Trade Diversion With Mexico and Asia facing the same tariff of t for sales into the United States, the equilibrium is at A with the quantity Q2 exported by Mexico and the remainder exported by Asia at a price of PAsia + t. U.S. tariff revenue is the area (a + b + c + d). Eliminating the tariff with Mexico under NAFTA leads to an expansion of Mexican exports to Q3. The United States loses the tariff revenue (a + b + c), which is the U.S. loss as a result of trade diversion from Asia to Mexico.