March 26, 2019
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A trade war with Mexico would put Maine paper jobs at risk

JOSE LUIS GONZALEZ | REUTERS
JOSE LUIS GONZALEZ | REUTERS
A general view shows a newly built section of the U.S.-Mexico border wall Nov. 9, 2016, at Sunland Park, U.S. opposite the Mexican border city of Ciudad Juarez, Mexico.

PORTLAND, Maine — Last year, about $10.8 million in pulp and paper products left Maine for Mexico, which made up the fifth-largest market for the state’s paper exports, behind Canada, Belgium, China and Australia.

The amount is a relatively small but clear way that changing trade policy between the United States and Mexico could affect Maine, based on federal trade statistics.

President Donald Trump’s administration on Thursday floated a proposal to put a 20 percent tax on Mexican imports as one way to make Mexico pay for a wall along the southern border of the United States.

Such a move could raise prices for a range of consumer goods in Maine and New England, from semi-truck tractors to aluminum roofing and siding.

The details of compelling Mexico to pay are hazy, but the Washington Post reported Thursday that leaders of the Republican majority in Congress are considering ways to impose taxes on Mexican imports, possibly through a border adjustment tax.

Like the United States as a whole, Maine imports more from Mexico than it exports to the country. Not all products that come from the country and eventually make their way to store shelves in Maine are logged as imports to the state. But those that came directly to Maine from Mexico amounted to about $66 million last year, through November.

Meanwhile, Maine sent about $42 million in goods directly to Mexico, making for a trade deficit of about $24 million.

By specific product categories, the largest imbalance tips in Maine’s favor, because of the state’s exports of pulp and paper products, according to federal trade statistics for 2016.

See more detail about specific product categories from the U.S. Census Bureau.

That breakdown also shows some of the largest imports from Mexico to Maine: aluminum used in sheet metal roofing and siding, footwear, glass and glassware, and certain heavy factory equipment.

It also includes a range of larger vehicles, including $6.8 million in semi-truck tractors and another $4.8 million in vehicles with engines with volumes larger than 3 liters.

One way to characterize the overall trade imbalance is to say that Mexico ends up with cash and Maine ends up with things. But that’s an overly simplistic way of looking at the economic ties.

Some of those raw goods are used to produce items then sold by U.S. firms. And sometimes, it’s much more complicated than that.

The South Portland-based Texas Instruments provided an example to Maine policymakers last year, in assessing a free trade deal with Pacific Rim countries that would have reduced tariffs throughout its supply chain.

From start to finish, it said its semiconductors travel to four U.S. states and four countries, traveling a total of 25,000 miles, with Malaysia, Singapore, Japan and Vietnam “specializing in the diverse segments that make up the semiconductor ecosystem.”

Those complicated trade patterns make it hard to assess the specific ways that changes in trade policy would affect companies and consumers in any one place. But the volume of trade between Mexico and Maine indicates what parts of Maine’s economy would be hit hardest.

A broader look across New England shows other product categories with regional impacts. For the six New England states, imports of metals and precious stones outpaced vehicle imports. Car imports from Mexico have been a major subject of criticism from Trump, who has called out U.S. automakers with factories in Mexico.

In Maine, imports of large-engine vehicles and parts in 2016 were balanced against the state’s $8.1 million in exported car parts and about $1.1 million in the vehicle category that includes snowmobiles.

See the annual trade data for New England states and the entire country by commodity from the U.S. Census Bureau, used in the analysis above. Search import and export data from 2016 for New England states in the dashboard below.



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