Understanding NAFTA and its Implications for U.S./Canada Trade

Trade among the U.S., Canadian, and Mexico has more than tripled, but many ask at what cost. For example, here in the U.S. some claim jobs were lost to Mexico and that U.S. workers’ wages suffered.

While the debate continues, many U.S. businesses are finding NAFTA benefits to be a game changer. NAFTA has leveled the playing field in many important areas, chiefly by eliminating tariffs on domestically produced items moving between the partner nations and by allowing U.S. businesses nearly unfettered access to the Canadian and Mexican markets. But wading through the trade agreement’s legalese and technical requirements can be a daunting exercise. As a result, many businesses may be unaware of its key provisions and may not be receiving financial benefits to which they are entitled.

The following discussion will help explain the role NAFTA has in cross border trade, particularly with regard to U.S./ Canada relations. The United States and Canada are each other’s largest trade partners, with more than $1.68 billion in goods crossing the border each day. NAFTA has become an integral part of the trade process, and the information provided will familiarize business managers, logistics managers, finance professionals—and anyone else with an interest in supply chain efficiency—with some of the trade agreement’s key provisions, compliance processes, and business implications.