- On Thursday, President Donald Trump announced plans to levy new tariffs on goods imported from Mexico.
- Those tariffs could hit states where trade with Mexico is a big part of the economy especially hard.
- States that border Mexico and big manufacturing states that rely on distributed, continent-wide supply chains could be affected.
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President Donald Trump has threatened a new round of tariffs on imported goods from Mexico, and it could hit certain states especially hard.
On Thursday, Trump announced plans to implement a 5% tariff on imported goods from Mexico in an effort to put pressure on the country to curb migrant flows into the United States.
The proposed tariffs would go into effect on June 10, and would increase by 5% every month until hitting a maximum of 25% in October – unless Mexico takes action to reduce border crossings.
Tariffs can have a negative economic impact on both countries involved in a trade dispute. Mexican firms exporting goods to the US could see a drop in sales, and American importers will likely see an increase in prices.
Friday morning, stocks were falling in industries like auto manufacturing, which has supply chains distributed across North America that could be seriously interrupted by increased trade barriers between the US and Mexico. Chipotle, which relies on imports of avocados and other produce from Mexico, also saw a drop in its stock price.
Several lawmakers and experts also warned that a new round of tariffs could threaten passage of the recently negotiated US-Mexico-Canada trade agreement updating NAFTA, which could cause further economic havoc.
If the proposed tariffs come into effect, certain states where trade with Mexico makes up a big part of the economy could be hardest hit.
The US Census Bureau publishes annual figures for the total amount of goods imported and exported in each US state and DC. The Bureau breaks out import and export volumes for the 25 biggest trading partners for each state.
Big state economies that border Mexico exported a large volume of goods to that country in 2017. Texas had nearly $US98 billion in exports, and California had nearly $US27 billion. While it doesn’t border Mexico, auto-industry supply chains contribute to Michigan’s $US12.5 billion in exports in that year.
Meanwhile, states with smaller economies and that are geographically further away from Mexico exported fewer goods. Hawaii’s goods exports to Mexico in 2017 came to only about $US1.4 million, and Alaska exported just $US21 million in goods.
Here’s each state’s total 2017 export volume to Mexico, according to the Census Bureau:
Imports show a similar picture. Texas imported nearly $US90 billion in goods from Mexico in 2017, while Michigan imported about $US53 billion and California about $US46 billion. Meanwhile, smaller northern states like Montana, Vermont, and Maine imported much less from Mexico:
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