A giant sucking sound. That’s what 1992 independent U.S. presidential candidate Ross Perot warned that North Americans would hear if the North American Free Trade Agreement (NAFTA) became law—the sound of jobs leaving the United States as companies chase lower wages overseas. He wasn’t wrong. Since the passage of NAFTA and a dozen other trade agreements modeled on NAFTA, millions of U.S. manufacturing jobs have been lost, and annual trade deficits have soared.
To be clear, the trade agreements don’t themselves cause offshoring and trade imbalances. U.S.-based companies were already moving manufacturing to Mexican maquiladoras before NAFTA passed in 1993. And American brands were already using Chinese factories before Congress passed Permanent Normal Trade Relations in 2000 and supported China’s entry into the World Trade Organization (WTO).
What these agreements do is grease the skids. By harmonizing rules, they make it more seamless for investors to move operations from one country to another. They reduce the costs of offshoring. It’s a betrayal, and American workers have paid the price.