After the 2016 election, one of the first actions Donald Trump is going take is to make Mexico pay for the wall at the border. At first, the president of Mexico refused to pay for Trump’s wall. Then Trump proposed a 20% tax increase in all Mexican imported goods to pay for the wall. It certainly means Mexican goods price is going to increase in the US. But how much do Mexico rely on exporting of this possible new tax raise?
Mexico exported about $401 billion worth of goods in 2014. The five biggest Mexican goods importers were the US ($292 billion), Canada ($24.5 billion), China ($7.89 billion), Spain ($6.18 billion), and Brazil ($5.35 billion). The US imported more Mexican goods than all countries combined. In addition, the top five exported Mexican goods are crude oil, cars, vehicle parts delivery trucks and computers.
Meanwhile, the US imports around $2.19 trillions worth of goods in 2014. The top 5 US importers in 2014 were China ($432 billion), Canada ($331 billion), Mexico ($291 billion), Japan (128 billion) and Germany ($121 billion).
In conclusion, 73% of the Mexican imports meant 13% of imports for the US. In the same time, Mexico imported $194 billion worth of goods from the US, it was about 13.4% of US total exports ($1.45 trillion). In the same time, that $194 billion worth of imports is 51% of the Mexican total imports ($380 billion). In another word, US exports dominated the Mexican foreign trade but Mexico is only one dominated part of the US international trade shares.
We will see would the tax rate be increased, if so, how would it impact the trading between these two countries and impact on the prices of Mexican imported goods.