The Economic Impacts of a U.S. withdrawal from NAFTA: A CGE Analysis

Authors

Jonathan Liu, University of Toronto SchoolsFollow

Abstract

The aim of this study is to examine the economic impacts of a U.S. withdrawal from the North American Free Trade Agreement (NAFTA) on Canada, Mexico and the United States. The shocks simulate scenarios in which the U.S instates penalizing tariff rates on NAFTA countries, a trade war between NAFTA members and a tariff reset to the WTO MFN rates. The effects of these tariff structures are analyzed under the framework of a computable general equilibrium (CGE) model with a focus on macroeconomic variables and welfare. The findings show that, in all iterations, Mexico’s economy takes a substantial hit, America’s economy is marginally affected and Canada’s economy slightly benefits.

Recommended Citation

Liu, Jonathan (2017) "The Economic Impacts of a U.S. withdrawal from NAFTA: A CGE Analysis," Undergraduate Economic Review: Vol. 14: Iss. 1, Article 14.
Available at: https://digitalcommons.iwu.edu/uer/vol14/iss1/14