Your Margarita Night Might Be Safe From Trump’s Nafta Overhaul

The North American Free Trade Agreement undoubtedly has fueled an increase in trade on the continent, though proponents of the agreement may be exaggerating when they say its demise would block the flow of goods among member countries.

That’s because fewer companies — including tequila-makers — are taking advantage of benefits provided by the 23-year-old pact, which includes an elimination of tariffs on most goods traded between the U.S., Mexico and Canada. Of total U.S. imports from its two neighbors last year, only 51 percent were under the Nafta, down from 66 percent in 1998, according to calculations made by Bloomberg based on Census Bureau data.

Trade analysts said it’s unclear why fewer importers are taking advantage of Nafta benefits. They said red tape involved in using Nafta can be a deterrent, meaning some companies may instead choose to pay tariffs allowed by the World Trade Organization, which are still low and in some cases nonexistent. And companies may opt out of Nafta because it stipulates how much material must be sourced from North America, which can be a costly requirement given the low cost of Asian supplies.

The questions come at a crucial time, as U.S. President Donald Trump has made modernizing and improving Nafta a central component of his economic policy. Mexico has already given its companies notice that it will renegotiate the deal, while Trump and Canadian Prime Minister Justin Trudeau discussed trade ties in their first official meeting on Monday.

Ending Nafta