This paper evaluates the trade and welfare effects of the North American Free Trade Agreement (NAFTA) using a multi-country, multi-sector Ricardian model that incorporates sectoral linkages, trade in intermediate goods, and sectoral heterogeneity in production. The model quantifies the impact of tariff reductions on the welfare of Mexico, the United States, and Canada. The results show that Mexico's welfare increases by 1.31%, the U.S. by 0.08%, and Canada by -0.06%. Intra-bloc trade increases by 118% for Mexico, 11% for Canada, and 41% for the U.S. The study highlights the importance of sectoral heterogeneity, intermediate goods, and sectoral linkages in quantifying the welfare gains from tariff reductions. It also shows that welfare effects from tariff reductions are reduced when the structure of production does not account for intermediate goods or input-output linkages. The paper proposes a new method to estimate sectoral trade elasticities consistent with any trade model that delivers a multiplicative gravity equation. The results demonstrate that the trade and welfare effects of NAFTA are significant, with Mexico benefiting the most. The study also finds that the trade created within NAFTA is larger than the trade diverted from other economies, particularly for Mexico and Canada. The paper concludes that sectoral heterogeneity, intermediate inputs, and sectoral linkages are important mechanisms for quantifying the trade and welfare effects of tariff changes.This paper evaluates the trade and welfare effects of the North American Free Trade Agreement (NAFTA) using a multi-country, multi-sector Ricardian model that incorporates sectoral linkages, trade in intermediate goods, and sectoral heterogeneity in production. The model quantifies the impact of tariff reductions on the welfare of Mexico, the United States, and Canada. The results show that Mexico's welfare increases by 1.31%, the U.S. by 0.08%, and Canada by -0.06%. Intra-bloc trade increases by 118% for Mexico, 11% for Canada, and 41% for the U.S. The study highlights the importance of sectoral heterogeneity, intermediate goods, and sectoral linkages in quantifying the welfare gains from tariff reductions. It also shows that welfare effects from tariff reductions are reduced when the structure of production does not account for intermediate goods or input-output linkages. The paper proposes a new method to estimate sectoral trade elasticities consistent with any trade model that delivers a multiplicative gravity equation. The results demonstrate that the trade and welfare effects of NAFTA are significant, with Mexico benefiting the most. The study also finds that the trade created within NAFTA is larger than the trade diverted from other economies, particularly for Mexico and Canada. The paper concludes that sectoral heterogeneity, intermediate inputs, and sectoral linkages are important mechanisms for quantifying the trade and welfare effects of tariff changes.