This is how the imports to the US from Mexico and China have moved over the last three decades. For both countries, trade agreements made a huge difference, with Mexico suffering grievously from lost share after China entered the World Trade Organization in 2001. Now, it appears to be benefiting from the retreat from China. These numbers are shown as 12-month moving averages to avoid the distortions that come with the Chinese lunar new year holiday. The last three months, on an un-smoothed basis, actually show Mexican imports exceeding those from China for the first time in 20 years. Related: Global Trade Is Shifting, Not Reversing and Globalization Isn’t Dead. But It’s Changing
- Date Posted:
- July 7, 2023
A large share of immigrants keeps ties with their origin countries. Many send money, known as remittances, to family members in those countries, while others plan to eventually return to their birthplace. In either case, this means that a substantial part of immigrants’ spending, now or in the future, takes place in their origin country rather than in the city where they currently work. Hence, for immigrants, the local prices in the city where they work only matter for the fraction of their total budget spent there. This means, that, relative to native-born workers, immigrants are equally attracted to high wages in select cities but less deterred by high local prices—particularly housing. This simple mechanism can explain why immigrants concentrate so much in a small number of select cities, and why these cities tend to have the highest costs of living.