With the future of the North American Free Trade Agreement (NAFTA) in question and the potential for new tariffs on the horizon, there is a need to understand the underlying factors that drive the dynamics of the U.S.-Mexico bilateral trade relationship. This is a complex relationship that can best be understood by examining case studies at the national level and evaluating select U.S. states’ economies and their relationships with Mexico as well as the states’ relationships to the federal government. The first of this two-part Deep Dive examines some of the areas where the United States has the upper hand in commodity trades. It also shows that Mexico is in a position to more equally negotiate with the U.S. in the automotive sector.
Mexico’s growing dependence on imports to meet domestic gasoline demand, combined with the U.S. being the principal supplier, gives the U.S. strong leverage in this area.
Mexico has multiple options for sourcing its steel; t