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Cramer's wake-up call for Donald Trump on NAFTA

Cramer's wake-up call for Donald Trump on NAFTA

Jim Cramer found Donald Trump's talks of keeping jobs in America a noble goal, but the argument has a flipside that both Trump and Hillary Clinton have failed to address.

"These trade deals that ship American jobs overseas also have an upside for the American consumer: lower prices on just about everything. It's a bargain, some would say an unholy bargain, but this tradeoff is very real and it needs to be explored," the "Mad Money" host said.

Trump has repeatedly criticized Ford for sending jobs to Mexico. Not only has Ford done this, but so have several other American manufacturers. Cramer noted that within the small radius of where he travels to Mexico, there are plants for Toyota, Honda, Mercedes Benz, Jaguar, Mazda and BMW, too.

Mexico produces approximately 3.5 million cars currently, and is expected to grow to 5 million by 2020. As of 2015, the country was the fourth-largest exporter of cars and auto parts.

"Most of this growth … didn't exist before the North American Free Trade Agreement — NAFTA for short — which Donald Trump repeatedly trashed and tried to link with Hillary Clinton. But Secretary Clinton didn't take the bait," Cramer said following Monday night's presidential debate.

It's our loss — I just wish American politics allowed for this kind of rational discussion.
Jim Cramer
Republican presidential nominee Donald Trump
Win McNamee | Getty Images

No one talks about the actual benefit that deals like NAFTA bring to American workers, namely cheaper products. Meanwhile, the average Mexican worker only receives about $3 per hour. The country has fewer worker and environmental protections. There is state provided healthcare, and very little absenteeism.

Shareholders want the companies to move to Mexico for an immediate earnings-per-share boost. More important for consumers, Mexico has kept the price of cars down because of its low costs, Cramer said.

"That is a real trade-off and we need to talk about it, rather than pretending it doesn't exist," he said.

Is it better to have cheaper cars that allow American workers to commute further away for jobs? Or are there not enough jobs to go around without the outsourced auto positions?

Cramer thinks this argument can be applied to other topics beyond cars. Trade agreements have pushed the price of clothing down so that one can dress nicely for an important job interview without spending a fortune. Meanwhile, the U.S. textile industry has been damaged.

"We want higher skilled jobs to replace them, but we don't always have a good enough education system to teach people those new skills, and there aren't enough trade schools to produce highly qualified workers," Cramer said.

At the same time, the countries that have taken jobs from the U.S., like Mexico and China, have created a large amount of pollution and have gotten away with it.

Should this be allowed? Should there be some sort of pollution tax on those goods?

Those are the economic questions that Cramer would like answered. Unfortunately, he does not have faith that the current political campaign will produce answers.

"It's our loss — I just wish American politics allowed for this kind of rational discussion," Cramer said.

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