Former President Donald Trump drew intense criticism from many in the international community for his protectionist stance and strict adherence to an “America First” agenda on the matter of trade. Among other concerns for the Trump administration, one of the primary targets of the former president’s ire was the North American Free Trade Agreement (NAFTA). Reached in 1994, the agreement established a trilateral trade bloc among Canada, Mexico, and the United States.
Following months of negotiations, the updated United States-Mexico-Canada Agreement (USMCA), sometimes referred to as the “new NAFTA,” came into effect on July 1, 2020.
In many respects, the USMCA is very similar to NAFTA, but it makes several important updates to the earlier agreement to reflect changes in trade over the past three decades. Among these are changes to intellectual property protections, regulations for the trade of automobiles and parts, and protections regarding labor laws. While the impact of the USMCA on U.S.-Mexico trade is still being determined, there is little question that trade with Mexico is a crucial feature of the U.S. economy as well as foreign policy. Below, we explore how much the United States trades with Mexico.
Key Takeaways
- The North American Free Trade Agreement (NAFTA) was a landmark treaty for free market commerce between the U.S., Canada, and Mexico.
- Some Americans saw NAFTA as giving an unfair advantage to the other two nations, and strongly opposed the policy.
- President Trump took aim at NAFTA, replacing it with the USMCA agreement.
Largest Trading Partener
According to the Office of the United States Trade Representative, U.S. goods and services trade with Mexico reached a total of more than $677 billion in 2019. Of this, $289.5 billion were exports, while close to $388 billion were imports. Thus, the U.S. trade deficit with Mexico was about $98.5 billion for 2019.
Mexico became the largest trading-goods partner of the United States for the first time in 2019, with $614.5 billion in total (two-way) goods traded during that year. The United States reported a trading-goods deficit with Mexico of $101.4 billion for the year.
In 2020, Mexico fell to the second-largest trading partner with the U.S. behind China. Amid the COVID-19 pandemic 2020 trade between the countries resulted in substantial decrease in total bilateral merchandise trade to $538.1 billion.
Important Areas
Mexico was the second-largest goods export market of the United States in 2019. The United States exported $256.6 billion to Mexico in 2019, marking an increase of about 517% since 1993, the last year before NAFTA took effect. About 16% of all U.S. exports went to Mexico in 2019.
There are several important areas of export. The top categories include machinery, at $45 billion in exports; electrical machinery, at $42 billion; mineral fuels, at $34 billion; and vehicles, at $21 billion. Plastics are also a major export category, accounting for about $16 billion worth of exports to Mexico in 2019.
On the imports side, Mexico was the second-largest supplier of goods imports to the United States in 2019, with a total of $358.0 billion in goods imported that year. That constitutes an increase of nearly 800% relative to 1993, before NAFTA came into effect. U.S. imports from Mexico made up more than 14% of overall U.S. imports in 2019.
Some of the most important categories for imports from Mexico in 2019 include vehicles, at $101 billion; machinery, at $66 billion; electrical machinery, at $64 billion; optical and medical instruments, at $16 billion; and mineral fuels, at $13 billion. Additionally, there were about $28 billion in agricultural product imports from Mexico, divided among fresh fruits and vegetables, wine and beer, snack foods, and processed fruits and vegetables.