After repeatedly referring to NAFTA as "the worst trade deal maybe ever signed anywhere" during the presidential campaign, the Trump administration seems to be softening it's protectionist rhetoric. According to The Hill, in speaking to a group of concerned business leaders, Trump advisor Anthony Scaramucci said that the new administration isn't looking to "rip up NAFTA" but rather to "right-size it and make it fairer."
Anthony Scaramucci, a senior advisor on the Trump transition team, told a group of business leaders convened at a bipartisan meeting by the group No Labels that President-elect Trump is a free-trader who is looking to make trade deals more fair, not scrap them.
“I don’t think we’re looking to rip up NAFTA as much as we are looking to right-size it and make it fairer,” he added. “He’s got a great relationship, by the way, with the Mexican president. They talk regularly,” referring to Trump and Mexican President Enrique Peña Nieto.
Scaramucci said his homework on Trump’s economic team has been to study the impact of the North American Free Trade Agreement (NAFTA), which Trump called “the worst trade deal maybe ever signed anywhere” during the campaign.
“I don’t think anybody in the administration from the top to the bottom is looking for protectionism. We understand the economic harm and the impact that would take,” he said. “I don’t think anybody in the administration is looking for quote-unquote tariffs, but I think they are a cudgel if you will to lay out there if we can’t get the trade deals to be right-sided to now benefit the American people.”
All that said, the suggestion that no one within the administration "is looking for quote-unquote tariffs," would seem to slightly contradict tweets from the President-elect himself who has directly warned, as recently as yesterday, that companies looking to offshore manufacturing jobs should expect a 35% import tariff.
The U.S. is going to substantialy reduce taxes and regulations on businesses, but any business that leaves our country for another country,— Donald J. Trump (@realDonaldTrump) December 4, 2016
fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. ......— Donald J. Trump (@realDonaldTrump) December 4, 2016
without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies ......— Donald J. Trump (@realDonaldTrump) December 4, 2016
these companies are able to move between all 50 states, with no tax or tariff being charged. Please be forewarned prior to making a very ...— Donald J. Trump (@realDonaldTrump) December 4, 2016
expensive mistake! THE UNITED STATES IS OPEN FOR BUSINESS— Donald J. Trump (@realDonaldTrump) December 4, 2016
Of course, only time will tell if the Trump administration will pursue protectionist policies like a 35% tariff or whether the tough talk is all simply a negotiating tactic as suggested by Scaramucci.
He added that deals signed since World War II were designed to promote global peace and stability, but sometimes came at the expense of American workers.
“This economic interdependence has actually reduced conflict around the world. However, one of the deleterious side effects of this is that it’s hollowed out the manufacturing base of the United States,” Scaramucci said.
“Things get snippeted a certain way in the media and they get framed a certain way that he’s a protectionist and he’s against trade. I can state categorically that if he were standing here right now he’d tell you that he’s a free trader,” he said.
In the end, we're certain the Trump administration fully appreciates that while protectionist policies may have a positive impact on manufacturing employment levels in the short term, in the long term keeping manufacturing costs artificially high only serves to improve the return profile of automation and other technology-based capital investment projects.