Texas is the leading US state exporter to Mexico, trading oil products, automobile components and electronics. The USMCA will impose a restructuring of the North American supply chains to meet the new input content requirements. In order to evaluate the impact of the changes in tariffs arising from the new rules of origin requirements, an econometric model with different tariff scenarios was estimated. The estimations indicate that the distance to Texas and the size of the economies of the states of Mexico are factors that impact Texas exports to Mexico. Tariffs under the USMCA would have a minor but positive effect if the input content requirement of the USMCA are met. Foreign direct investment showed positive effects on trade, indicating the existence of value chains between Texas and Mexico. The results suggest that polices to encourage trade between Texas and Mexico would require the development of transportation infrastructure and the strengthening of the communication channels between the private sector and institutions in Texas and Mexico to promote investment in strategic sectors.
US Trade Policy, Mexico, Trade, NAFTA, USMCA
Economics | Public Affairs, Public Policy and Public Administration
Mission Foods Texas-Mexico Center
Mendoza, Jorge Eduardo, "Economic integration in North America: Changes in US trade policy and the effects on Texas regional exports to Mexico" (2018). Mission Foods Texas-Mexico Center Research. 10.