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Round four of the Nafta negotiations kicked off yesterday, but this time, negotiators are trading in their peace pipes for nunchucks.

That’s because a few aggressive U.S. demands could prompt Mexico and Canada to walk away from the table:

  • Proposing a “sunset” provision, which would terminate Nafta after five years unless the countries actively renew it.
  • Introducing an “auto rules of origin” clause requiring Nafta-made cars to source over 50% of their content from the U.S.
  • Gutting the “Investor State Dispute Settlement,” a system that allows private corporations to sue foreign governments. Weakening the ISDS would create more uncertainty for U.S. companies investing abroad…in let’s say…Mexico (h/t Axios).

So what’s tying these proposals together? Trump wants to reduce trade imbalances with our neighbors (like a $64.3 billion deficit with Mexico) by “leveling the playing field” for U.S. manufacturers.

But other groups, like the U.S. Chamber of Commerce, disagree. Its argument comes straight from an Econ101 PowerPoint: barriers lead to economic inefficiencies…and free trade is a tide that lifts all boats.



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