I never did like NAFTA, and I still don't. Any trade with Mexico is unfair on the face of it because of the difference in labor costs. Canada is exactly the kind of country we should be seeking to trade with. Canada if anything now has better hourly rates for workers than we do.
Mexico has a warmer climate than we do and can produce many vegetables for a longer growing season than we can. Other than produce I see no advantage whatsoever in trade with Mexico. We already contribute gosh knows how many billions in remittances.
I bought a Tesla last week, 70% parts from the US, best car I've ever owned. OK, it cost a lot, so what. We need to start making quality again and repairing what we have. We don't need cheaper stuff we need better lives. Bringing manufacturing jobs back to America leads to better lives.
Not ripping on you but it has far less to do with the wages in Mexico. A lot more to do with the much lower worker protection and environmental regulations. Then add in the corruption that makes what laws Mexico has on the books the starting point of negotiating the bribe rather then the minimums a company has to meet. Last but not least is that Mexico is free riding off America and Canada to defend the global supply chains.
Differences in labor costs will always equalize if your not ignoring the other problems. It's all those other issue that are the problem.
NAFTA was great for America…what people do is they conflate NAFTA in 1994 with China in the WTO which was November 2001. So our economy boomed from 1995 through 2000 and that included manufacturing in which Detroit metro actually added population through 2000. Then we had a mild recession and 9/11 and then we started hemorrhaging manufacturing jobs even as the economy recovered. Remember the Ford Explorer?? Ford was selling 400k Explorers a year for 8 years which meant that factories were running around the clock with UAW workers. Ford Expedition sales figures were 200k a year for 4 years.
Anyway, we’ve added manufacturing jobs since 2010 and because of automation manufacturing jobs will never return to 2000 levels even with Biden having great policies which resulted a solid number of manufacturing jobs reshored. But losing manufacturing jobs under Bush combined with Republicans blocking Clinton’s health insurance reform played a huge part in the 2008 Global Financial Crisis…and Trump knows that which is why he has resisted repealing Obamacare even when he had the power to do it.
Because we’ve added manufacturing jobs since 2010…and automation is only getting better. And I’m positive—Biden did a great job reshoring jobs in an overall great job market.
Gene if juicing the economy with more and more liquidity time and time again is a good economy for a while yes. But that is not sustainable. Eventually you have to get back to a real sustaining economy again like we did before the 1960's.
Now I'm not going to write here tearing down a sick declining in his health man. He was sad to watch as his health kept deteriorating during the presidency. Article II, Section 1 of the Constitution, which provides for the vice president to assume presidential duties in cases of incapacity should have been enacted. But then wait, we would get Harris then. So, Jill or Kamala? That became the question, I guess.
While I don’t claim to be an expert in trade and tariffs, I find your analysis to be somewhat limited.
Canada, Mexico, and the US, have developed an integrated auto sector since these agreements and even before with the auto pact. Major North America Corps and Unions are calling for a resumption of our collaborated - interrelated systems.
Trump started by his assault to tax the American people with false allegations of Canadian fentanyl entering the US then escalating tariffs on auto, lumber, steel and aluminum. This had nothing to do with China.
Speaking of China when Canada followed its responsibilities to International Law when we detained China’s WeiWei executive requested by the US. With no other action from the US, two Canadian citizens were detailed by China with further retaliation to our vital Pot Ash and Canola exports. All resulting from supporting US requests.
When Trump then said we need nothing from Canada and they need everything from us and would do better as a 51st state. Trump started this and now you suggest we are a backdoor for China.
Trump didn’t cancel his deals when he visited China. Canada now has once again begun talks with China with reduced tariffs on Canola and Pot Ash which is essential for our western provinces since US illegal tariffs and violations of the Cusma agreement.China cars in Canada are such a minuscule part of the Canadian auto market.
Canada imported about $306 million parts from China in 2024. Which I don’t know of any of this represented the 18.3 Billion imported from China into the US in 2024.
Look in the mirror and get back to our mutual trade and respectful relationship. I won’t even get into Trump’s misinformation on dairy.
