HARD BARGAIN
Slapping a border tax on the rising tide of Mexican imports is likely to cost American workers, consumers in the end
MEXICO CITY — If the United States imposes a border tax on Mexican imports, it’s not just tequila, beer and avocados that would jump in price.
Mexico is the world’s leading exporter of refrigerators and flat-screen TVs. Cars and trucks such as the Ram 1500 crew cab, Ford Fiesta and Chevrolet Trax fill U.S. dealer lots. Mexican berries, vegetables and beef born south of the border abound at American supermarkets.
It is an amazing state of affair for a country that, as late as the 1980s, basically exported just oil — a country transformed by embracing the open markets promoted by its U.S. neighbor.
“In just three decades, we changed from an economy that was basically exporting raw materials . ... Eighty percent of our exports were oil,” President Enrique Peña Nieto said at a ceremony promoting made-in-Mexico goods last week. “Back then, we were rather uncompetitive, and we would have a hard time competing (abroad) with the products produced here.”
Peña Nieto had reason to crow: Even while Mexico’s oil production has fallen steadily, U.S. imports from Mexico increased 638 percent since 1993, just before the North American Free Trade Agreement took effect, according to the U.S. Trade Representative’s office.
The top-selling U.S. imports from Mexico in 2015 include $74 billion worth of cars, trucks and other vehicles, electrical machinery ($63 billion), machinery ($49 billion) and optical and
medical instruments ($12 billion).
Effect on U.S. workers
While the price-tag benefit to U.S. consumers is clear, critics complain the effect on U.S. workers has been dismal. A unionized auto worker in the U.S. can make $58 an hour in wages and benefits. By comparison, a Mexican auto assembly worker makes a little more than $8.
One of the most visible success stories has been in agricultural exports to the U.S., which totaled $21 billion in 2015, making Mexico America’s secondlargest supplier of agricultural imports. Mexico supplies about 77 percent of all avocados consumed in the United States, and about one-third of its tomatoes.
The achievements leave many Mexicans cold. In many of the most-successful categories — autos, appliances, TVs and mining — the dominant firms are foreign, and many of the components they assemble in Mexico are imported, in turn, from their home countries.
Mexico still does little of the research and design work.
“I have always been a critic of the fact there are no Perez cars in Mexico, no Ramirez in Mexico; they are all foreign firms,” said radio commentator Eduardo Ruiz Healy. “Oh well, that’s just the way it goes.”
But U.S. farmers have also benefited from the trade openings under NAFTA — the deal U.S. President Donald Trump has pledged to renegotiate.
“Market access under NAFTA has been a windfall for U.S. farmers, ranchers and food processors. U.S. food and agriculture exports to both countries (Mexico and Canada) have more than quadrupled, growing from $8.9 billion in 1993 to $38.6 billion in 2015,” some of the top U.S. agriculture companies wrote in an open letter to Trump in January.