NAFTA or America First: The Vantage Point of the Auto Industry

May 10, 2018

In the world of trade policy, not much if anything is ever clear one way or the other. This is certainly true for the relationship that the American auto industry has had with NAFTA ever since its ratification. While many blue collar workers and others point to free trade agreements as the reason why their careers are no longer a given, the auto industry sings a much different song. A song that preaches of the good that globalization has done and that if it were not for NAFTA many more of those all so important American jobs would have been lost then already were. It is important to see why this is the case, but then also to see just how compatible this model is with other industries. Will free trade agreements be a savior for the American worker in other industries as well or is this simply a one-time occurrence, a perfect storm of specific circumstances of the American auto industry?

            Eduardo Porter, writing for the New York Times in 2016 agrees with that statement but perhaps not for the reasons that one would think.  The article states that

“In the final analysis, NAFTA might have saved hundreds of thousands of jobs. By offering a low-wage platform, Mexican plants increased the scale of production in North America, allowing domestic and foreign automakers to amortize their large fixed costs. Carmakers and parts suppliers tend to cluster relatively close together. So assembly plants in Mexico help sustain a robust auto-parts industry across North America.” (Porter)

The author, in short, argues that the best way to think of the situation is not one of active rescuing but of mitigating harm. Yes, Mexico took some auto workers jobs from the United States, but for Porter that evil allowed the car makers to cut costs at such a vital time and keep a foothold here in America. Perhaps, in a world without NAFTA that would have not been possible. Mexico’s close proximity allows for the transfer of products back and forth during the manufacturing process. NAFTA facilitates that transfer by easing trade restrictions. Without this in place, it would have left U.S auto makers with a very different situation. It is simply not so cheap to send cars back and forth to China. So at that point, it would have simply made more sense for them to move the whole production line there, decimating American jobs in the process.

            In fact, it is pointed out that U.S auto exports doubled since the implementation of NAFTA (Bozzella and Bainwol). That being said, many American jobs must have been either created or retained because of this innovation in production that utilized the best of both worlds in terms of cheaper costs in Mexico and increased productivity north in the United States. This is proven by the figures that show that the advanced industries field in the manufacturing of electronics in the United States continues to export more than it imports with Mexico shown by data from the U.S Census Bureau from December 2017 and January 2018 (U.S. Census Bureau).The United Auto Workers state that there is a “lopsided” trade imbalance but even more aggressive than that is the statement that “no amount of spin can erase the fact that NAFTA cost hundreds of thousands of jobs and the closure of thousands of U.S and Canadian manufacturing facilities” (Unifor-UAW). Overall there is data to support the argument that NAFTA has caused the loss of American jobs. What is missing there is the lack of acknowledging the possibility that NAFTA most likely saved many a job in the auto industry. It is understandable to be mad at the situation, even just one person not being able to put food on the table because they lost their job is a tragedy. But even worse than that are many people not able to do the same. The facts shown about the situation seem to strongly suggest that at least in the American auto industry NAFTA may be more of a scapegoat than the actual enemy.

            This appears to hold true for other industries as it is projected that if the United States withdraws from NAFTA, 300,000 American jobs would be lost as a result and not all of them could possibly come from the auto industry alone (Gillespie). The article did not specify where these jobs would go or what sectors they would be lost in, but as Porter pointed out in his article it could be said that some of these jobs would most likely find their way to China (Porter). The reality of the matter is that the world is becoming more and more intertwined and the people and leaders of the world have a choice before them. They are either to adjust with the times, or be left behind in isolationist policy.

While unions should be strongly supported by politicians and the workers that comprise them they too should begin to adjust to the newly globalized world in helping to keep and farther specialization of the American workforce to guard against losing jobs, as American workers may be expensive but they are also very productive. Of course, no trade agreement is perfect and NAFTA should be renegotiated to help protect workers better in all three countries. Overall though, blame for weak worker protections can and should be placed on the governments of their respective countries and not on a treaty that works for fair trade. It is much easier to blame outside forces, but the reality and the rhetoric simply do not completely match up. Instead of fighting free trade, perhaps resources would be better spent lobbying for better labor market policies that provide for social welfare protections for workers who lose their jobs and retraining and placement programs for them to reenter the work force. The U.S Auto Industry benefiting from NAFTA proves that free trade agreements have the potential to provide benefits to all parties involved if and only if they are made to be fair and implemented properly.

Written by Kaleb Knowlton, Political Science major with a minor in French and European Union Studies certificate.  


  1. Bozzella, John, Mitch Bainwol. (28 Sept. 2017). "Changing NAFTA's 'Rules of Origin' Would Jeopardize the U.S. Auto Industry". The Washington Post, .
  2. Gillespie , Patrick. (2018). "Killing NAFTA Would Cost 300,000 American Jobs, Analysis Says". CNNMoney, Cable News Network, .
  3. Porter, Eduardo. (29 Mar. 2016). "Nafta May Have Saved Many Autoworkers' Jobs". The New York Times.
  4. United States Census Bureau. (2018). "Foreign Trade: Data". U.S. Trade in Advanced Technology Products.

About Author(s)

US Latin American Relations
This course focuses on the history, politics, and legitimacy of US policy towards Latin America. The course is taught by Professor Scott Morgenstern. The contributing articles are written by students who took the course in Spring '18.