U.S. NAFTA Trade Deficit Deepens 14% After Year-Long Trump Stall on Making the Improvements to USMCA Necessary for Pact to Move

Third Quarter 2019 U.S. NAFTA Goods Trade Deficit Higher than Last Year

Today’s release of third quarter 2019 goods trade data shows that the U.S. deficit with North American Free Trade Agreement (NAFTA) partners continues to grow as President Donald Trump stalls enactment of a new NAFTA by refusing to alter aspects of his 2018 U.S.-Mexico-Canada Agreement (USMCA) that Democrats oppose.

The U.S. goods trade deficit with Mexico and Canada increased to $177 billion in the first three quarters of 2019 – up 14% relative to the same period last year. This extends a trend of increased U.S. goods deficits with NAFTA partners: the 2018 U.S. goods deficit was up 16% relative to 2017, an increase from $181 billion to $210 billion, and up 30% ($49 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016, the last year of the Obama administration.

“The ever-increasing NAFTA deficit underscores the political liability for Trump of his year-long refusal to fix the USMCA deal he signed last year so it could become viable in Congress,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “We want to really fix NAFTA, which means strengthening the labor and environmental terms and their enforcement to counter NAFTA’s original sin of race-to-the-bottom job outsourcing and not adding monopoly rights for Big Pharma that would lock in high medicine prices.”

While the NAFTA trade deficit expanded, the U.S. goods trade deficit with the world for the first three quarters of 2019 is $653 billion – dropping 1% from the same period last year, although an increase relative to the last year of the Obama administration. The annual 2018 U.S. goods trade deficit with the world of $892 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.

The U.S. goods trade deficit with China of $265 billion also decreased in the first three quarters of 2019 – down 14% relative to same period last year and down 4% relative to the last year of the Obama administration. The U.S. annual 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, President Obama’s last year.

[Figures are adjusted for inflation to the base month of September 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to September 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau.]