Trade Wars?

With the new administration in place and President Trump threatening to tax imports from countries like Mexico, some have become concerned that we will set off a trade war with the rest of the world.  For many reasons, I hope this is wrong and that, like most of the time, the biggest export from Washington, DC is merely rhetoric.

Yet, I read a headline the other day about our trade with Mexico that caused me some concern. The lede to the story stated that 16% of US exports were sold to Mexico, but that 80% of Mexican exports were shipped to the US.  On the face of it that sounds a bit one-sided and I guess that is the story the writer was trying to tell. 

But you should know this is a case of lies, damn lies, and statistics. According to data from the world bank in 2015 the United States exported 2.264 trillion dollars of goods and services to the rest of the world. That means that about $362 billion of our products and services were sold to Mexico. Now Mexico on the other hand exported a total of about $404 billion to the rest of the world. Doing the math that means that Mexico exported about $323 billion worth of goods and services to the US.
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You cannot spend percentage points, so the bottom line is we have a positive balance of trade with Mexico. Looked at from the other side for every dollar we spend in Mexico, Mexicans buy $1.12 worth of US goods and services. That is a good trading partner.

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