Withdrawing from NAFTA Would Hit 187,000 US Exporting Jobs, Mostly in Heartland

Sherman Robinson (PIIE), Egor Gornostay (PIIE), Monica de Bolle (PIIE), Junie Joseph (PIIE) and Melina Kolb (PIIE)

November 16, 2017 2:30 PM
Photo Credit: 
PIIE

An analysis of US jobs that rely on exports to Canada and Mexico finds that withdrawing from the North American Free Trade Agreement (NAFTA) would cost 187,000 of those jobs over a 1 to 3 year period.[1] (By comparison, from 2013 to 2015, a total of 7.4 million US workers were displaced, or lost their jobs involuntarily.[2]) The most affected states are Arkansas, Kentucky, Mississippi, and Indiana. The most affected sectors are autos, agriculture, and manufacturing (non-auto).

These estimates are based on the latest available World Trade Organization’s (WTO) most favored nation (MFN) tariff rates that would apply to US exports without NAFTA—and the fact that higher prices of US-made or grown exports will dampen sales to Canadian and Mexican consumers.[3] The analysis assumes that firms would then cut production, leading to US job displacements.[4] These estimates do not take into account the potential disruptive impact on supply chains from an elimination of NAFTA.

IMPACT BY STATE

 

IMPACT BY INDUSTRY

Percent of jobs displaced in each industry
1. Auto 0.51%
2. Agriculture 0.45%
3. Manufacturing (non-auto) 0.30%
4. Trade 0.22%
5. Transportation 0.18%
6. Utilities 0.16%
7. Mining 0.15%
8. Services 0.12%
9. Construction 0.01%

MOST AFFECTED COUNTIES

Top 10 counties with highest percent of estimated job losses
1. Scott County, MS 222 out of 11,711
2. Murray County, GA 128 out of 8,098
3. Knox County, MO 19 out of 1,229
4. Hardy County, WV 64 out of 4,873
5. Bolivar County, MS 117 out of 9,287
6. Marshall County, AL 344 out of 30,251
7. Macon County, IL 485 out of 43,503
8. Whitfield County, GA 516 out of 46,877
9. Harris County, GA 49 out of 4,570
10. McDonald County, MO 62 out of 5,865

Notes

1. Job loss figures refer to current positions in these sectors and displacement of those workers. Total US employment will not necessarily be lastingly affected.

2. US Bureau of Labor Statistics. Displaced workers are defined as persons 20 years of age and older who lost or left jobs because their plant or company closed or moved, there was insufficient work for them to do, or their position or shift was abolished.

3. MFN rates are based on the latest available data for traded items in 2016 for Canada and 2015 for Mexico.

4. This is a “shock” scenario without any explicit modelling of the dynamic adjustment process. These figures do not account for any potential change in US tariff rates on imports. The researchers used a simple estimate of demand elasticities with MFN tariff rates. The multiplier model then takes that decline in US exports and estimates what would happen to US production of those exports and to production of all goods that are directly and indirectly linked to those exports (e.g., steel into autos, coal into steel, etc.). It is then assumed that employment falls with the decline in production. The downscaling methodology and data used in this analysis is described in chapter 2 of the PIIE Briefing Assessing Trade Agendas in the US Presidential Campaign (September 2016), by Marcus Noland, Gary Clyde Hufbauer, Sherman Robinson, and Tyler Moran.

Comments

Sara Whipple

Great analysis

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