I don’t know how many US economist have said Americans are paying for tariffs and Trump is clueless. You need to see the entire picture.
The irony is that the author didn't go far enough. Trade with Canada wasn't the problem it was when we added Mexico to the mix that things went to pot. Mexico is not an ally and doesn't come close to either the US or Canada when it comes to protecting workers and our environments.
The result is that we are rewarding companies not for innovation that increases worker productivity and wealth, but instead rewarding them for exploiting the workers and environment in places like Mexico to boost their short term profits, all while avoiding more of the taxes that would be paid in the US and Canada. Taxes that support the militaries that protect the shipping lane and global supply chains those Mexican factories rely on.
The system is breaking down because everyone is trying to ignore all the commons problems created when you disconnect trade from mutual defense and protecting our own people and environment. Trump is just a symptom of that. Another version is the way the Europeans failed to build and maintain the defenses needed to protect their own territory and global interests, and then tried to make deals with actors like Putin, even if it meant sacrificing the people in Ukraine.
Seriously, why would Germany make itself reliant on Russia for it's energy while underfunding it's military? Have they never read their own history books? Ah, step back and you'll see Volkswagen is forced to compete against Toyota and Ford who get there parts made in China and vehicles assembled in Mexico. So the Germans have to buy the cheapest oil and gas they can to stay competitive. Yet at the same time, Germany is in a union with Austria and Ireland who aren't part of NATO and spend far less on defense.
The system is going to collapse. It's more a case of when and what replaces it.
Canada and Carney will always side with the UK. They are one of 56 commonwealths belonging to the UK. Canada and Carney will dance to the tunes UK plays period. Always has been always will, since the days of the revolution when the loyalists ran north during the 1776 revolution to free from UK domination. Must remember this when dealing with them. A must.
Mexico is basically a narco state. They also really have no clue what China is doing there. Mexico is incompetent and why companies want to go there to take advantage of them. Place is a mess.
China - oh well China what can I say? They really just need to get over themselves.
I found this essay by Mr. Phillips to be informative, well argued, and infuriating.
Democracy is only a better form of government than authoritarianism when people listen to what others have to say, not simply as a courtesy, but because it is widely recognized that conflicting opinions can both be true.
Absent this epistemology, democracy deteriorates into bipolar authoritarianism, as in the mental illness.
I would say that anyone who believes that America can rise to the challenge posed by China without a flourishing democracy is crazy, as we will never be as good at authoritarian rule as the Chinese or the Russians.
Trump has done more than engage in intemperate rhetoric. He demeans and bullies, instead of negotiating. Canada and Mexico are our neighbors. Imagine how you’d feel if Trump were your neighbor.
Let's flip that, how do you feel about our Mexican neighbors that exploit their own people and environment to steal our industries, all while allowing cartels to flood our country with drugs, illegal immigrants, underage prostitutes and even foreign terrorists.
The whole free trade thing is falling apart because it rewards corrupt, irresponsible and even adversarial nations for exploiting their own people and free riding off America and our allies protecting the global supply chains that feed those nations factories and allow them to get their goods to our markets.
In short, things will keep collapsing as long as the Canadians believe that Mexico should get the same low tariffs, even while Canadians spend their own blood and treasure to protect the foreign shipping feeding those Mexican factories. So while I pity the average Canadian, it's more about how Mark Carney is just another "expert" that believe in the magic of free trade.
I’m hoping with Trump gone and Rubio in the White House that trade and other relations with our neighbors to the north and south can be reworked in a mutually beneficial way
Trump isn't the problem. The problem is the belief that trade is somehow magical and can be separated from everything else. The need to protect the environment from heavy metals, doesn't matter, companies can just move production to Indonesia, Mexico or China and dump away. That this hollows out our industrial base, leaves us spending more on welfare and without the means to replace our aging warships isn't supposed to matter.
That somehow how wee little Belgium is supposed to be able to tax and spend 5% a year on defense, just because they are part of NATO but Ireland can offer Belgium's most successful companies lower taxes since it's not part of NATO and spend a mere 0.25%, apparently doesn't matter because of the magic of comparative advantage.
