Trump corners Democrats with threat to kill NAFTA: ‘It is going to force Congress to act’

Democratic congressional leaders are loath to acknowledge it, but President Trump has them cornered with his threat to terminate NAFTA if his new trade deal with Mexico and Canada isn’t approved.

Scrapping the North American Free Trade Agreement without a replacement would deliver a heavy blow to the U.S. economy. In the short term, it would reduce real U.S. gross domestic product — the total output of goods and services — by as much as $231 billion, more than 1 percent during the first five years, according to an analysis commissioned by the Business Roundtable.

“Terminating NAFTA would have negative impacts on jobs, exports and output even after new supply chains are formed. In this longer run, we estimate that U.S. GDP would remain depressed by over 0.2 percent, permanently,” said the report for the Business Roundtable, an association of chief executive officers from major U.S. corporations.

The impact on the U.S. GDP, about $19.3 trillion in 2017, would depend on the reactions of Mexico and Canada. Alternative scenarios in the analysis pegged the reduced annual GDP at $119 billion to $231 billion, with job losses from 1.8 million to 3.6 million in the five-year window.

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