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December 29, 2017
Agricultural Trade Balances Under NAFTA
A focus on trade deficits has emerged as an important
meat, and dairy products. Imports from Mexico were valued
fixture of the Trump Administration’s trade policy,
at $23.0 billion, resulting in a trade deficit of $5.1 billion in
including its ongoing review of the North American Free
2016. The balance of agricultural trade between the United
Trade Agreement (NAFTA). Merchandise trade deficits (or
States and Mexico has also alternated between a trade
surpluses) refer to an accounting of the net balance of
surplus and a trade deficit since NAFTA was implemented.
exports and imports of goods. In agricultural trade, the U.S.
From 2012 to 2016, the U.S. trade deficit with Mexico
Department of Agriculture (USDA) reports that the United
averaged $1.1 billion per year (Figure 2). The deficit grew
States had a trade surplus of $20.3 billion in 2016 based on
sharply beginning in 2015 as certain U.S. agricultural
total U.S. agricultural exports of $134.9 billion worldwide
imports from Mexico continued to grow while overall U.S.
compared to imports of $114.6 billion. This aggregate
exports to Mexico receded (Table 1). Prior to 2015, U.S.-
surplus, however, masks trade deficits for some product
Mexico agricultural trade consistently showed a surplus.
categories or within some markets.
Figure 1. U.S.-Canada Agricultural Trade, 1990-2016
The value of U.S. agricultural trade with its NAFTA
partners—Canada and Mexico—has increased sharply since
NAFTA was implemented. Total U.S. agricultural exports
under NAFTA rose from $8.7 billion in 1992 to $38.1
billion in 2016. U.S. imports also rose from $6.5 billion to
$44.5 billion. This resulted in a $6.4 billion trade deficit for
U.S. agricultural products in 2016. In general, the U.S.
agriculture trade balance with NAFTA countries has
fluctuated, resulting in a surplus in some years and a deficit
in others. Further examination reveals that this deficit is
concentrated with certain agricultural products and also
varies depending on the trading partner country. It also
reveals that the U.S. trade deficit for certain products might
be attributable to longer-term market changes.
In 2016, U.S. agricultural exports to Canada totaled $20.2
Figure 2. U.S.-Mexico Agricultural Trade, 1990-2016
billion. Leading exports were grains and feed, meat and
poultry products, fresh and processed fruits and vegetables,
sugar and related products, oilseeds, and nuts. Agricultural
imports from Canada were valued at $21.6 billion, resulting
in a U.S. trade deficit of $1.3 billion in 2016. However,
since NAFTA was implemented, the balance of agricultural
trade between the United States and Canada has alternated
between a trade surplus and a trade deficit (Figure 1).
Averaged over the 2012-2016 period, the U.S. agricultural
trade deficit with Canada averaged $0.7 billion per year.
Table 1 highlights that most product categories are marked
by annual U.S. trade surpluses, including sugar and related
products, fruits and vegetables, nuts, and dairy products.
U.S. agricultural trade deficits with Canada are attributed to
trade in meat, grains, and oilseeds. In 2016, the U.S.-
Source: CRS using USDA data for “Agricultural Products” as defined
Canada agricultural trade deficit totaled $3.6 billion for
by USDA. Data are not adjusted for inflation.
grains and oilseeds and $1.6 billion for meat (mostly pork).
This trade disparity is largely explained by general market
Table 1 highlights which product categories have seen the
and trade trends between the United States and Canada but
greatest gap in the value of U.S. exports compared to
also by trade patterns in these products with other global
imports from Mexico in recent years. Much of the current
trading partners. This deficit with Canada does not reflect
U.S. agricultural trade deficit is attributable to sharp
global U.S. grain and meat trade trends, which generally
increases in U.S. imports of Mexico’s fruits and vegetables.
reflect a trade surplus each year.
