Report | Trade and Globalization

Heading South: U.S.-Mexico trade and job displacement after NAFTA

Briefing Paper #308

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  •  Supplemental Table A: Jobs displaced due to trade deficits with Mexico, by congressional district, 2010 [PDF] [Excel]
  •  Supplemental Table B: Jobs displaced due to trade deficits with Mexico, by congressional district, 2010 [PDF] [Excel]

As of 2010, U.S. trade deficits with Mexico totaling $97.2 billion had displaced 682,900 U.S. jobs. Of those jobs, 116,400 are likely economy-wide job losses because they were displaced between 2007 and 2010, when the U.S. labor market was severely depressed.

Prominent economists and U.S. government officials predicted that the North American Free Trade Agreement (NAFTA) would lead to growing trade surpluses with Mexico and that hundreds of thousands of jobs would be gained (Hufbauer and Schott 1993; President Clinton 1993). The evidence shows that the predicted surpluses in the wake of NAFTA’s enactment in 1994 did not materialize, for reasons outlined in this briefing paper. However, congressional leaders and administration officials now make nearly identical claims about export growth and job creation under the proposed U.S.-Korea Free Trade Agreement (KORUS FTA).

Abstract promises about increased jobs and exports misrepresent the real overall effects of trade on the U.S. economy. Trade both creates and destroys jobs. While exports tend to support domestic employment, imports lead to job displacement: As imports are substituted for domestically produced goods, production that supports domestic jobs falls, displacing existing jobs and preventing new job creation.

Growing trade deficits almost always result in growing trade-related job displacement. Like NAFTA, the KORUS FTA will likely result in growing trade deficits and hence U.S. job displacement, not economy-wide job growth.

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