAFTA supposedly made permanent, may go away.”

“Some commentators have dismissed this as no big deal, because Trump’s successor will probably reverse his decision and make the USMCA permanent after all. However, this misses the point of such agreements. Before NAFTA went into effect, North American tariffs were already low. The average tariff imposed by the US on imports from Mexico was only 2 percent. But NAFTA gave more than tariff relief. It gave, or seemed to give, certainty: businesses could invest in border-spanning supply chains confident that they would be able to use these chains for many years to come.”

“Or, as it turns out, not, if we have a U.S. president who doesn’t care about breaking promises.”