Singing The Nafta Blues

A severe imbalance will make it harder to extend free-trade pacts

Forget the gaping $40 billion U.S. trade deficit with China for the moment. A new trade problem lurks just off the radar screen. Call it the NAFTA gap: America's swelling merchandise trade imbalances with its partners in the North American Free Trade Agreement. Private economists expect the combined U.S. deficit with Canada and Mexico to approach $40 billion this year--more than a fourfold jump since 1993, before NAFTA (chart). That puts the NAFTA trade deficit on par with the U.S. shortfall with China and right behind the bilateral $45 billion gap with Japan.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.