I will say that Rubio is one of a growing yet still minority with in the Republican party that seems to have caught on to how free trade is failing us, but even there, he will have to battle all the never Trumpers that refuse to see how free trade is failing still in the GOP. Then he will have to battle the still overwhelming majority of the Democrats as well.
Now zoom out and see why Trump really isn't the problem. Just to the north, both Carney of the Liberal party as well as both Pierre Poilievre and Doug Ford of the Conservative, still believe in the magic of free trade. Canada still fails to see how they have been spending their own blood and treasure, wearing out their military in the process, protecting the global supply chains that feed the factories in Mexico. Of course Mexico isn't an ally and just expects to keep free riding off of Canada's generosity.
Jump across the pond and it gets worse. In England, from Labor to the Tories, but including the up start Reform, they all believe in the magic of free trade. This even as they find themselves at the point that they can only field on destroyer and have no idea how their going to replace the submarines that are supposed to be there nuclear deterrent.
As mentioned above, the beating heart of the EU is the belief that not only can they disconnect trade from mutual defense, but even things like freedom of movement. So rich people in Germany can move themselves and the taxes they pay across the border to Austria. Where more of their tax dollars will go toward healthcare and education. The Germans that stay back in Germany can foot the bill for defense spending so the newly Austrian don't have to worry about someone invading Austria.
If you just don't like Trump, I get it. I'm more warming up to Vance but we'll have to wait and see. If more people don't start to understand how free trade is failing, especially if Rubio or whoever gets in prove not to understand, then strap in cause the ride is going to get that much more bumpy.
You might have noticed that I'm much more of a policy/ long term view type of guy, rather than a personality guy. That said, it's worth noting that Vance made his name and fortune in the private sector before getting into politics. Rubio on the other has been in politics since he left college, more or less.
You can add to this, that back when I lived in Florida, and Rubio was in the state senate, the only thing he was known for at the time was supporting the abolition of property taxes in favor of piling it all on sales taxes. This would have absolutely horrible policy. I'm sad to say that there is a stain of that foolish idea making the rounds here in Texas.
You can start with the way piling taxes on one economic activity massively distorts the economy. Leading to malinvestment, waste and fraud. In Florida as well as Texas, the surrounding states would cheer us on. Any road that crossed the border would be covered with retail outlets of every kind, just past the border. The amount of sales tax you would have to charge to make up for the lost revenue would guarantee smuggling and a big uptick in shoplifting. As well as petty theft. A used bike would have an even bigger advantage on Facebook marketplace in that type of situation, so even a cheap kids bike stolen off someone front lawn would be worth more.
But in some ways, the bigger issue is that just about any economist could tell you all this, so pushing it as real policy, even if you don't think it will ever pass, tells me you will sell out anyone and everyone for some campaign cash and a consulting jobs for your cousin.
That was sixteen years ago. Maybe the man has grown. If my vote still matters when the primary comes to Texas, I would probably go for Vance, but would still vote for Rubio in the general if he won. Of course plenty of time between now and then so I reserve the right to change my opinion at whim.
"now that the U.S. has erected a high tariff wall, everyone is looking for a back door."
This is what neoclassical economics would predict. Nations act in their own interests, and somehow the US is the only nation for whom that is legitimate? You're going to have a lot of holes in that dam to try to plug.
I sympathize with the concern about China. But if the operations are actually taking place outside of China, then a lot of the labor costs are going to the Americas. That's a good thing! And the whole point of offshoring to China was low labor costs, so there's only so much that China can reshore while still remaining economically viable.
Taking a hard line on China is good. A declining empire trying to bully its remaining allies is not good.
Lots of comments from people who don’t have a clue about what’s going on. But I can tell you what. Nobody trading with the United States while it’s run by a mob boss. Over and done. Trade with yourselves.
I never did like NAFTA, and I still don't. Any trade with Mexico is unfair on the face of it because of the difference in labor costs. Canada is exactly the kind of country we should be seeking to trade with. Canada if anything now has better hourly rates for workers than we do.
