A lot has happened since the North American Free Trade Agreement started to stitch the economies of Canada, Mexico and the US together in 1994 to form the world's largest trading bloc. Over the past 24 years, NAFTA has helped companies and firms in all three countries move capital more freely, leading to plenty of cross-border dealmaking down the years.
Now, representatives from the governments of each nation are about to hit the final stretch of the treaty's renegotiation, a process that promises the first significant revisions to NAFTA in its history. US trade rep Robert Lighthizer appears wedded to a handful of Trump Administration demands that could significantly alter the status quo.
Lighthizer has proposed ending the treaty's investor-state dispute settlement provision, which protects US investments in Canada and Mexico through multilateral arbitration panels that settle state-by-state disputes. Lighthizer also supports the Trump Administration’s proposal for a five-year "sunset" provision that would spell the end of NAFTA without active support from each of the three governments, per The Wall Street Journal.
These proposed changes, among others, have led a number of business groups, including the National Association of Manufacturers and US Chamber of Commerce, to press President Donald Trump and members of his administration to preserve the current investment protections in NAFTA.
State-by-state investment trends since 2007
With that in mind, we looked at the inflows of M&A investment from Canada and Mexico into all 50 US states since 2007. A few key takeaways from the data:
Canada tops Mexico by a ratio of 48:1 in terms of total deal count in the US
Overall, California, Texas and New York are the three states most actively targeted for investment
The commercial services industry has witnessed more investment activity than any other
A final, salient characteristic of NAFTA's impact on Canadian and Mexican M&A investment traffic into US states is just how regional it has remained over the years. As you scroll over the map, begin by noting the heightened activity levels of Canadian and Mexican firms in states nearer the northern and southern borders of the US, respectively. Hover over the map to see the total deal flow for each state, broken out by investments from Canada vs. Mexico (a dash in the deal value row means no value data is available):