3rd Quarter 2016

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Geography [ Maps ]

For the most part, it's not a matter of exchanging products but of sharing supply chains.


Locating continued

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The other significant traded goods also tend to be industrial rather than consumer goods. Various plastics account for nearly $500 million of state exports to and $70 million in imports from Mexico. The pie charts
give a picture of the major products going between the two areas. (The automotive sector is colored in greens.)

[ charts and map ]

The trade with Mexico is evidently very much a part of industry supply chains. We can grasp this by looking at a map of the state's shipments to Mexico. Over two-thirds of Tennessee exports go to just four Mexican states. Trade clusters south of the Texas border in the areas where many maquiladoras are located. Generally, the heaviest exporting goes to states where the Mexican auto industry is centered (Nuevo Leon and Guanajuato) or where the state's auto manufacturers have Mexican plants. (For GM that's Nuevo Leon and San Luis Potosi, for VW it's Puebla, and for Nissan, Aguascalientes and Estado de México. We might also add the Toyota plant in Baja California.) Just as with the product mix, the geography of Tennessee-Mexico trade is quite concentrated.

Lack of data prevent us from saying too much about the geography of Mexican trade within Tennessee. We can say that the lion's share involves the Memphis and Nashville MSAs. Together they account for just about two-thirds of all the state's shipments to Mexico. However, five years ago, the two were responsible for 78% of those shipments, so there appears to be a steady diversification within the state of its exports south of the border. Given the concentration of trade in the transportation sector, it would not be going too far out on a limb to project that the large majority of state trade outside the two large urban areas occurs in the "auto belt" that stretches south from Nashville to Chattanooga and then along I75 up to and above Knoxville.

It would be reckless to speculate at this point how American trade policy toward Mexico might change and what its effects would be. What we can say is that the state economy is quite imbricated with Mexico. For the most part, it's not a matter of exchanging products but of sharing supply chains. Policies that aim to change that would certainly have a significant impact on the Tennessee economy and in ways that would be difficult to predict. Should this change come we would indeed be living, as the supposed Chinese curse has it, "in interesting times."