Mexico has a warmer climate than we do and can produce many vegetables for a longer growing season than we can. Other than produce I see no advantage whatsoever in trade with Mexico. We already contribute gosh knows how many billions in remittances.
I bought a Tesla last week, 70% parts from the US, best car I've ever owned. OK, it cost a lot, so what. We need to start making quality again and repairing what we have. We don't need cheaper stuff we need better lives. Bringing manufacturing jobs back to America leads to better lives.
Not ripping on you but it has far less to do with the wages in Mexico. A lot more to do with the much lower worker protection and environmental regulations. Then add in the corruption that makes what laws Mexico has on the books the starting point of negotiating the bribe rather then the minimums a company has to meet. Last but not least is that Mexico is free riding off America and Canada to defend the global supply chains.
Differences in labor costs will always equalize if your not ignoring the other problems. It's all those other issue that are the problem.
NAFTA was great for America…what people do is they conflate NAFTA in 1994 with China in the WTO which was November 2001. So our economy boomed from 1995 through 2000 and that included manufacturing in which Detroit metro actually added population through 2000. Then we had a mild recession and 9/11 and then we started hemorrhaging manufacturing jobs even as the economy recovered. Remember the Ford Explorer?? Ford was selling 400k Explorers a year for 8 years which meant that factories were running around the clock with UAW workers. Ford Expedition sales figures were 200k a year for 4 years.
Anyway, we’ve added manufacturing jobs since 2010 and because of automation manufacturing jobs will never return to 2000 levels even with Biden having great policies which resulted a solid number of manufacturing jobs reshored. But losing manufacturing jobs under Bush combined with Republicans blocking Clinton’s health insurance reform played a huge part in the 2008 Global Financial Crisis…and Trump knows that which is why he has resisted repealing Obamacare even when he had the power to do it.
What?
We’ve added manufacturing jobs since 2010…we will never get back to 1979 manufacturing job levels no matter how many tantrums you throw.
Gene why so negative? why?
Because we’ve added manufacturing jobs since 2010…and automation is only getting better. And I’m positive—Biden did a great job reshoring jobs in an overall great job market.
Gene if juicing the economy with more and more liquidity time and time again is a good economy for a while yes. But that is not sustainable. Eventually you have to get back to a real sustaining economy again like we did before the 1960's.
Now I'm not going to write here tearing down a sick declining in his health man. He was sad to watch as his health kept deteriorating during the presidency. Article II, Section 1 of the Constitution, which provides for the vice president to assume presidential duties in cases of incapacity should have been enacted. But then wait, we would get Harris then. So, Jill or Kamala? That became the question, I guess.
Bravo! Excellent analysis I can’t read anywhere else.
While I don’t claim to be an expert in trade and tariffs, I find your analysis to be somewhat limited.
Canada, Mexico, and the US, have developed an integrated auto sector since these agreements and even before with the auto pact. Major North America Corps and Unions are calling for a resumption of our collaborated - interrelated systems.
Trump started by his assault to tax the American people with false allegations of Canadian fentanyl entering the US then escalating tariffs on auto, lumber, steel and aluminum. This had nothing to do with China.
Speaking of China when Canada followed its responsibilities to International Law when we detained China’s WeiWei executive requested by the US. With no other action from the US, two Canadian citizens were detailed by China with further retaliation to our vital Pot Ash and Canola exports. All resulting from supporting US requests.
When Trump then said we need nothing from Canada and they need everything from us and would do better as a 51st state. Trump started this and now you suggest we are a backdoor for China.
Trump didn’t cancel his deals when he visited China. Canada now has once again begun talks with China with reduced tariffs on Canola and Pot Ash which is essential for our western provinces since US illegal tariffs and violations of the Cusma agreement.China cars in Canada are such a minuscule part of the Canadian auto market.
Canada imported about $306 million parts from China in 2024. Which I don’t know of any of this represented the 18.3 Billion imported from China into the US in 2024.
Look in the mirror and get back to our mutual trade and respectful relationship. I won’t even get into Trump’s misinformation on dairy.
