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Globalization of Opioids: How International Trade Fuels Fentanyl Overdoses

A few weeks ago, the opioid crisis entered the center stage of political debate in the US when President Trump justified the tariff hike on Canada and Mexico accusing the two countries to favor the illegal imports of fentanyl, the most common opiod used in the United States. Illegal imports of fentanyl actually have little to do with the Canadian border (and a little more with the Mexican one), but this was one of the few occasions in which the topic surfaced majorly in the political debate.


The abuse of opioids is a major health emergency, with tragic social ramification and severe adverse economic effects. As reported in MacLean et al. (2020), the crisis has evolved in subsequent waves, each with increased economic and social effects.


The Unfolding Crisis

The opioid epidemic began in the 1990s with a dramatic increase in the prescription of opioids, driven by lax regulations and aggressive marketing by pharmaceutical companies. This first wave saw opioids being prescribed liberally, leading to widespread misuse and addiction. A second wave, from 2010 to 2013, saw a shift to heroin as regulations tightened on prescription opioids. The third and current wave, beginning in 2013, has been characterized by the rise of synthetic opioids like fentanyl, which are far more potent and deadly.


Fentanyl is a synthetic opioid over 50 times more potent than heroin and now accounts for 90% of all opioid deaths. This drug is typically smuggled into the country exploiting legal trade channels. As reported in Moore (2023) the increased volumes of  international trade are inadvertently facilitating the fentanyl epidemic.



Waves of opioid epidemics (CDC, 2024)
Figure 1. Waves of opioid epidemics (CDC, 2024)

Economic Costs and Labor Market Impacts

The economic costs of the opioid crisis are calculated to be over $500 billion annually. These costs encompass healthcare expenses, lost productivity, and the burden on the criminal justice system. The labor market has been particularly hard hit, with opioid misuse leading to reduced labor force participation and increased disability claims. The crisis has not only diminished the workforce but has also driven up healthcare costs for employers, creating a vicious cycle of economic decline.


The opioid crisis has disproportionately affected white men, who are the subjects of a more general crisis linked with the decline of manufacturing and the increased educational disadvantage with respect to women. Men are more likely to die from opioid overdoses than women, with non-Hispanic whites have the highest rates of opioid overdose deaths, followed by American Indians and Alaska Natives. However, Black and Hispanic populations are experiencing increased overdose rates, as fentanyl  spreads in urban areas.


The Economics of Fentanyl

Fentanyl is primarily produced abroad, with China and Mexico being the main sources. The Drug Enforcement Administration (DEA) has highlighted that fentanyl is often smuggled into the U.S. through the Southwest border or via international mail. However, the geographic distribution of fentanyl deaths, which are highest in the Midwest and Northeast, suggests that other smuggling routes are also significant.


Using data from the Centers for Disease Control (CDC) and the U.S. Census, Moore et al. (2023) analyzed state-level import patterns of all goods and drug overdose rates from 2008 to 2020. Their findings indicate a strong positive correlation, while this correlation was not observed for other causes of death, such as suicides or alcoholic liver disease, which are often linked to similar socioeconomic factors.

The study also controlled for various factors that influence opioid demand, such as import competition or  the presence of prescription drug monitoring programs. None of these factors significantly altered the relationship between imports and fentanyl overdoses.


All of this is strongly suggestive of the fact that fentanyl is being smuggled into the U.S. through legal trade flows. This channel accounts for an estimated 14,000 to 20,000 deaths per year.

The question remains on what are the actual smuggling routes. The Drug Enforcemente Administration (DEA) has been focusing on fentanyl smuggling from China and Mexico, but the study found that imports from these countries were only weakly related to fentanyl overdoses. The use of imports to smuggle fentanyl appears to be more diffuse and pervasive.


For instance, imports from Latin America showed a strong correlation with fentanyl overdoses, suggesting that smugglers might be using these routes to avoid detection. Similarly, sea imports were found to be more strongly associated with fentanyl overdoses than air or land imports.


Policy Responses: A Mixed Bag

Policy responses to the opioid crisis have been varied and, at times, contradictory. Supply-side policies, such as Prescription Drug Monitoring Programs (PDMPs) and Pain Management Clinic Laws (PMCLs) have shown some success in reducing opioid misuse. However, these policies often lead to unintended consequences, such as increased heroin use when prescription opioids become less accessible.


Demand-side policies, including Medicaid expansion under the Affordable Care Act, have improved access to treatment for opioid use disorder but have not significantly reduced opioid-related deaths. The legalization of medical marijuana has been suggested as a potential tool to reduce opioid misuse, but the evidence remains weak.


Harm reduction strategies, such as Naloxone Access Laws and Good Samaritan Laws, aim to reduce the immediate harms of opioid misuse. While these policies have shown promise in reducing overdose deaths, their effectiveness is often hampered by the rapid evolution of the crisis and many question their long-term effectiveness and sustainability.


Following on Moore et al.’s (2023) findings, the current focus on China and Mexico may be too narrow, missing other critical smuggling routes. Broader, data-driven screening efforts could save lives by better targeting fentanyl smuggling.


The U.S. Customs and Border Protection (CBP) currently screens imports based on risk assessments, but the effectiveness of these methods in detecting fentanyl is clearly low.


With such a devastating crisis, more effort should be put in finding creative and innovative ways to tackle it. Fentanyl overdoses are now the leading cause of death for Americans aged 18 to 49. Moderating the relationship between imports and fentanyl overdoses by even 20% could save around 2,800 to 4,000 lives per year, valued at approximately $28 to $40 billion.


Conclusion

The opioid crisis, particularly the rise of fentanyl, is an ever-changin challenge that needs a more decisive and creative policy approach. Broadening the focus of anti-smuggling efforts and improving customs screening are the natural solutions to better address this devastating public health crisis.


The fentanyl epidemic underscores the interconnectedness of global trade and public health. As the U.S. grapples with this crisis, it is clear that a comprehensive, data-driven approach is essential to curbing the flow of fentanyl and saving lives.


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