A primary factor contributing to the fentanyl crisis in the United States may be the smuggling of the drug through legal trade flows, according to a report by the National Bureau of Economic Research (NBER).
“A substantial amount of fentanyl smuggling occurs via legal trade flows, with a positive relationship between [nation] state-level imports and drug overdoses that accounts for 15,000-20,000 deaths per year,” the report stated. “This relationship is not explained by geographic differences in ‘deaths of despair,’ general demand for opioids, or job losses from import competition. Our results suggest that fentanyl smuggling via imports is pervasive and a key determinant of opioid problems.”
Fentanyl is the leading cause of drug overdose deaths in the US, accounting for more than 70,000 deaths in 2021 — or nearly two-thirds of all drug overdose deaths that year.
Tim Moore, associate professor of economics at Purdue University and co-author of the report, explained that the illicit drugs aren’t entering the US through legal imports of medical fentanyl but rather through the legal trade for all goods.
“Every day there are containers and air shipments and so on that are all coming in across the United States,” Moore told Yahoo Finance. “Our belief, and I think it’s consistent with others, is that this is illicit fentanyl that’s manufactured overseas and then smuggled into the country.”
While there are now 25 states seeing decreases in drug overdose deaths, the overall death rate in the country is still up 2.3% for the 12-month period ending July 2023, according to Centers for Disease Control and Prevention (CDC) data.
Working with Mexico and China
Much of the US's policy efforts to disrupt fentanyl trafficking emphasizes Mexico, the US's largest trading partner, and trade from China.
According to the latest report from the Commission on Combating Synthetic Opioid Trafficking, Mexico is the main source of illicit fentanyl and its analogs in the US. The drug is sourced primarily from China, where traffickers then export the fentanyl to Mexican cartels.
“Because illicit fentanyl is so powerful and such a small amount goes such a long way, traffickers conceal hard-to-detect quantities in packages, in vehicles, and on persons and smuggle the drug across the US-Mexico border,” the Commission's report stated. “It is difficult to interdict given that just a small physical amount of this potent drug is enough to satisfy US demand, making it highly profitable for traffickers and dealers. Indeed, the trafficking of synthetic opioids offers a more profitable alternative to heroin for Mexican drug traffickers.”
Many politicians have called on President Biden to complete the construction of a wall along the US-Mexico border, citing the ongoing toll of the overdose crisis, although data shows that most fentanyl is seized at legal ports of entry.
Fentanyl has been found in 1,351 of the 51,484 drug seizures at the border so far in 2023. It’s the fifth-most-seized drug at the border behind marijuana, methamphetamine, cocaine, and ecstasy, according to CBP data.
The Biden administration has also intensified pressure on Mexico's President Andrés Manuel López Obrador to crack down on clandestine labs manufacturing illicit fentanyl, though so far results have come up short.
Cooperation with China is another key step to stopping the flow of fentanyl in the US.
Last month, President Biden and China President Xi Jinping met in California and announced that China would be directing its chemical companies to curtail shipments to Latin America. They also announced that China would be sharing information about suspected drug trafficking with an international database and launch a counternarcotics group with the US.
David Luckey, a senior researcher for the RAND Corporation and former director of homeland security for the Senate Committee on Homeland Security and Governmental Affairs, stated that the "vast majority of fentanyl precursor chemicals are being produced in China and shipped from China ultimately to Mexico."
He explained that there are "various things we can do along this entire supply chain from the production of precursor chemicals to the shipment of precursor chemicals to the production of fentanyl, to the shipment of fentanyl across the border to that shipment of fentanyl within the United States. All of these things need to be addressed, and small improvements in all of these areas can add up to larger improvements overall.”
And the Southwest border is “still the primary introduction” of illicit fentanyl into the US, according to Luckey, there are other emerging means of shipping fentanyl across the border.
'This is more than a border story'
Given that the US is the second-largest exporter of goods and largest importer in the world, Moore argued that Mexico shouldn’t be the only focus to curb the flow of fentanyl into the US.
“In terms of policy, I think one of the key takeaways is that we maybe need to be looking more broadly at smuggling roots,” he said. “Our data and findings don’t actually closely match the public policy emphasis in discussions in the US at the moment. ... [Those channels] may be very important, but we’re highlighting that there are other things going on that aren’t being given a strong emphasis.”
Moore’s research found that imports from Europe and Latin America to the US are “associated with fentanyl deaths, as are chemical and agricultural imports.”
“US government agencies like the DEA and CBP often focus on China and Mexico, although fentanyl seizures from European and Latin American shipments do occur and there is evidence that smugglers are active in those regions,” the NBER report said. “Our results suggest that the use of imports to smuggle fentanyl is more pervasive than currently appreciated.”
According to Moore’s research, targeting more resources toward screening imported goods could reduce the relationship between imports and overdoses. A 20% reduction in that relationship, he wrote, “would save around 3,000-4,000 lives per year and be valued at around $30-40 billion.”
His research also looked at states that don't share an international border to assess the relationship between imports and fentanyl overdoses without accidentally attributing the impact of drugs smuggled across the Canadian or Mexican borders.
“If you drop those 14 [international border] states, then the relationship between the amount of ... import activity in the other states and its relationship to drug overdoses, it’s almost exactly the same,” he said. “So I think it highlights this idea that this is more than a border story.”
Adriana Belmonte is a reporter and editor covering politics and healthcare policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at adriana@yahoofinance.com.
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