Australia's massive trade deficit with Mexico demands attention! (Not really)

Fri, 27 Jan 2017  |  

In 2015-16, Australia’s imports of goods from Mexico outpaced exports to Mexico by 4 to 1. That is, there were $2.4 billion of imports into Australia from Mexico and just $600 million of exports to Mexico from Australia.

I am waiting for One Nation or some crazy galoot to suggest that Australia should put a tariff on those nasty Mexican exporters to pay for, I don’t know, politicians travel? A fence around Parliament House? An anti-halal campaign?

To be fair, any one in Australia who suggested a tariff on Mexican imports would be laughed out of the room; treated with contempt; ridiculed for the absurdity of such a suggestion. So One Nation just might propose it? Ha - surely not, it wont happen.

Meanwhile, in the US, President Trump is promising to impose a tariff of 20 per cent on Mexican imports into the US to fund a similarly ludicrous issue, building the wall between the US and Mexico. Amid the justified ridicule there are, amazingly, some people supporting the idea. And no, they are not all the inmates from the Cuckoo’s Nest.

In 2015-16, over half the value of Australia’s exports to Mexico was coal. Second, at $34 million for the year, was aluminium, followed by meat at $24 million. We clearly don’t make much or have much that Mexicans want or need.

Among the massive $2.4 billion of imports from Mexico in 2015-16, Australian bought $357 million of telecom equipment and parts, $213 million of medical instruments, $213 million of alcoholic beverages and $198 million of ores and concentrates. These are all important parts of our economy, so putting a tariff on them would be to shoot ourselves in the foot.

We’d be silly to do such a thing which is why it wont happen.

In the US, however, they seem to be keen to shoot themselves in the foot and other palces too with a tariff on Mexican goods that will hurt consumers and business in the US and, quite obviously, met with retaliatory action from Mexico which will further hurt firms in the US that have business dealings there. It's crazy policy that will create a lot of damage not only in the Mexico, but also in the US. 

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