Arizonans cheer end to NAFTA, but exports would suffer
Arizonans ought to be careful what they wish for when it comes to scrapping the North America Free Trade Agreement. At a rally in Phoenix, Arizona late Tuesday, scores of Trump supporters cheered the U.S. President’s declaration that the world’s largest economy would likely leave the trade pact sometime down the line, in spite of the fact Arizona is highly dependent on trade with Canada and Mexico.
“Personally, I don’t think we can make a deal because we have been so badly taken advantage of,” Trump told the assembled crowd. “They have made such great deals -- both of the countries but in particular Mexico -- that I don’t think we can make a deal. I think we’ll end up probably terminating NAFTA at some point.”
Such a declaration and subsequent reaction glosses over the fact Mexico and Canada are the top two destinations for Arizonan exports, as the US$8.3 billion worth of goods shipped to Mexico in 2016 represents more than one third of the state’s US$22 billion export economy. Canada purchased a little more than US$2 billion worth of goods from the state last year, just shy of 10 per cent of its total exports.
Though the rally participants were largely receptive to Trump’s message, he may find a tough opponent in the governor’s office. Republican Doug Ducey is a staunch proponent of trade with Canada, and refused to attend the rally. Ducey has repeatedly gone on trade missions throughout his tenure as governor, and while in Canada promoting cross-border trade in November told BNN his state is eager to expand existing trade relationships rather than build barriers.
“There’s a lot of business here, there’s a lot of similar values, there’s a lot of relationships that have already been built,” Ducey said. “We’re looking to grow those and expand them.”
Any strengthening of the bonds between Canada and Arizona would likely bolster Ducey’s job-creation record. Canadian firms with operations in the state employ 15,600 Arizonans, by far the largest share of employment by foreign-owned companies in the state.
Though Canadian firms have a significant Arizona footprint, Gareth Watson, director of investment management at Richardson GMP, questioned how aware of that fact the rally participants were. In an interview on BNN, Watson cautioned the people of Arizona on the perils of scrapping trade agreements.
“I wouldn’t be surprised if a lot of people in that audience have absolutely no clue about that and they should be very careful about what they wish for,” he said Wednesday. “If those disappear, Mr. Trump will have to come up with some new jobs to replace them. Good luck though.”