I don’t know how many US economist have said Americans are paying for tariffs and Trump is clueless. You need to see the entire picture.
The irony is that the author didn't go far enough. Trade with Canada wasn't the problem it was when we added Mexico to the mix that things went to pot. Mexico is not an ally and doesn't come close to either the US or Canada when it comes to protecting workers and our environments.
The result is that we are rewarding companies not for innovation that increases worker productivity and wealth, but instead rewarding them for exploiting the workers and environment in places like Mexico to boost their short term profits, all while avoiding more of the taxes that would be paid in the US and Canada. Taxes that support the militaries that protect the shipping lane and global supply chains those Mexican factories rely on.
The system is breaking down because everyone is trying to ignore all the commons problems created when you disconnect trade from mutual defense and protecting our own people and environment. Trump is just a symptom of that. Another version is the way the Europeans failed to build and maintain the defenses needed to protect their own territory and global interests, and then tried to make deals with actors like Putin, even if it meant sacrificing the people in Ukraine.
Seriously, why would Germany make itself reliant on Russia for it's energy while underfunding it's military? Have they never read their own history books? Ah, step back and you'll see Volkswagen is forced to compete against Toyota and Ford who get there parts made in China and vehicles assembled in Mexico. So the Germans have to buy the cheapest oil and gas they can to stay competitive. Yet at the same time, Germany is in a union with Austria and Ireland who aren't part of NATO and spend far less on defense.
The system is going to collapse. It's more a case of when and what replaces it.
Excellent article thank you. Spot on.
Canada and Carney will always side with the UK. They are one of 56 commonwealths belonging to the UK. Canada and Carney will dance to the tunes UK plays period. Always has been always will, since the days of the revolution when the loyalists ran north during the 1776 revolution to free from UK domination. Must remember this when dealing with them. A must.
Mexico is basically a narco state. They also really have no clue what China is doing there. Mexico is incompetent and why companies want to go there to take advantage of them. Place is a mess.
China - oh well China what can I say? They really just need to get over themselves.
I found this essay by Mr. Phillips to be informative, well argued, and infuriating.
Democracy is only a better form of government than authoritarianism when people listen to what others have to say, not simply as a courtesy, but because it is widely recognized that conflicting opinions can both be true.
Absent this epistemology, democracy deteriorates into bipolar authoritarianism, as in the mental illness.
I would say that anyone who believes that America can rise to the challenge posed by China without a flourishing democracy is crazy, as we will never be as good at authoritarian rule as the Chinese or the Russians.
What?
Who?
Trump has done more than engage in intemperate rhetoric. He demeans and bullies, instead of negotiating. Canada and Mexico are our neighbors. Imagine how you’d feel if Trump were your neighbor.
Let's flip that, how do you feel about our Mexican neighbors that exploit their own people and environment to steal our industries, all while allowing cartels to flood our country with drugs, illegal immigrants, underage prostitutes and even foreign terrorists.
The whole free trade thing is falling apart because it rewards corrupt, irresponsible and even adversarial nations for exploiting their own people and free riding off America and our allies protecting the global supply chains that feed those nations factories and allow them to get their goods to our markets.
In short, things will keep collapsing as long as the Canadians believe that Mexico should get the same low tariffs, even while Canadians spend their own blood and treasure to protect the foreign shipping feeding those Mexican factories. So while I pity the average Canadian, it's more about how Mark Carney is just another "expert" that believe in the magic of free trade.
I’m hoping with Trump gone and Rubio in the White House that trade and other relations with our neighbors to the north and south can be reworked in a mutually beneficial way
Trump isn't the problem. The problem is the belief that trade is somehow magical and can be separated from everything else. The need to protect the environment from heavy metals, doesn't matter, companies can just move production to Indonesia, Mexico or China and dump away. That this hollows out our industrial base, leaves us spending more on welfare and without the means to replace our aging warships isn't supposed to matter.
That somehow how wee little Belgium is supposed to be able to tax and spend 5% a year on defense, just because they are part of NATO but Ireland can offer Belgium's most successful companies lower taxes since it's not part of NATO and spend a mere 0.25%, apparently doesn't matter because of the magic of comparative advantage.
