Trump Announces Trade Deal With Mexico

The Heartland Institute cited CEI’s Fellow Ryan Young on new NAFTA agreement.

Ryan Young, an adjunct fellow at the Competitive Enterprise Institute, says the proposed bilateral trade deal will increase the cost of consumer goods for U.S. residents, whether through tariffs or government-mandated increases in the costs of labor.

“Raising Mexico’s minimum wage in auto factories to $16 per hour is insulting to Mexico’s national sovereignty, as they should be able to set their own laws,” Young said. “But more to the point, if that doesn’t happen, raising the required percentage of U.S.-made parts in cars from the current 62.5 percent to 75 percent, under this agreement, raises the possibility of a tariff. Faced with disrupting a pretty big part of the global supply chain, companies may decide it’s just not worth it, and will pay tariffs instead, also making cars more expensive. Raising the minimum wage for Mexico’s auto workers also makes cars more expensive and is a de facto tariff.

“No matter what happens, we’re going to pay more for cars,” Young said.

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