How Trump’s Mexico tax could hit Boeing’s bottom line
Jan 26, 2017, 4:59 PM | Updated: 5:27 pm
(AP)
(AP)
After President Donald Trump announced his 20 percent tax on Mexican imports, industry experts started checking whose pocket books are about to feel lighter. Aerospace was one such industry to react to news of the Mexico tax, and Boeing was at the center of the discussion.
Related: Trump trade war among top concerns of economists, Washington
Aviation reporter Stephen Trimble quickly went to Twitter and noted the Mexican aerospace industry exported $7.6 billion worth of goods last year. About 90 percent of that went to the United States. Trump’s 20 percent tariff would “cost US aero industry about $1.38 billion,” Trimble wrote.
CNN’s aviation editor Jon Ostrower soon followed up. According to Ostrower, “Every single wire on a 787 Dreamliner comes from a Mexican factory.”
Those wires contribute a lot to the jets. According to Boeing:
On an airplane, the electrical system produces, controls and distributes power to all the other systems that need it — flight deck displays, flight controls, in-flight entertainment and more. It’s much like the electrical system in your house, which carries electricity throughout the rooms to power your lights, television and so forth.
Beyond that, airplanes produce their own energy, so there’s wiring and electrical systems for that as well.
Overall, the Dreamliner is composed of about 2.3 million parts. A majority of parts come from suppliers in the United States, but Boeing sources about 30 percent of parts come from foreign sources.
The Mexico tax and Washington
Many news reports are noting that the Mexico tax will essentially be paid for by American consumers. But when it comes to countries importing goods locally to Washington state, Mexico is eighth on the list. Side note: Canada is no. 1, and China is no. 2.
The total value of imported goods from Mexico has dramatically spiked in recent years. In 2012, Washington state imported about $556 million from south of the border. In 2015, that figure was about $1.3 billion.
Concerns over Mexico-Washington trade go beyond what enters the United States. There is a concern that if the US imposes a Mexico tax on imports, Mexico may do the same to American businesses. Washington state exported about $1.9 billion worth of goods to Mexico in 2015.
