No, Mr. Trump, Mexico is not 'killing us on trade'
BY RAOUL LOWERY CONTRERAS, CONTRIBUTOR
http://thehill.com/blogs/pundits-blog/p ... s-on-trade
No, Mr. Trump, Mexico is not 'killing us on trade'
Donald Trump manifests profound ignorance of Mexico, our third-largest trading partner. He also insults Mexicans and their leaders who negotiated trade agreements that Trump says he would have negotiated better.
Problems: his insulting tone, his marketing of his own dark fantasies and his grievous choice of words.
Does he know there are 160 million Mexicans and Mexican-Americans? Does he know that Mexicans have bought trillions of dollars' worth of goods and services from the United States in recent years? Does he know that millions of Americans go to work every day to work in trade with Mexico?
The real problem with Trump's outburst against Mexicans is that he says all Mexicans are "killing us on trade ... and the country of Mexico is making billions of dollars in doing so." But that, Mr. Trump, is not true.
Trump: "I believe that my examples of bad trade deals for the United States was [sic] of even more concern to the Mexican government than my talk of border security."
What examples, Mr. Trump? I don't see any.
Trump: "I have great respect for Mexico and love their people and their peoples' great spirit. The problem is, however, that their leaders are far smarter, more cunning, and better negotiators than ours."
Great respect, really?
Mr. Trump, yes or no, do Mexicans benefit the United States?
Trade: In 1993, before NAFTA took effect (which it did in January 1994), Mexico bought $41 billion in goods and services from the U.S. and sold $39 Billion worth to the United States. Total: $80 billion. In the first year of NAFTA, the $80 billion increased to $99 billion, a 25 percent increase.
Ten years after NAFTA started, total trade between the U.S. and Mexico was $145 billion — an increase of 55 percent. In 2003, almost twenty years after NAFTA began, total trade with Mexico was $506 billion — half a trillion dollars — which is 632 percent more than 1994.
In 2014, by contrast, the United States exported $123 billion in goods to China and imported $466 billion from China. That's a minus $343 billion imbalance in trade. In 2014, the U.S. exported $49 billion of goods to Germany and imported $123 billion for an imbalance of minus $73 billion (lots of Mercedes and BMWs).
Here is something that Mr. Trump apparently does not know: U.S.-Mexico trade is unique in the world; there is a "production sharing" program between Mexico and the United States in which, according to the Wilson Center's Mexico Institute, "A full 40 [percent] of the content of U.S. imports from Mexico is actually produced in the United States. ... This means that forty cents of every dollar spent on imports from Mexico comes back to the United States, a quantity ten times greater that the four cents returning for each dollar paid on Chinese imports."
This production sharing with Mexico is vital for the United States. For example, between 2009 and 2014, according to the Congressional Research Service, the U.S. imported a total of $341 billion in cars and car parts from Mexico, of which $136 billion was the 40 percent that Mexico bought from us to install in cars assembled in Mexico, then exported to the U.S. In $341 billion dollars worth of goods imported from China, 4 percent would be $13 billion — compared to 10 times more from Mexico.
"Production sharing" means that the U.S. has an actual positive balance of trade with Mexico, rather than huge deficits as with China, Germany, United Kingdom, Japan etc. For example, in 2014, Mexico sold $290 billion to the U.S. Forty percent of $290 Billion is $116 billion which, when added to the $240 billion in goods and services we sold Mexico, totals at $356 billion, or a positive trade balance of $182 billion. Mr. Trump, do the math.
The Wilson Center also posits that "There are 6 million U.S. jobs that depend on trade with Mexico. Two border states that trade extensively with Mexico, California (692,000 jobs) and Texas (463,000 jobs) have the most…Detroit (alone) exports $10.9 BILLION in cars and car parts to Mexico (part of the total of $20 BILLION worth of cars and auto parts exported to Mexico)."
The United States Chamber of Commerce offers a higher estimate of 14 million American jobs in trade with Mexico.
In short, Trump's 22,000 jobs don't amount to much compared to the 6 million to 14 million Americans who work in trade with Mexico. Mexico-dependent jobs number between 272 and 622 times more than Trump's payroll.
On balance, it can be said that trade with Mexico and Mexicans is far more beneficial to the United States and millions of Americans than not.
Why, then, is anyone taking Trump seriously? We know that Mexico benefits millions upon millions of Americans in jobs and lower prices in goods such as flat-screen TVs, cars, fruits and vegetables. How many Mexican-made cars sold in the U.S. cost as much as cars made in Europe? None!
Trump insists that Mexico is ripping us off by buying $356 billion in goods and services from us last year and more than a trillion dollars' worth since 2010.
Donald Trump insults Mexicans, our best customers. That's good business?
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