US-Mexico Trade: The Numbers

US exports to Mexico have jumped five-fold with NAFTA.

BY LATINVEX STAFF

U.S. President-elect Donald Trump has vowed to renegotiate or exit the North American Free Trade Agreement (NAFTA), which provides duty-free trade between the United States, Mexico and Canada.

NAFTA has benefited both countries as two-way trade has jumped dramatically.  Last year, trade between the United States and Mexico hit $531.1 billion, a six-fold increase from $81.5 billion in 1993, the last full year before NAFTA.  US exports to Mexico reached $236.4 billion last year, a fivefold increase from $41.6 billion in 1993. Meanwhile imports from Mexico hit $294.7 billion in 2015, a seven-fold increase from $39.9 billion.

While Mexico has seen an overall stronger increase, the United States has clearly benefited as well.

Since its implementation in 1994, NAFTA has enabled manufacturing companies – from automakers to manufacturers of white goods -- to use economies of scale. And Asian companies like Samsung could set up manufacturing in Mexico for exports to the United States. As a result, Mexico is now the world's biggest exporter of flat screen TVs, refrigerators and freezers, according to ProMexico. It has also become the fourth-largest PC exporter and sixth-largest household appliance exporter. 

AUTO BOOM

But it’s the auto sector that has benefited most from NAFTA. Last year, auto parts was the top category for both US exports to Mexico and Mexican exports to the United States, according to a Latinvex analysis of US Census Bureau data.

US imports of auto parts from Mexico accounted for $42.9 billion, while, imports of passenger cars, trucks and busses made in Mexico reached $52.6 billion.

US auto parts exports to Mexico reached $21.6 billion, while exports of engines and parts reached another $6.9 billion.  

"In 2015, Mexico was ranked as the largest export market for U.S. auto parts overall, supplanting Canada, the US Department of Commerce says in a report. "The size of its market and the shared border provides an excellent market for U.S. OE and aftermarket parts."

The United States accounted for 65 percent of total Mexican imports of auto parts, according to the US DOC.

Thanks to the strong growth in the sector, Mexico is now the world's fourth-largest auto exporter (behind Germany, Japan and South Korea).   

SMALL DEFICIT, BIG BUYER

Trump has repeatedly said that Mexico was “killing” the United States, although it is unclear what he has been referring to as the US trade deficit with Mexico is among the smallest it has with its major trade partners. The 2015 trade deficit of $58.4 billion was smaller than the US deficits with Germany ($74.2 billion) and Japan ($68.6 billion) and six times less than the US deficit with China ($365.7 billion).

Meanwhile, Mexico typically buys a significant portion of US goods. Taking last year’s data as an example, for every US dollar in US imports from Mexico, Mexico bought 80 cents back in the form of purchases of US goods.  That compares with China, which only buys back 24 cents for each dollar they sell to the US market.

Mexico has also provided a welcome market for US exporters in Latin America. Last year, for example, US exports to Mexico fared much better than the regional average. The 1.6 percent decline in US exports to Mexico was five times lower than the 8.6 percent decline in US exports to Latin America overall.   

© Copyright Latinvex

SEE ALSO

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Ex-Ambassadors Warn Against NAFTA Changes

Hills: Losing Mexico Market Would Be Devastating

Farnsworth: Trump & Latin America 

Fact Check: Donald Trump Wrong on Mexico

The Cost of a US-Mexico Trade War

NAFTA: The Benefits Versus The Costs