Freedonia Analyst Weighs in on Trump Admin's Proposed Mexico Import Tax

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Jan 31, 2017, 08:31 ET

CLEVELAND, Jan. 31, 2017 /PRNewswire/ -- Last week, President Donald Trump's administration suggested a 20% tax on imports from Mexico, which would fund the construction of a wall separating the US and its southern neighbor. Trump campaigned on a promise to build a wall along the border and to have Mexico fund the project. But, according to Mexico's Foreign Minister Luis Videgaray, it is US consumers who will bear the brunt of this cost, in the form of higher prices on a variety of goods.

A more detailed account of the administration's import tax proposal can be read here: http://www.reuters.com/article/us-usa-trump-mexico-idUSKBN15A1VF

The potential impacts of this tax on US consumers, manufacturers, and service providers could indeed be significant, according to new analysis by Matthew Rolfe, Senior Market Research Analyst for the Freedonia Group.

"Mexico accounted for 13% of imports to the US in 2015", says Rolfe, "and is second only to China in supplying products to the US market. Moreover, Mexico's influence has only grown in the last decade; imports rose 5.6% per year, on average, between 2005 and 2015."

As Rolfe illustrates, many of the leading imports from Mexico are high-value durable goods such as transportation equipment (eg, motor vehicles), electronics, appliances, and machinery. Production of many of these goods is tied to relatively inflexible capacity, which is constrained by high capital costs. Thus, instead of spurring a manufacturing shift to the US, the tax would most likely increase the prices that US consumers pay for these already expensive items.

But prices for many other products could also increase, given Mexico's involvement in supplying the US market for such products.

Click here for further insight on the potential impacts of a shift in trade policy toward Mexico.

The Freedonia Group provides key insights on many US markets supplied by Mexican imports, including:

Motor Vehicles: United States

Audio Video Equipment: United States

HVAC Equipment: United States

View the many market research reports that Freedonia has to offer at http://www.freedoniagroup.com.

About the Freedonia Group – The Freedonia Group, a division of MarketResearch.com, is a leading international industrial research company publishing more than 100 studies annually. Since 1985 we have provided research to customers ranging in size from global conglomerates to one-person consulting firms. More than 90% of the industrial companies in the Fortune 500 use Freedonia Group research to help with their strategic planning. Each study includes product and market analyses and forecasts, in-depth discussions of important industry trends, market share information and profiles of the leading industry players. Reports can be purchased at www.freedoniagroup.com and are also available on www.marketresearch.com and www.profound.com.

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SOURCE The Freedonia Group