Arizona’s international trade relationships

In 2017, Arizona’s merchandise exports to other countries totaled $20.8 billion, down from a 2016 level of $22.0 billion. The five largest markets for Arizona products were: Mexico-$7.5 billion, Canada-$2.0 billion, China -$1.1 billion, the United Kingdom -$977.0 million and Germany-$693.4 million.

Arizona’s $7.5 billion exports to Mexico in 2017 continued a downward trend from the $8.2 billion recorded in 2016 and the $9.1 billion posted for 2015. Arizona ranked fifth among the states exporting to Mexico in 2017, behind Texas-$97.2 billion, California-$26.7 billion, Michigan -$12.5 billion and Illinois-$9.8 billion. Of the states cited, only Arizona’s exports to Mexico declined, the other states recorded increases from their 2016 levels.

The United Sates is renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico, six rounds of inconclusive talks have been completed so far. The Trump administration has proposed three major changes regarding vehicle production that Canada and Mexico have so far rejected. While negotiations will continue, the ultimate fate of NAFTA remains uncertain.

Unfortunately, the global trading system that the United States helped establish in the wake of World War II has developed its share of problem issues over time. The Trump administration’s approach, the constricted focus on trade deficits and negative view of trade matters, does little to address the bulk of current trade system problems. Instead, it is making things worse by inflaming the situation. America’s trading partners have stated that they will retaliate in kind to new U.S. trade restrictions. As the world trade environment deteriorates and the danger of a major trade war increases, politicians need to keep in mind that around 85,000 American jobs are dependent on Arizona’s current level of exports.

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