Will redrawing NAFTA disrupt Mexican-U.S. ties?
President Trump’s bid to renegotiate the North American Free Trade Agreement (NAFTA) may have a pronounced impact on the strong economic relationship between Mexico and the United States that has developed in the 23 years since the accord took effect. During this time, U.S. trade with Mexico has increased more than 500 percent as tariffs and other restrictions disappeared. The relationship is especially close in cities along the U.S.-Mexican border, such as El Paso, Texas and Ciudad Juarez just across the Rio Grande. These binational links are so strong that many experts say they can survive a redrawing of the trade agreement.
Among the key takeaways:
While U.S. exports to Mexico have more than tripled under NAFTA, the U.S. trade balance with that country has swung from a $1.6 billion surplus to a $63.2 billion deficit.
A substantial wage gap persists; the average wage in the United States is more than three times greater than in Mexico.
Trump has moved from threatening to withdraw from NAFTA to calling for a renegotiation of the accord, which encompasses Canada as well as the United States and Mexico.
Resources for Further Study
Boskin, Michael J., “NAFTA at 20,” Hoover Institution Press, 2014. A Stanford economist brings together presentations from policymakers who helped develop the North American Free Trade Agreement (NAFTA) and academics who have studied it.
Domm, Patti, “Trump is mad about ‘made in Mexico’ cars – but this is even bigger,” CNBC, Jan 3, 2017, http://tinyurl.com/
Kahn, Carrie, “How NAFTA Helped The Mexican Billionaires’ Club,” NPR, Dec. 13, 2013, http://tinyurl.com/
Reports and Studies
“2016 Top Markets Report, Automotive Parts, Country Case Study,” U.S. Department of Commerce, 2016, http://tinyurl.com/
De la Calle, Luis, and Luis Rubio, “Mexico: A Middle Class Society Poor No More, Developed Not Yet,” Woodrow Wilson International Center for Scholars, 2012, http://tinyurl.com/
Villarreal, M. Angeles, “Mexico’s Free Trade Agreements,” Congressional Research Service, 2012, http://tinyurl.com/
Villarreal, M. Angeles, and Ian F. Fergusson, “The North American Free Trade Agreement,” Congressional Research Service, 2017, http://tinyurl.com/
Weisbrot, Mark, Stephan Lefebvre and Joseph Sammut, “Did NAFTA Help Mexico? An Assessment After 20 Years,” Center for Economic and Policy Research, 2014, http://tinyurl.com/
The Next Step
Effects on Businesses
Crow, Kirsten, “In Texas, companies await word on Trump’s border wall,” USA Today, May 19, 2017, http://tinyurl.com/
Murphy, Katy, “California bill would blacklist contractors involved in U.S.-Mexico border wall project,” The Mercury News, April 25, 2017, http://tinyurl.com/
Sherman, Christopher, “Complex world of border trade: Cattle go north, meat south,” ABC News, The Associated Press, May 22, 2017, http://tinyurl.com/
Chardy, Alfonso, “Border guards accused of illegally turning away foreigners seeking asylum,” Miami Herald, May 21, 2017, http://tinyurl.com/
Hesson, Ted, and Seung Min Kim, “Trump’s immigration crackdown is well underway,” Politico, April 28, 2017, http://tinyurl.com/
Partlow, Joshua, “The ‘Trump effect’ has slowed illegal U.S. border crossings. But for how long?” The Washington Post, May 22, 2017, http://tinyurl.com/
Center for International Policy Americas Program
2000 M St., N.W., Suite 720, Washington, DC 20036
011-52-555-324-1201 (Mexico City office)
Research center that focuses on public policy and socioeconomics in Mexico.
The Hub for Human Innovation
500 W. Overland Ave., Suite 230, El Paso, TX 79901
Incubator for tech businesses in the El Paso-Ciudad Juarez region.
International Trade Administration
U.S. Department of Commerce, 1401 Constitution Ave., N.W., Washington, DC 20230
Resource for information on foreign industries that participate in the U.S. market.
Edificio Plaza Reforma, Prolongación Paseo de la Reforma 600-101B, Col. Santa Fe Peña Blanca, C.P. 01210, México D.F.
Economic research group of former Mexican politicians who worked to develop NAFTA.
Woodrow Wilson International Center for Scholars Mexico Institute
1300 Pennsylvania Ave., N.W., Washington, DC 20004
Research group that examines U.S.-Mexico public policy.