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Investors confronting an increasingly cloudy outlook for the global economy, just as President Trump pushes ahead with a fresh wave of tariffs, Nurian Rabini of NYU and had Some Bay Capital proposing a solution, writing quote to resolve their current tensions, Canada, Mexico, and the United States should start drafting plans for a North American economic union. Dorian Rabini join just now for more. Welcome to the program sir, Thanks for making time for us. That's quite a statement. Just go through the way you're thinking about it. How on earth would this work.

Investors confronting an increasingly cloudy outlook for the global economy, just as President Trump pushes ahead with a fresh wave of tariffs, Nurian Rabini of NYU and had Some Bay Capital proposing a solution, writing quote to resolve their current tensions, Canada, Mexico, and the United States should start drafting plans for a North American economic union. Dorian Rabini join just now for more. Welcome to the program sir, Thanks for making time for us. That's quite a statement. Just go through the way you're thinking about it. How on earth would this work.

Well? For now, we have only a free trade area between US, Canada and Mexico, and there are ready tensions involved. There's nothing not only to do with of course drugs, fan Danila and migrants, but the US is also concerned about the trade imbalance between Mexico, US and Canada. They're very large trade services with the United States. So you can really negotiate the USMCA in a direction of restricting trade and US is now probably asking Mexico and Canada to also restrict trade in automobiles. There may be twenty twenty five percent tarries on that because there are lots of job loss in the US. Or you can do something that is more bold, forming a full economic union. They would imply free trade not only in goods but also in services, in the movement of capital, labor, data, technology, and information. That's what the European country have done for the last few decades, and from any economic point of view, in North America is an optimal trading area that goes beyond goods. Now, one step you can take along those lines before having a full economic union could be, for example, to form a custom union. What's the difference between a custom union and a free trade area. In a free trade area, there is no common external tariff against other countries. So, for example, there are lots of Chinese cars that are now entering into Mexico, while US is a one hundred percent tariff on against Chinese ev If you form a custom unions, the first step for economic union you have to have the same tariff impose on Chinese cars whether they go to Mexico or US or Canada. And in this way you create a full market, for example, for automobiles, and you prevent imposition of say twenty twenty five percent tariffs on experts for Chinese cars or parts from Mexico to the United States. So you can do a reform of the trade agreement the direction of shrinking trade, or you can do it in the direction of expanding trade. And I argue that actually in the economic benefit of all three countries to expand trade to first the custom union and then a full economic union.

Well? For now, we have only a free trade area between US, Canada and Mexico, and there are ready tensions involved. There's nothing not only to do with of course drugs, fan Danila and migrants, but the US is also concerned about the trade imbalance between Mexico, US and Canada. They're very large trade services with the United States. So you can really negotiate the USMCA in a direction of restricting trade and US is now probably asking Mexico and Canada to also restrict trade in automobiles. There may be twenty twenty five percent tarries on that because there are lots of job loss in the US. Or you can do something that is more bold, forming a full economic union. They would imply free trade not only in goods but also in services, in the movement of capital, labor, data, technology, and information. That's what the European country have done for the last few decades, and from any economic point of view, in North America is an optimal trading area that goes beyond goods. Now, one step you can take along those lines before having a full economic union could be, for example, to form a custom union. What's the difference between a custom union and a free trade area. In a free trade area, there is no common external tariff against other countries. So, for example, there are lots of Chinese cars that are now entering into Mexico, while US is a one hundred percent tariff on against Chinese ev If you form a custom unions, the first step for economic union you have to have the same tariff impose on Chinese cars whether they go to Mexico or US or Canada. And in this way you create a full market, for example, for automobiles, and you prevent imposition of say twenty twenty five percent tariffs on experts for Chinese cars or parts from Mexico to the United States. So you can do a reform of the trade agreement the direction of shrinking trade, or you can do it in the direction of expanding trade. And I argue that actually in the economic benefit of all three countries to expand trade to first the custom union and then a full economic union.

You offer a different vision then first before we get to the much bigger one later, Can we just talk about a much bigger one. Freedom of labor, free movement of labor between the United States and Mexico just sounds like a complete nonstarter. Noriel, do you actually think that could be a stepping stone further out down the road in the future.

You offer a different vision then first before we get to the much bigger one later, Can we just talk about a much bigger one. Freedom of labor, free movement of labor between the United States and Mexico just sounds like a complete nonstarter. Noriel, do you actually think that could be a stepping stone further out down the road in the future.

Well, in the case of the European Union, you had the same problem. The country with that were much poorer in Central Eastern Europe. They you joined a U, there was a transition period of many decades. It's until they reached a certain level of per capita income, a certain level of governance, a certain level of reform. Of course, free trade in labor between US and Canada would not be a problem. Same per capita income, same culture, language, and actually there'll be probably more people going from US to Canada. They around because of global climate change and shipland in Canada with Mexico. Of course, at the current level of per capita income, you cannot have free trade day in labor, but as I said, like in the case of Europe, you could have sun criteria. They suggest that maybe after ten or twenty years, when Mexican per capita income is much higher, there's better governance than you free up that type of trade. So the economic union, the part that is controversial is only probably migration of labor. It will be an interest of the United States who have free trade in goods, in services where it has comparative advantage, in the movement of capital portfolio FDI, and of course that information technology, where the US as a major comparative advantage real to Mexico and to Canada. The only controversial part, as I said, is labor movement, but you can restrict it over time.

