Tariffs and Arizona’s Trade with Mexico

Arizona engages in trade with many countries around the world. For goods in 2024, the value of Arizona exports to the world was $32.2 billion, while for imports the total was $42.2 billion. 

Since Arizona is integrated into the global economy, the imposition of tariffs will impact the state. The impact on import volumes and prices in Arizona will depend on which goods and which countries face tariff increases. Further, goods which are part of the shared production processes in North America (autos, etc) may face particularly drastic cost increases, since those parts often cross borders several times in the production process.

Mexico is Arizona’s most important international trading partner. In 2024, Arizona imported from Mexico goods valued at $11.6 billion. That accounted for 27.5% of state imports from the world (Exhibit 1). China was the next most import source at 12.7%, followed by Taiwan, Canada, and Japan.

Exhibit 1: Arizona Import Shares, Major Trading Partners as of 2024, Percent

One way to gauge the importance of imports to a state economy is to calculate imports as a share of GDP. As Exhibit 2 shows, in 2023, imports for Mexico amounted to 2.3% of state GDP. That ranked the state sixth in the nation, behind Michigan, Texas, Kentucky, Tennessee, and Alabama. GDP data is only available through 2023, so that is the most recent share we can calculate.

Exhibit 2: Commodity Imports from Mexico by U.S. State, 2023, Percent of GDP

We can drill down into the major industries importing from Mexico into Arizona. As Exhibit 3 shows, agricultural products was by far the largest sector, followed by computer and electronic products; electrical equipment, appliances, and components; transportation equipment; and machinery, except electrical.

Exhibit 3: Arizona Commodity Imports from Mexico in 2024, Top 10 NAICS Industries, $ Million

In addition, we can drill down into individual product categories. As Exhibit 4 shows, tomatoes were the most valuable import from Mexico last year, followed by peppers; wiring for vehicles; cucumbers; and imports of articles exported and returned, no change.

Exhibit 4: Top 10 Arizona Import Commodities from Mexico in 2024, Six-Digit HS Commodities, Dollars

Arizona exports to Mexico are an important part of the state economy. If countries facing increased U.S. tariffs respond with retaliatory tariffs, this will adversely impact state exporters.

In 2024, the state exported $9.0 billion in goods to Mexico. That was 27.8% of state exports to the world (Exhibit 5). Canada was Arizona’s next largest export destination, with 8.6% of state exports to the world, followed by the Netherlands, China, and the United Kingdom.

Exhibit 5: Arizona Export Shares, Major Trading Partners as of 2024, Percent

Exports to Mexico are a larger share of Arizona’s economy than most states. One way to see this is to calculate exports as a share of GDP (Exhibit 6). In 2023, which is the last full year of data on GDP, Arizona commodity exports accounted for 1.6% of the state’s GDP. That ranked the state sixth in the nation, behind Texas, New Mexico, Louisiana, Michigan, and Oregon.

Exhibit 6: Commodity Exports to Mexico by U.S. State, 2023, Percent of GDP

Arizona exports to Mexico differ significantly across industries. Exhibit 7 shows the top 10 NAICS export sectors in Arizona by the total value of exports in 2024. As the exhibit shows, computer and electronic products was the largest sector, followed by minerals and ores; electrical equipment, appliances and components; transportation equipment; and chemicals.

Exhibit 7: Arizona Commodity Exports to Mexico, Top 10 NAICS Industries, $ Millions

At the product level, Arizona’s highest value exports to Mexico by far last year were copper ores and concentrates, followed by electronic components and parts for aircraft and vehicles (Exhibit 8).

Exhibit 8: Top 10 Arizona Export Commodities to Mexico in 2024, Six-Digit HS Commodities, Dollars

Be sure to track the latest monthly data on Arizona’s role in border trade on Arizona-Mexico Economic Indicators. There you will find the latest monthly data on Arizona imports and exports with Mexico and Canada, trade flows from Mexico to the U.S. through Arizona’s Border Ports of Entry, legal border crossings from Mexico to the U.S. through Arizona’s border ports, and more!