NAFTA and U.S.-Mexico Cattle Trade

The North American Free Trade Agreement (NAFTA) was implemented in January 1994. Thus far, no clear pattern has emerged regarding U.S.-Mexico cattle trade: in the first year the U.S. trade deficit in cattle fell, but in the second year that deficit reached a record level. While some U.S. cattle producers blamed NAFTA for the record deficit, the underlying causes were devaluation of the peso, Mexico's economic contraction, and drought in northern Mexico. Lower U.S. cattle prices, which some also contend were the result of NAFTA, were the result of several factors including high grain prices and large domestic cattle supplies.