President-elect Trump has mentioned a 25% tariff on Mexico and Canada. Time to think about how this would affect Wisconsin, a state that voted for Mr. Trump.
Source: ITA.
Source: ITA.
Wisconsin imported $1.6bn from Mexico, $0.8bn from Canada in 2023. Total Wisconsin (goods) imports from the world were $7.8 bn, so a not inconsequential share (almost a third) comes from these two countries (just to recall for you, these are the other two members of the USMCA free trade area, formerly NAFTA. USMCA was negotiated under Mr. Trump’s first term).
Note that these figures of imports into Wisconsin are likely understating the actual imports. That’s because the documented destination state might not be the final destination, due to storage, warehousing, etc. See this note.
The president of Mexico has threatened retaliation against our exports. Presumably Canada would also do something in response. What does Wisconsin export to Mexico and Canada?
Source: ITA.
Source: ITA.
In 2023, Wisconsin exports $0.8bn to Mexico and $1.8bn to Canada, so a total of $2.6bn. Total goods exports to the world is $6.8bn, so these account for nearly 40% of Wisconsin’s total exports.
As noted earlier, the Midwest is particularly trade sensitive, so any trade war was going to hurt this region particularly hard.
In terms of nationwide impacts, Goldman Sachs (11/26), notes:
We estimate the proposed tariffs would boost the US effective tariff rate by 8.6pp and core PCE prices by 0.9%.
