Evaluating the Impact of FTAs on U.S.–Mexico Beef Trade
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Abstract
This study examines the impact of major free trade agreements—NAFTA and the USMCA—on U.S. beef imports from Mexico over the period 1980–2024. Using quarterly data and an error correction model (ECM), the analysis evaluates both the long-run determinants of import behavior and the short-run adjustment dynamics. The results reveal a stable cointegrating relationship in which the real exchange rate exerts a positive and statistically significant long-run effect, consistent with theoretical expectations about price competitiveness. In contrast, U.S. GDP does not display the anticipated positive influence, suggesting the presence of supply-side constraints in Mexico’s beef sector. Short-run estimates show that real exchange rate fluctuations have an immediate negative effect on imports, pointing to contractual rigidities and logistical frictions. Regarding trade agreements, the findings contradict the hypothesis of limited sensitivity for NAFTA—whose effect is positive and significant—while no comparable evidence is found for the USMCA to date. Overall, the study highlights the importance of structural factors, production capacity, and exchange-rate dynamics in shaping U.S. beef imports from Mexico, within a broader context of evolving North American beef trade.Keywords:
free trade agreements , NAFTA , USMCA , beef import trade , error correction model , real exchange rateReferences
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