Effect on the U.S. Economy
The overall net effect of NAFTA on the U.S. economy has been relatively small, primarily
because total trade with both Mexico and Canada was equal to less than 5% of U.S. GDP at the
time NAFTA went into effect. Because many, if not most, of the economic effects came as a result
of U.S.-Mexico trade liberalization, it is also important to take into account that two-way trade
with Mexico was equal to an even smaller percentage of GDP (1.4%) in 1994. Thus, any changes
in trade patterns would not be expected to be significant in relation to the overall U.S. economy. A
major challenge in assessing NAFTA is separating the effects that came as a result of the
agreement from other factors. U.S. trade with Mexico and Canada was already growing prior to
NAFTA and it likely would have continued to do so without an agreement. A 2003 report by the
Congressional Budget Office observed that it was difficult to precisely measure the effects of
NAFTA. It estimated that NAFTA likely increased annual U.S. GDP, but by a very small amount
– “probably no more than a few billion dollars, or a few hundredths of a percent.”52 In some
sectors, trade-related effects could have been more significant, especially in those industries that
were more exposed to the removal of tariff and non-tariff trade barriers, such as the textile,
apparel, automotive, and agriculture industries.