In the LA Times today, Jim Puzzanghera writes that “a small U.S. trade surplus with Mexico of about $1.7 billion in 1993 has ballooned into a large deficit — $61 billion last year.” Here’s the accompanying chart:
This does indeed give the impression of an ever-widening gap. But it’s badly misleading because it doesn’t take account of inflation and economic growth. Here’s a better chart that shows the trade gap directly:
The US trade deficit with Mexico did indeed rise in the first decade after NAFTA. But for the past 15 years it’s been flat. In 2002 it was 0.338 percent of US GDP. In 2015 it was 0.336 percent of GDP.
You can’t look at stuff like this in nominal dollars. You have to account for economic growth (about 25 percent since 2002) and inflation (about 30 percent since 2002). Once you do that, you can see that, in fact, our trade deficit with Mexico hasn’t changed at all for the past 15 years.
