If the United States pulls out of the North American Free Trade Agreement (NAFTA), as many as 1.8 million US jobs would disappear within the first year, according to an analysis by Business Roundtable, an association of CEOs from leading American companies.
The manufacturing sector alone would lose between 82,000 and 157,000 jobs in a matter of months and the absence of NAFTA would decrease American industrial output dramatically, leading to lower employment rates. The re-imposition of trade tariffs will also kill more jobs than it could create, according to the study.
Foreign purchasers are predicted to shift away from US goods and services in favor of lower-cost goods and services made in other international markets, particularly those made in Asia.
“Terminating NAFTA would permanently reduce US employment, exports, and economic output, while benefiting our economic competitors at the expense of American workers and businesses,” said Joshua Bolten, President and CEO of Business Roundtable.
US exports to Canada and Mexico may drop by 17.4% each, and American companies’ exports to other countries elsewhere in the world would decrease by 2.5%, as higher tariffs make American companies less competitive in the global market.
More than anything else, the study warns that the breaking down of NAFTA would lead to a reduction in American purchasing power by almost US$654 per household due to higher prices and lower wages caused by increased tariffs.
This would hugely benefit economies like China, which would reportedly experience a 0.2% increase in GDP and the creation of 2 million new jobs as a result.