NAFTA Deal Could Meet Deficit Test With a One-Off 4% Growth in Exports

The detailed NAFTA renegotiation objectives for the administration of President Donald Trump center around reducing the U.S. trade deficit, specifically in the balance of goods. The U.S. strategy is more export-led than import-cutting in nature.

Assuming the target is to cut the deficit in goods to zero, then exports would need to rise by as much as 17%. However excluding energy, which is subject to other policies from the Trump administration, that drops to 12%. If also adjusting for the $31 billion services surplus, the rise in goods exports to set the “goods and services” deficit to zero would be just 4%.

The U.S doesn’t have “artificial deadlines” but the practicalities of TPA expiry and the Mexican elections necessitate a year-end completion to talks. This may prove ambitious given the objectives include action on digital trade as well as standards in labor and the environment among others. 

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