States’ NAFTA supply chain

For U.S.-based companies and states reliant on the North American Free Trade Agreement (NAFTA), a renegotiation could be high stakes poker. Canada and Mexico are the America’s two largest export markets. Major changes to NAFTA could come at a price. In fact, the United States trades as much with Canada and Mexico as it does with Japan, Korea, Brazil, Russia, India, China, and South Africa combined. Millions of jobs in U.S. states depend on those exports. Much of that trade occurs in “intermediate goods” (materials or components) that firms import and integrate into production of a final product. U.S. Census Bureau imports data provides an insight to states’ economies that rely most on Canada and Mexico. Texas, Illinois, Michigan, New York, Ohio, and Washington all import more than $15B in intermediate goods. Michigan’s auto industry gets 61 percent of its intermediate imports from Canada-Mexico. Arizona imports about $300M worth of turbojets and turbo-propellers from Mexico. Energy is the No. 2 U.S. sector to rely upon NAFTA intermediate imports. The U.S. is a major crude oil importer from Canada, but less so from Mexico. But, Mexican petroleum is shipped through the Gulf of Mexico to major refining and chemical manufacturing hubs in Louisiana, Mississippi, and Texas. U.S. states continue to rely on its North American partners to create the basic inputs to everything from plastics to chemicals. (Source: Global Trade 07/10/17)