Surprising to many Americans is the importance of the United States’ trade with Mexico. While Asia captures the headlines, U.S. exports to Mexico are double those to China, and second only to Canada.
And while many of these goods come from border states—Texas, Arizona, New Mexico, and California—Mexico matters for much more of the union. Seventeen states send more than 10 percent of their exports to Mexico, and it is the number one or two destination for U.S. goods for nearly half the country. The graph below shows those states most economically dependent on our southern neighbor–notice that South Dakota and Nebraska outpace New Mexico and California.
These flows are only accelerating. During the first ten months of 2012 exports heading south grew by $17 billion dollars (or 10 percent) compared to 2011, reaching a total of $181 billion. They include petroleum products (some $17 billion worth) and intermediate goods such as vehicle parts, electrical apparatuses, industrial supplies, metals, and chemicals (over $40 billion combined). Spurred on by deep supply chains, these pieces and parts move fluidly back and forth across the border (often quite a few times) before ending up as finished goods on store shelves in both countries.
The uptick should be seen as a good thing. According to economic studies, these exports support some six million American jobs (directly and indirectly). But to continue this dynamism, the United States and Mexico need to improve border infrastructure and facilitate flows. This means expanding border crossings and highways, and harmonizing regulations and customs to make the process easier and faster. Prioritizing and investing in bilateral trade will provide greater opportunity and security–for U.S. companies and workers alike.
Published in conjunction with Latin America’s Moment at the Council on Foreign Relations.