International Trade

Arizona-Sonora international trade

The states of Arizona and Sonora have an existing trade relationship for products transported between the states.

According to the Eller College of Management, exports to Sonora account for 30 percent of all of Arizona’s international exports.

The products may not have Sonora as their destination, as many that pass through the Arizona-Sonora border are shipped to destinations in other parts of Mexico.

Nor does it mean that the products originated in Arizona. Exports crossing from Arizona to Sonora may have originated in other states, such as the case with automobile components that originate in Michigan. If they pass through an Arizona border port, they are counted as Arizona exports.

Commodity flows

According to Eller, commodity flows from the United States to Mexico, and from Mexico to the United States, that cross through Arizona ports are dominated by two categories of products: electric and electronic products, and; machinery and equipment.

Electric and electronic products have the highest volume of cross-border products, due in large to production in cross-border maquila facilities.

The high volume of machinery and equipment products is also reflective of the Arizona-Sonora interchange of the maquila industry.

Fruit and fresh produce

A major Mexican export to the United States is fresh produce. In 2019, the value of fresh produce imports at Arizona ports exceeded $3 billion.

Like consumer hard goods, the actual value of products is also multiplied for those produce and fruit products. When they are shipped out of Arizona to other U.S. states, they are counted as Arizona exports, in addition to being counted as Arizona imports.

Additive effect of cross-border transfers

It is interesting to note that the total reported cost of a product that has processing on both sides of the border can greatly exceed the actual cost of the product.

That is because every time a component or assembly crosses the border for further processing, its value is counted as an individual product reported individually rather than as a finished product.

So, the cumulative value of a product that is processed various times on both sides of the border is a greatly exaggerated cost of the product itself.

Which means that cumulatively the total value of imports and exports reported is an exaggerated multiple of the cost of the products themselves.

Opportunity

With the approval of the United States Mexico Canada Agreement, the existing maquila industry could expand to further utilize the hard-working, lower wage workers as an option for U.S. manufacturing needs.

That said, however, the effects on labor and environmental standards mandated by USMCA with respect to Arizona-Sonora cross-border manufacturing efforts remains to be seen.