Renegotiation of NAFTA: A Look at the Potential Consequences of a 20% Tariff on Mexican Imports, The

The United States' trade policy has changed over the years, and now is potentially returning to a protectionist policy with a renegotiation of the North American Free Trade Agreement. This policy is a response to the growing discontent with free trade agreements because of the increasing unemployment in the manufacturing sector as the result of increased trade. This paper analyzes the potential consequences of a 20% tariff on Mexican imports using a Heckscher-Ohlin Model and a trade surplus model. An alternative policy option of increased government investment in the Trade Adjustment Assistance Program is presented based on the findings of this research.