President elect Donald Trump has had renegotiating NAFTA agreement in his agenda right from the start of his campaign. He has been very vocal about how USA has had an unfair position in the agreement and renegotiating it to US’s advantage. The focus of the renegotiation is to provide better employment opportunities in the country, thereby improving the employment rate. Let’s look into how Trump presidency and changes in NAFTA will affect the cryptocurrency world:
NAFTA and its significance:
The North American Free Trade Agreement is an agreement signed by Canada, Mexico, and the United States. This led to the creation of a trilateral trade bloc in North American continent. For over 30 out of the 50 States, Canada or Mexico rank as the first or second largest export market. Many American small business exporters first foreign customers are in Canada or Mexico. NAFTA and U.S. trade with Canada and Mexico have supported over 140,000 small and medium-sized businesses. U.S. manufacturing exports to NAFTA have increased 258% and maintain a growing manufacturing trade surplus with Canada and Mexico.
Trump’s plans and early allegiance:
From the onset of his campaign, Trump has addressed NAFTA a few times, calling it “the single worst trade deal ever approved in United States”. He also added that if elected president he will either renegotiate it, or we will break it. A range of trade experts have said that pulling out of NAFTA as Trump proposed would have a range of unintended consequences for the U.S. This includes reduced access to the U.S.’s biggest export markets, a reduction in economic growth, and increased prices.
Nevertheless just after a couple of days of being elected, Trump was able to get Canada on board for renegotiations. Canadian Prime Minister Justin Trudeau, a staunch proponent of trade, announced his willingness to head back to the negotiating table.
“I think it’s important that we be open to talking about trade deals. If the Americans want to talk about NAFTA, I’m more than happy to talk about it.”
How would this affect Bitcoin:
Any renegotiation in the favor of USA would mean increased trade and job opportunities. Most of the economists predicted recession and obliteration of US jobs because of the negativity around the campaign. But while the markets haven’t really been that shaken up with the news of Trump’s presidency. Moving forward with negotiation would create more jobs and create opportunities better trades. Exporters always look to cut down on the transaction charges for their trade deals. Hence with increased trade deals, there can be significant increase in the volumes and price of Bitcoin.