Goldman Sachs’ chief economist suggested that Trump’s tariffs on foreign steel and aluminum will lead to the United States leaving the North American Free Trade Agreement (NAFTA).
Jan Hatzius, chief economist for Goldman Sachs, argued:
Unlike routine antidumping and countervailing duty cases or less common safeguard cases, the Section 232 authority the President will apparently use is rarely used and more controversial. There is a good chance that this could eventually lead the President to announce he intends to withdraw from NAFTA, but such an announcement does not appear likely in the near term.
Hatzius added Friday that Trump’s proposed tariff “does not rely on any economic argument and instead imposes trade restrictions on national security grounds.”
President Donald Trump revealed on Thursday that he intends to impose a 25 percent tax on steel and a 10 percent tax on aluminum starting next week.
The U.S. Commerce Department argued that dumping of cheap steel and aluminum from China and other countries puts vital American companies out of business, risking national security.
In February, Commerce Department Secretary Wilbur Ross published a study that said that foreign dumping of steel and aluminum threatens national security.
Trade representatives from the United States, Canada, and Mexico have met over the last several months to discuss reforming NAFTA, although, the countries have to come to an agreement on how to reform NAFTA.
President Trump suggested during a rally in August that he thinks he will probably end up terminating NAFTA.
“Personally, I don’t think we can make a deal because we have been so badly taken advantage of,” Trump said during the rally in Arizona last August. “I think we’ll probably end up terminating NAFTA at some point.”