How was NAFTA linked to concerns about manufacturing employment in the U.S. Rust Belt?

The North American Free Trade Agreement (NAFTA) was linked to concerns regarding manufacturing employment in the U.S. Rust Belt primarily due to the potential for companies to relocate production to Mexico to capitalize on significantly lower labor costs.12

Critics feared that the agreement would incentivize U.S. and Canadian firms to shift manufacturing operations southward, leading to a rapid decline in domestic industrial jobs and contributing to the widespread unemployment and poverty that came to define the Rust Belt region. This shift was facilitated by the maquiladora system, which allowed American companies to produce lower-priced goods in Mexico using duty-free components and inexpensive labor.21

These concerns remained a central point of debate for decades, ultimately fueling the 2018 renegotiation of the treaty into the United States–Mexico–Canada Agreement (USMCA). The USMCA sought to address these issues by increasing the required percentage of North American-made components for tariff-exempt vehicles and mandating that a portion of the work be performed by higher-wage earners.12