In his effort to bring jobs back for the US workers, President Trump sets a plan to negotiate NAFTA, a free trade deal, which involves three countries, namely the US, Mexico, and Canada. According to the President, NAFTA is responsible for losing millions of jobs in manufacturing industries in America.

Despite lack of information on how the deal will look like, some experts think that the deal will come with a cost. In other words, if some Americans will win from the new NAFTA deal, some others will lose.  If the American workers will benefit from the deal, it may make US consumers and companies at loss.

Suggestions for the New NAFTA Deal

Experts have been speculating about the contents of the new NAFTA deals. The following are some of their suggestions and related expenses they may bring:

More Car Parts Will Be Sourced from the Member Countries

Mexico exports most of its car products to the US. Therefore, the new NAFTA deal may require that the car parts be produced in the US or Canada. Now, at least 62.5% of the parts are produced in the three countries. Then, the remaining parts are sourced from any other countries in the world. Trump’s team wants the rule to be changed. The percentage must be increased.

If more parts are sourced from the three countries, more jobs will be available. However, experts stated that this had happened in the past. The result was that the car price increased, thus leading teh Americans unable to buy the car and American cars unable to compete with cars produced from any other countries. If this is the case, the cars produced in Mexico will be less competitive. That is the cost…

Increasing Labor and Environmental Standards in Mexico

Another way to improve the workers’ living standards is by increasing the labor payroll. Trump’s team seemingly want to increased labor standards by setting working hour limit per week, improving labor safety, and meeting environmental standards. If the manufacturers have to paid more for labor force and standards, the cars’ prices will logically increase. More expensive price means less competitiveness.

It is true that the manufacturers have to comply with the labor safety and environmental standards. By raising the production costs in Mexico, more jobs will be expected to get back to the US. However, experts are not convinced about this. The manufacturers may build their factories in the US, but they will be probably machine-operated, rather than human operated. If this happens, the US workers will not get the benefits at all.

Ending Value-Added Tax in Mexico

Trump’s team may also force Mexico to stop its value-added tax regulation.  However, some experts said that this policy would not significantly bring jobs back to the US. Of course, Mexico and Canada also want a new NAFTA deal that benefits them.

In the end, experts said that the three suggestions would bring their own consequences. If the new deal messes up the global supply chain and disrupts the web of business, the effects would be terrible for the US economy. Therefore, Trump’s team should consider the options carefully.