Renegotiating NAFTA

On January 16, 2020, the Senate passed a landmark trade deal that would replace the 26-year-old North American Free Trade Agreement (NAFTA). Until the United States-Mexico-Canada Agreement (USMCA) was signed, considerable debate had surrounded it. The new agreement made significant changes to the auto and dairy industries, instigating the nickname of “the cows and cars deal”. With changes to NAFTA looming, many questioned whether the accord had brought more benefits than costs to its signatories. Why had the countries signed the original agreement? Could the costs be minimized under a new agreement without reducing the benefits? Did buying local goods help create the most jobs in a country? What was the role of business? Everyone wondered about the potential ramifications of the new NAFTA. [Teaching Note for "Renegotiating NAFTA" HBS No. 318-143]