Donald Trump announced today that he will pay for “the wall” by taxing American consumers. A far cry from claiming repeatedly during the campaign that “Mexico will pay for the wall.”
Specifically, Trump is now claiming that “Mexico” will pay for the wall by a 20% tax on Mexican goods coming into the US. But Mexico won’t be paying that tax, US consumers will when prices go up for Mexican goods in US stores.
Oh, but it gets worse. Trump’s move could endanger hundreds of thousands, if not millions, of jobs in Republican-controlled states.
Mexico will surely retaliate by slapping a 20% tax on US goods heading into Mexico. And here’s the thing: While Trump claims otherwise, US trade with Mexico isn’t that lopsided. The latest annual figures from the US Trade Representative, for 2015, show the following:
The U.S. goods and services trade deficit with Mexico was -$49.2 billion in 2015. Mexico is currently our 3rd largest goods trading partner with $531 billion in total (two way) goods trade during 2015. Goods exports totaled $236 billion; goods imports totaled $295 billion.
So Mexico do nearly as much damage back.
But it gets worse. Mexico is our second largest export market for goods, and our third largest market for agriculture — it’s not some little backwater that we don’t care about. More from USTR:
Mexico was the United States’ 2nd largest goods export market in 2015…. U.S. exports to Mexico account for 15.7% of overall U.S. exports in 2015.
The top export categories (2-digit HS) in 2015 were: machinery ($42 billion), electrical machinery ($41 billion), vehicles ($22 billion), mineral fuels ($19 billion), and plastics ($17 billion).
U.S. exports of agricultural products to Mexico totaled $18 billion in 2015, our 3th largest agricultural export market. Leading categories include: corn ($2.3 billion), soybeans ($1.4 billion), dairy products ($1.3 billion), pork & pork products ($1.3 billion), and beef & beef products ($1.1 billion).
So Trump is threatening to start a trade war with our second largest export market — that’s not a small deal.
Now let’s look at some states in particular.
Texas sends 36% of its exports to Mexico. Arizona and California are in trouble too. From the State Department:
Mexico is the top export destination for three U.S. States (Texas, 35.7% of total exports went to Mexico in 2012; Arizona, 34.1%; and California, 16.3%) and the second most important market for another twenty states (see table below). Including the District of Columbia and other US territories (Puerto Rico and the Virgin Islands), Mexico is in the top 5 export destinations for 34 states and US territories.
In Texas, 463,000 jobs rely on trade with Mexico. Arizona: 111,000. And California: 692,000.
And now, after announcing this earlier today, the White House is saying maybe they won’t do it after all.
Here is state-by-state, who exports to Mexico and how many jobs are at stake.