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The article “Trump Just Ripped Up Nafta. Here’s What’s in the New Deal” by Jim Tankersley portrays the new regulations and explores the potential long-term effects of the new United State-Mexico-Canada Agreement (USMCA). Tankersley discusses the U. S. expanding its markets to Canada and Mexico and the risks associated with it. In doing so he makes two contentious claims such that the USMCA will: increase profits for U. S. companies and will cause the shifting of U. S. manufacturing jobs to China. The first claim will be examined through a capitalistic economic approach, such that the fundamental goal of a company is to “make a profit to ensure competitiveness and survival”. The second claim will be analyzed according to globalization theory, taking into consideration the outsourcing of jobs due to high labour costs in North America. Therefore, from the economic and geographical theory found in Sparke’s (2013) and Herod’s (2012) scholarship, suggests that Tankersley’s arguments are convincing. This paper will examine them through the perspectives of capitalistic and globalization theory.
Tankersley suggests that under the USMCA, the US will expand its market to Canada and Mexico, allowing U. S. products to be sold there. He argues it will increase profits for U. S. companies in the long term, but fails to explain the process of how it will happen, which makes this argument less persuasive. However, scholarship on the economic system of capitalism Gregoire Benzakin enforces Tankersley’s argument. For example, Sparke mentions that “a capitalist economy is constantly searching for new markets, to expand and sell their products”, which allows American companies to reach various consumers, thus increasing their profitability. Alternatively, Herod discusses the concept of using spatial geography to increase access to goods via North America’s transportation infrastructure which will create the notion that the U. S. wants to expand into these markets. This scale of expansion can be applied at an international scale to remain competitive with other U. S. companies.
Secondly, Tankersley argues that U. S. jobs could be outsourced to China, as a long-term consequence of the USMCA deal, which states that “75% automobile parts will be manufactured in North America while paying factory workers a $16 hourly wage”. However, Tankersley fails to explore the motivation behind shifting production to China. But based on research found regarding the globalization of the labour market, it makes Tankersley’s argument convincing. For instance, the existing global network of cheap labour allows U. S. companies to shift production to those countries to maximize profits. Mathematically speaking, paying factory workers a high hourly wage will result in high labour costs thus minimizing the company’s profitability, therefore decreasing its chance for survival in the market. Additionally, modern advances in transportation infrastructure and technology make it easier to ship products to the U. S. , thus motivating U. S. companies to shift production to China. Given these points, Tankersley’s arguments present a slight bias towards pro-capitalism but remain convincing.
To conclude, Tankersley claims on the long-term effects of the new USMCA deal were convincing based on Sparke and Herod’s scholarship. Given the U. S. is a capitalist economy, Gregoire Benzakin Tankersley’s bias towards the capitalistic system complements the notion that U. S. companies want to maximize profit, to ensure their survival. As time progress, the long-term effects will depend on the decisions of the U. S. companies, which may impose either a positive or negative impact on society.
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