Well, in the case of the European Union, you had the same problem. The country with that were much poorer in Central Eastern Europe. They you joined a U, there was a transition period of many decades. It's until they reached a certain level of per capita income, a certain level of governance, a certain level of reform. Of course, free trade in labor between US and Canada would not be a problem. Same per capita income, same culture, language, and actually there'll be probably more people going from US to Canada. They around because of global climate change and shipland in Canada with Mexico. Of course, at the current level of per capita income, you cannot have free trade day in labor, but as I said, like in the case of Europe, you could have sun criteria. They suggest that maybe after ten or twenty years, when Mexican per capita income is much higher, there's better governance than you free up that type of trade. So the economic union, the part that is controversial is only probably migration of labor. It will be an interest of the United States who have free trade in goods, in services where it has comparative advantage, in the movement of capital portfolio FDI, and of course that information technology, where the US as a major comparative advantage real to Mexico and to Canada. The only controversial part, as I said, is labor movement, but you can restrict it over time.

Neil, do you get the sense that anyone in the current administration is sympathetic to this type of proposal at a time where it seems like people are increasingly going for economic isolation rather than reducing the walls entirely.

Neil, do you get the sense that anyone in the current administration is sympathetic to this type of proposal at a time where it seems like people are increasingly going for economic isolation rather than reducing the walls entirely.

I will start conversation within the administration on this matter. But I would say that certainly a step towards reforming the USMCA in the direction of a custom union makes sense because right now, of course, the automakers that are the producers, are very worried about the in fact on their own production costs and profit margins of restricting and imposing a lot of tariffs on say auto trade. The unions and the workers are in favor of it, but the problem is that you're imposing these twenty five percent tariff or a bot acomotive trade, the cost of cars in North America is going to increase by ten twenty percent. That's going to hurt first of all, consumers, but it's going to also hurt the workers. So if you care about US auto workers, there are two options. One to impose the tariffs and restricting trade in automotive, but that's going to be bad for everybody. Another one is instead having a castle union, where if you essentially have an external tariff that is common against Chinese autos, then Chinese autos that are not entering the United States, so they will not enter Mexico either, and therefore the market for US automaker is going to be much bigger because you have one hundred and twenty million Mexican they need auto and that by now mostly Chinese cars. So you can have a win win solution that makes everybody better off, including the auto workers if you go in the direction of a custom union and eventually in economic union, so you have to go forward rather than going backward. And I think that those arguments can be made in Washington, in Mexico City, and of course in Canada as well.

I will start conversation within the administration on this matter. But I would say that certainly a step towards reforming the USMCA in the direction of a custom union makes sense because right now, of course, the automakers that are the producers, are very worried about the in fact on their own production costs and profit margins of restricting and imposing a lot of tariffs on say auto trade. The unions and the workers are in favor of it, but the problem is that you're imposing these twenty five percent tariff or a bot acomotive trade, the cost of cars in North America is going to increase by ten twenty percent. That's going to hurt first of all, consumers, but it's going to also hurt the workers. So if you care about US auto workers, there are two options. One to impose the tariffs and restricting trade in automotive, but that's going to be bad for everybody. Another one is instead having a castle union, where if you essentially have an external tariff that is common against Chinese autos, then Chinese autos that are not entering the United States, so they will not enter Mexico either, and therefore the market for US automaker is going to be much bigger because you have one hundred and twenty million Mexican they need auto and that by now mostly Chinese cars. So you can have a win win solution that makes everybody better off, including the auto workers if you go in the direction of a custom union and eventually in economic union, so you have to go forward rather than going backward. And I think that those arguments can be made in Washington, in Mexico City, and of course in Canada as well.

Noreel is this proposal potentially away that the United States could have more haft when it comes to driving a wedge between Beijing.

Noreel is this proposal potentially away that the United States could have more haft when it comes to driving a wedge between Beijing.

Well, certainly one of the concerns that the United States has is not just company that is coming to the US via China, but more importantly that the Chinese have avoided tariffs by essentially exporting goods to Mexico and from Mexico to the United States as if there were Mexican goods they were. The Mexican production of many goods as a lot of content of parts that is Chinese. And there is also a concern about the fact that the Chinese are taking over the auto market of Mexico as well. Experting chip cars isn't otherwise to Mexico. So if you care about the risking the relationship with essentially China, whether it's in auto or other critical parts of the economy, it makes sense to have initially custom union and then having also a full economic union where decisions about how much you trade and you investment with China from North America are done not by the U s ALON side ALON and then Mexico can do whatever they want as they do right now, but everything the context of an economic union and initially a custom union. So it makes sense for the US, it makes sense for North America.

Well, certainly one of the concerns that the United States has is not just company that is coming to the US via China, but more importantly that the Chinese have avoided tariffs by essentially exporting goods to Mexico and from Mexico to the United States as if there were Mexican goods they were. The Mexican production of many goods as a lot of content of parts that is Chinese. And there is also a concern about the fact that the Chinese are taking over the auto market of Mexico as well. Experting chip cars isn't otherwise to Mexico. So if you care about the risking the relationship with essentially China, whether it's in auto or other critical parts of the economy, it makes sense to have initially custom union and then having also a full economic union where decisions about how much you trade and you investment with China from North America are done not by the U s ALON side ALON and then Mexico can do whatever they want as they do right now, but everything the context of an economic union and initially a custom union. So it makes sense for the US, it makes sense for North America.

No real provocative as always, it's going to catch up with this, sir, and I should say thanks for making sign for us. And I run a bit of a world source, so looking forward to catching up with you when you're back in New York. Marian Rapinie of NYU stand and had some bank capital

No real provocative as always, it's going to catch up with this, sir, and I should say thanks for making sign for us. And I run a bit of a world source, so looking forward to catching up with you when you're back in New York. Marian Rapinie of NYU stand and had some bank capital