The North American Free Trade Agreement (NAFTA) was sold to the U.S. public in 1993 with grand promises. The deal would create 200,000 new U.S. jobs per year in its first five years alone, according to President Clinton. That projection was based on a study by the Peterson Institute for International Economics (PIIE) that modeled how NAFTA’s elimination of Mexican and Canadian tariffs would result in growth of U.S. exports that would outpace growth in imports from the other NAFTA countries. By expanding our pre-NAFTA trade surplus with Mexico and improving the U.S. trade balance with Canada (with which the United States had a small pre-NAFTA deficit), NAFTA would create numerous U.S. jobs.
But instead of an improved trade balance with Canada and Mexico, NAFTA resulted in an explosion of imports that led to a huge new U.S. NAFTA trade deficit.