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PIIE: U.S. Trade Deficit with Mexico will Expand if NAFTA Falls Apart

The consensus view of economists is that neither the broad U.S. trade balance nor the U.S. trade balance with a specific trading partner is an appropriate gauge of whether a particular set of trade policies—or trade agreements—is delivering benefits to the American people (more on that here and here).  Regardless, it is clear that terminating NAFTA would do exactly what the U.S. administration wants to avoid: it would increase the U.S. trade deficit with Mexico. The Peterson Institute for International Economics (PIIE) points out that the Mexican peso declines in response to threats of tariffs and NAFTA withdrawal, making imports from Mexico cheaper and more attractive . Learn more here.

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Filed Under: NAFTA

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U.S. manufacturers added more than 800,000 jobs in the four years after NAFTA entered into force.

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