In 2016, the U.S.-Mexico trade deficit totaled $6 billion for
fresh and processed vegetables and $5.2 billion for fresh
U.S. agricultural exports to Mexico were valued at $17.8
and processed fruits (Table 1). Mexico’s increased fruit and
billion in 2016. Leading exports were grains, oilseeds,
vegetables production and export supplies may largely be
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Agricultural Trade Balances Under NAFTA
explained by its ability to grow certain crops during the
already accounts for 60%-70% of Canada’s imports of
U.S. winter season, increased U.S. business investment and
grains, oilseeds, and meat products and accounts for about
market integration in Mexico’s produce sectors, and
70% of Mexico’s fruit and vegetable imports (Figure 4).
increased demand for year-round fruits and vegetables by
consumers in the United States. This deficit reflects broader
A trade imbalance does not imply any particular economic
global trends in U.S. fruit and vegetable trade. (See CRS
cost or benefit for either country. For example, there has
Report RL34468, The U.S. Trade Situation for Fruit and
been substantial cross-border foreign investment and
Vegetable Products.) Growth in Mexico’s produce exports
market integration between the United States and its
is also attributed to its investment in large-scale greenhouse
NAFTA partners (e.g., U.S.-Canada animal finishing
production facilities, which some claim has been supported
operations and U.S.-Mexico produce operations). USDA
by the Mexican government.
reports that since NAFTA was implemented, U.S. direct
investment in Mexico’s and Canada’s production
Table 1. U.S.-NAFTA Trade Balance, 2012-2016
agriculture has increased. Accordingly, product imports
Product Group
2012
2013
2014
2015
2016
from a country could in part reflect sales from a partnership
or U.S.-owned business in the partner country, highlighting
($billions)
diverse potential import benefits for U.S. stakeholders.
U.S.-Canada Agricultural Trade
Grains, feeds
(1.3)
(1.8)
(1.7)
(1.4)
(1.5)
Figure 3. Canada’s Agricultural Suppliers, 2016
Meat, poultry
(0.7)
(1.0)
(2.1)
(1.7)
(1.6)
Dairy products
0.1
0.2
0.2
0.2
0.2
Vegetables, prods.
0.4
0.4
0.5
0.6
0.4
Fruits, preps.
1.6
1.7
1.7
1.5
1.5
Sugars, products
1.3
1.2
1.3
1.2
1.3
Oilseeds, prods.
(2.0)
(2.2)
(2.3)
(2.0)
(2.1)
Nuts, preps.
0.6
0.7
0.8
0.8
0.7
Beverages, juice
0.8
0.9
0.9
0.9
0.8
Total
0.4
(0.4)
(1.2)
(0.8)
(1.3)
U.S.-Mexico Agricultural Trade
Meat, poultry
2.6
3.1
3.3
2.2
2.3
Dairy products
1.1
1.3
1.5
1.1
1.1
Grains, feeds
4.7
3.7
3.8
3.5
3.6 Figure 4. Mexico’s Agricultural Suppliers, 2016
Oilseeds, prods.
3.2
2.8
3.2
2.8
2.8
Sugars, products
(<0.1)
(0.5)
(0.3)
(0.4)
(0.4)
Other horticulture
0.5
0.5
0.5
0.5
0.5
Vegetables, prods.
(4.2)
(4.8)
(4.9)
(5.1)
(6.0)
Fruits, preps.
(2.7)
(3.0)
(3.7)
(4.4)
(5.2)
Beverages, juice
(2.1)
(2.2)
(2.7)
(2.9)
(3.4)
Total
2.5
0.4
0.1 (3.3)
(5.1)
Source: CRS using USDA data. Totals do not add as some product
groups are excluded. Values in parentheses represent a trade deficit.
A focus on periodic trade imbalances for certain products
masks the fact that, overall, NAFTA has contributed to
three- to four-fold growth in the value of U.S. agricultural
Source: Compiled by CRS using Global Trade Atlas.
exports within NAFTA since it was implemented (Figure
1, Figure 2). It also masks that trade balances often tend to
Issues raised here focus primarily on the microeconomic
be highly variable year-to-year—resulting in an overall
factors that affect trade balances for particular products. In
surplus in some years or in deficits for some products that
general, however, most economists conclude that the trade
may be balanced out by surpluses for other products.
balances may be influenced by a number of macroeconomic
factors. Factors may include differences between countries
Often agricultural trade deficits exist because consumer
in savings and investment within the economy, economic
demand in one country is much greater than in the trading
growth, and infrastructure and distribution networks, as
partner country (e.g., U.S. year-round fruit and vegetable
well as periodic fluctuations in exchange rates and changes
demand that cannot be met by seasonal U.S. production).
in consumer demand. For additional information, see CRS
Duty-free access under NAFTA of product imports
In Focus IF10619, The U.S. Trade Deficit: An Overview.
generally results in lower consumer prices compared to
imports without preferential access. Also, opportunities to
Renée Johnson, Specialist in Agricultural Policy
increase exports may be limited if the target market is
already saturated. As shown in Figure 3, the United States
IF10800
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Agricultural Trade Balances Under NAFTA
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