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The United States is set to renegotiate Nafta, a treaty with Canada and Mexico that President Trump scorned during his campaign. He has also taken aim at China for what he insists are unfair trade practices.

But American manufacturers depend heavily on a global supply chain, especially from Mexico, Canada and China which leaves them vulnerable in a trade war.

A Swell of Trade Brings Complexity

Nafta, which took effect in 1994, opened the economic borders between the United States, Canada and Mexico. Chinese exports surged after China entered the World Trade Organization in 2001. The trade deals solidified the countries as the United States’ most important trading partners.

Concerns About Unbalanced Trade

While the growth of the American economy has followed trade, the changing dynamics have also prompted concerns about lost jobs, especially in the well-paying manufacturing sector, and the rising trade deficit. In recent years, the imbalance has become higher with Mexico.

Made in America, but WithParts From Around the Globe

Clothing. Cars. Computers. Even when something is manufactured in the United States, the product is typically made up of parts and pieces from around the world. The American auto industry is the most reliant on imports, with most coming from Japan, China, Canada, Mexico and Germany. But this cross-border supply chain has helped make the American auto industry competitive with manufacturers in Asia and Europe, which also have both lower- and higher-wage countries with different specialties.

Source: The New York Times - Organization for Economic Cooperation and Development

 

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