The impact of NAFTA on the Mexican‐American trade

This study analyzes the impact of the North American Free Trade Agreement (NAFTA) on the trade between Mexico and the U.S. NAFTA was signed by the U.S., Canada and Mexico on 17 December 1992 and took effect on 1 January 1994. This research found that NAFTA led to a significant increase in U.S. imports from Mexico, did not affect U.S. exports to Mexico, and led to a negative U.S. trade balance in the short term with Mexico. From a policy point of view, the results suggest that further expansion of NAFTA will probably lead to even larger trade deficits, at least in the short term, for the U.S. In order to prepare for the political and economic implications of NAFTA and FTAA the U.S. needs to encourage further research that leads to a quantification of the short‐term benefits and losses, even if most economists, business leaders, and government officials agree that in the long term the countries and populations involved will all benefit.