NYT Says the Price of Bacon Would Fall if NAFTA Is Repealed

January 23, 2018

It didn’t actually directly say this, but that is certainly a likely outcome of one of the scenarios it describes in its description of some of the possible effects of ending NAFTA. After describing the ways in which the US and Canadian pork industries have become integrated and the possible impact of the end of NAFTA on this integration it tells readers:

“But this agricultural supply chain would be disrupted in other ways. American pork would face a tariff of 20 percent when moving into Mexico, which generally has higher tariffs. That would hurt American farmers.”

If Mexico did, in fact, impose a tariff on imports of American pork it would lower the price of pork in the United States. (That’s what it means to hurt American farmers.) Lower pork prices are of course bad news for those in the industry (and those who care about animal rights) but are good news for the vast majority of people in the United States who are not employed in the industry.

The point here is that the effort to imply that repealing NAFTA would be an economic disaster is largely overblown. Most of the likely impacts would be small and in most cases, there would be gains offsetting the losses, even if the latter might be larger than the former.

Also, the repeal of NAFTA does not mean that all three countries would adopt the highest possible tariffs allowed under the WTO. It’s not clear that Mexico’s government would think that it would improve its popularity if it made people in Mexico pay 20 percent more for pork due to a tariff. Presumably, US pork would eventually be replaced by pork from other countries, but the net effect will still almost certainly be higher pork prices for Mexican consumers. That is both bad economics and in all probability bad politics.

NAFTA was originally sold to the public with a slew of completely dishonest arguments about how it would lead to a boom in exports to Mexico and be a massive source of job creation. This was not at all what economic theory predicted and of course, it is not what happened. It would be nice if the argument for retaining NAFTA was not based on the same sort of deceptions.


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