The impact of those first two shifts will mostly offset each other—with many of the jobs lost in Mexican production returning to the U.S. or moving elsewhere—meaning that most of the 4.9 million jobs lost by gutting NAFTA are those that are tangentially related to trade with Mexico, says Christopher Wilson, deputy director of the Mexico Institute, and author of the report. The model they used— called the Global Trade Analysis Project—analyzed national data on employment, production, imports, and exports in 56 industries. It found that the vast majority of jobs that tangentially depend on trade with Mexico are in the service sector, such as retail, finance, and healthcare. For example, when an American consumer buys a washing machine made in Mexico, he or she can save about $100 since it’s cheaper for American companies to manufacture appliances in Mexico than in the United States. The consumer can then spend that $100 elsewhere, maybe at a restaurant or a clothing store. That money—which is spread across the economy instead of spent on a single purchase—helps keeps people employed in other sectors, according to the report. Though it’s hard for economists to know exactly where consumers spend the extra money that they save by buying cheaper goods, Wilson and researchers at Purdue University calculated the impact at an aggregate level.
The fact that so many jobs would disappear if the United States stopped trading with Mexico shows how much the economies of both countries have become dependent on one another, says Wilson. “There is no longer such a thing as an American-made car, a Mexican-made car, or a Canadian-made car—the car is made across borders,” he says.
The jobs that are dependent on Mexico are not spread evenly across the United States, most are located in California, Texas, New York, and Florida. And while economists tend to view global trade as good for the American economy overall, they also acknowledge that it has hurt some American workers, particularly those in the Rust Belt without college degrees, whose well-paid manufacturing jobs have migrated abroad.
While the ability of American companies to move jobs to Mexico has certainly had both a positive and negative impact, little attention has been paid to the number of Mexican corporations that have opened operations in the United States—creating more than 120,000 jobs. To be sure, American companies create far more jobs in Mexico, but the relationship between the economies is still more symbiotic than is sometimes portrayed.
Take the example of Mexico City-based Bimbo, the world’s largest maker of baked goods. Thanks to the economic relationship between the two countries, Bimbo has opened more than 60 bakeries in the United States, which employ more than 21,000 people. The company owns several recognizable brands found in American supermarkets: Sara Lee desserts, Entenmann’s cakes, Arnold bread, Ball Park hotdogs, and Thomas’ bagels. Other big Mexican employers in the United States include cement-maker Cemex and Mission Foods, both of which employ American workers.