A U.S. exit from the North American Free Trade Agreement could result in up to $5.3 billion in additional annual expenses for American shippers and producers.
So predicts a report conducted by the Chicago-based global management consulting firm A.T. Kearney, which says that up to $182 billion in goods every year crosses the borders between the U.S., Canada, and Mexico as a result of NAFTA.
NAFTA became official in 1994 and today represents the largest free trade agreement in the world, comprising some 28 percent of the world’s gross domestic product.
Commissioned by the National Retail Federation, the Food Marketing Institute, and the Retail Industry Leaders Association, the report, entitled How NAFTA Affects US Retail, also forecasts possible individual product price increases should the trade agreement become a thing of the past.
Noting that U.S. retailers imported $128 billion in goods from Mexico in 2017 and $54 billion in goods from Canada, the report also says abandoning NAFTA could result in a $390 million increase in products that could impact the construction industry with equipment and electronics, as well as another $250 million increase in automotive parts.
Responding to the report, Matthew Shay, the president of the National Retail Federation, said in a statement that “It’s clear NAFTA must be modernized, but we can’t lose sight of the fact that this agreement helps ensure that American families have access to products they need at prices they can afford.”
Trade representatives from the U.S., Canada, and Mexico are currently in the process of negotiating a revamping of NAFTA.
By Garry Boulard
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