Prior to Nafta, trade between the U.S. and Mexico was a relatively tame affair. The two sides alternated between deficits and surpluses—small figures, typically no bigger than a few billion dollars. U.S. exports quickly jumped after the accord went into effect in 1994, but the imports pouring in from Mexico climbed faster, and by 2015, the U.S. was posting a deficit of almost $60 billion. (With China, the U.S.’s largest trading partner, the gap has ballooned to over $360 billion a year.)
Robert E. Scott of the Economic Policy Institute, a think tank critical of free-trade deals, estimates these deficits with Mexico alone have cost 850,000 Americans their jobs. This, in turn, has a “chilling effect,” Scott said. “It actually causes wage losses for everybody who doesn’t have a college degree.” After accounting for inflation, hourly pay at U.S. factories has been stagnant since the early 1970s.
Trump—and to a lesser extent, Democratic candidate Bernie Sanders—has found so much success in expressing the working-man’s anger that just about no candidate, not even Hillary Clinton, whose husband signed the Nafta deal, is now willing to fully embrace free trade. Trump’s proposed solution has been to impose restrictions on imports, a strategy that almost two-thirds of Americans backed in a Bloomberg Politics national poll last week. Little if any talk on the campaign trail is dedicated to the benefits of the surge in cheap imports, primarily subdued inflation that preserves consumers’ purchasing power.