A Year After Deal Announced, NAFTA Deficit Up 10% as Trump Sidelines Reform with Refusal to Cut USMCA Pharma Terms that Lock in High Drug Prices
Commerce Department Releases August 2019 Trade Balance Data
WASHINGTON, D.C. – As President Donald Trump continues to sideline congressional consideration of a revised North American Free Trade Agreement (NAFTA) by refusing to eliminate terms that would lock in high U.S. drug prices, the August 2019 goods trade data released by the U.S. Census Bureau this morning shows that the U.S. goods trade deficit with NAFTA partners Mexico and Canada increased 10.5% ($14.9 billion) relative to the first eight months of 2018, Public Citizen said today.
“The ever-increasing NAFTA trade deficit underscores why, after a year of not heeding Democrats’ demands, the administration must cut the pharma giveaways they added to NAFTA that would lock in high drug prices and strengthen labor and environmental standards and enforcement to counter outsourcing so that a NAFTA replacement might be enacted,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.
The growth in the NAFTA deficit continues a Trump-era trend: The 2018 annual U.S. goods deficit was up 11% relative to 2017, an increase from $197 billion to $218 billion, and up 19% ($34 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016, President Barack Obama’s last year.
“The congressional Democrats have been crystal clear for a year by engaging with the administration to try to improve the NAFTA deal Trump signed: Democrats’ zeal to fix NAFTA outweighs their dislike of Donald Trump. But unless Trump cuts the pharma giveaways he added to NAFTA and strengthens labor and environmental standards and enforcement to counter outsourcing, the deal Trump signed won’t fix NAFTA so not surprisingly it’s lacking support,” Wallach said.
The speedily growing NAFTA deficit contrasts with the latest global and China trade data. The U.S. goods trade deficit with the world for the first eight months of 2019 is basically steady relative to the same period last year at $582.57 billion. That is a drop of 0.11% from the first eight months of 2018. The annual 2018 U.S. goods trade deficit with the world of $192 billion was larger than any year since the 2008-09 financial crisis – up 8% ($63 billion) over 2017 and up 14% ($108 billion) in 2018 over 2016, the last year of the Obama administration.
However, the U.S. goods trade deficit with China has decreased in the first eight months of 2019. At $233 billion, it is down 13% relative to the first eight months of 2018. The U.S. goods trade deficit with China in 2018 was the largest ever recorded at $428 billion, up from $392 billion in 2017. This compares to $370 billion in 2016, Obama’s last year.
Note: The figures in this release are adjusted for inflation to the base month of August 2019. Thus, the figures represent changes in trade balances expressed in constant dollars, so, for years prior to 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau.