40% of a Mexican import is American
Remove car imports, and U.S.-Mexico trade deficit disappears
And this from the second article.
Indeed, cars beat the next top four import categories -- electronic parts, food, computers and TVs -- by a mile. Even if you add the value of those four categories together, they still fall short of the value of all the cars brought across the border, according to figures compiled by Capital Economics. Their value would total a little over $71 billion.
Now how much of the autos and those other major categories do you think are actual Mexican products? How many Mexican brand cars have you owned, or Mexican brand computers or cell phones? Much of the food would probably be Mexican, though much would probably be US branded (And Hershey's chocolate).
A huge amount of this US/Mexico trade is nothing but USA brand parts and finished goods being move back and forth across the border, economic activity that was once most all located in the US. Plus, some of the goods are produced by foreign owned companies in Mexico and exported to the US.
My question is: Which of these two scenarios is actually better for the U.S.? Would you give up $480 billion of trade to restore a surplus with this trading partner?
A mostly irrelevant question because if the economic activity had not been moved to Mexico, it would be taking place elsewhere, much of it back in the USA, and the USA would be much better off.
Secondly ... the auto import figures actually make my point about the difficulty of objectively comparing the pre-NAFTA and post-NAFTA scenarios. Think about it:
1. The period after 1992 has seen an enormous investment in new auto plants in the U.S. -- which actually flies in the face of this idea that the auto industry sees Mexico as a cheap alternative to the U.S. due to the elimination of tariffs under NAFTA.
2. Most of these plants are foreign manufacturers. So the migration of auto assembly operations south of the border has really been a phenomenon just for Big Three companies.
3. These companies haven't moved operations to Mexico for cheaper labor in an unconstrained enviroment. They've moved them there because the only way they can afford to pay enormous UAW compensation packages north of the border is by offsetting these costs with cheap labor south of the border. In effect, the only way to stay in business while paying UAW workers $70/hour is to have fewer of them on the job ... and moving production to places like Mexico where they can pay $5/hour for the same work.
3. Foreign manufacturers don't have the same issue because most of their plants are in non-union states, and they aren't paying $70/hour to anyone.
In other words, the auto import situation in the U.S. is almost entirely driven by union labor agreements here in the U.S.