News & Politics

Paul Krugman: Is Trump About to Tank the U.S. Economy?

The New York Times columnist assesses the dangers of ripping up NAFTA.

Photo Credit: YouTube/Bloomberg

Paul Krugman is the first to admit that the North Atlantic Free Trade Agreement has not been all it was cracked up to be. When the deal was struck in 1994, its proponents argued NAFTA would prove a boon to Mexico's economy and allow the United States to run up a huge surplus. More than 20 years later, it has accomplished neither, while U.S. manufacturing finds itself in steep decline. For better or worse, the economist writes, "We now live in a North American economy built around the reality of free trade."

Unfortunately, Donald Trump has never had much interest in reality.

In his latest column for the New York Times, Krugman warns what might happen if the president were to tear up NAFTA in a fit of pique. And given Trump's recent sabotage of the Affordable Care Act, he believes it's a distinct possibility.

"Breaking up or degrading NAFTA would have the same disruptive effects that came from NAFTA's creation," he argues. "Plants would close, jobs would disappear, communities would lose their livelihoods. And, yes, many businesses, small, large and in some cases huge, would lose many billions of dollars."

Trump has already threatened to exit the agreement if its terms are not renegotiated, and the demands he's made thus far—that the deal be revisted every five years, and businesses be denied the ability to appeal government orders—are unlikely to prove acceptable to Mexico and Canada. Indeed, they would appear to defeat the very purpose of the pact.

"NAFTA, then, is at real risk," Krugman concludes. "And if it does get destroyed, the only question is whether the consequences will be ugly, or extremely ugly."

Read Paul Krugman's column at the New York Times.

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Jacob Sugarman is the acting managing editor at Truthdig.