I will say that Rubio is one of a growing yet still minority with in the Republican party that seems to have caught on to how free trade is failing us, but even there, he will have to battle all the never Trumpers that refuse to see how free trade is failing still in the GOP. Then he will have to battle the still overwhelming majority of the Democrats as well.
Now zoom out and see why Trump really isn't the problem. Just to the north, both Carney of the Liberal party as well as both Pierre Poilievre and Doug Ford of the Conservative, still believe in the magic of free trade. Canada still fails to see how they have been spending their own blood and treasure, wearing out their military in the process, protecting the global supply chains that feed the factories in Mexico. Of course Mexico isn't an ally and just expects to keep free riding off of Canada's generosity.
Jump across the pond and it gets worse. In England, from Labor to the Tories, but including the up start Reform, they all believe in the magic of free trade. This even as they find themselves at the point that they can only field on destroyer and have no idea how their going to replace the submarines that are supposed to be there nuclear deterrent.
As mentioned above, the beating heart of the EU is the belief that not only can they disconnect trade from mutual defense, but even things like freedom of movement. So rich people in Germany can move themselves and the taxes they pay across the border to Austria. Where more of their tax dollars will go toward healthcare and education. The Germans that stay back in Germany can foot the bill for defense spending so the newly Austrian don't have to worry about someone invading Austria.
If you just don't like Trump, I get it. I'm more warming up to Vance but we'll have to wait and see. If more people don't start to understand how free trade is failing, especially if Rubio or whoever gets in prove not to understand, then strap in cause the ride is going to get that much more bumpy.
Vance or Rubio in 2028? Let's have a post about that! Thanks, Nicholas Phillips, for this excellent post about USMCA!
You might have noticed that I'm much more of a policy/ long term view type of guy, rather than a personality guy. That said, it's worth noting that Vance made his name and fortune in the private sector before getting into politics. Rubio on the other has been in politics since he left college, more or less.
You can add to this, that back when I lived in Florida, and Rubio was in the state senate, the only thing he was known for at the time was supporting the abolition of property taxes in favor of piling it all on sales taxes. This would have absolutely horrible policy. I'm sad to say that there is a stain of that foolish idea making the rounds here in Texas.
You can start with the way piling taxes on one economic activity massively distorts the economy. Leading to malinvestment, waste and fraud. In Florida as well as Texas, the surrounding states would cheer us on. Any road that crossed the border would be covered with retail outlets of every kind, just past the border. The amount of sales tax you would have to charge to make up for the lost revenue would guarantee smuggling and a big uptick in shoplifting. As well as petty theft. A used bike would have an even bigger advantage on Facebook marketplace in that type of situation, so even a cheap kids bike stolen off someone front lawn would be worth more.
But in some ways, the bigger issue is that just about any economist could tell you all this, so pushing it as real policy, even if you don't think it will ever pass, tells me you will sell out anyone and everyone for some campaign cash and a consulting jobs for your cousin.
That was sixteen years ago. Maybe the man has grown. If my vote still matters when the primary comes to Texas, I would probably go for Vance, but would still vote for Rubio in the general if he won. Of course plenty of time between now and then so I reserve the right to change my opinion at whim.
And keep Canada out of the EU/UK
"now that the U.S. has erected a high tariff wall, everyone is looking for a back door."
This is what neoclassical economics would predict. Nations act in their own interests, and somehow the US is the only nation for whom that is legitimate? You're going to have a lot of holes in that dam to try to plug.
I sympathize with the concern about China. But if the operations are actually taking place outside of China, then a lot of the labor costs are going to the Americas. That's a good thing! And the whole point of offshoring to China was low labor costs, so there's only so much that China can reshore while still remaining economically viable.
Taking a hard line on China is good. A declining empire trying to bully its remaining allies is not good.
Lots of comments from people who don’t have a clue about what’s going on. But I can tell you what. Nobody trading with the United States while it’s run by a mob boss. Over and done. Trade with yourselves.