> How does that help the USA? Do we really make it up in the goods we export to Mexico? We run a trade deficit with Mexico, which can be looked at as arbitrage

> How does that help the USA? Do we really make it up in the goods we export to Mexico? We run a trade deficit with Mexico, which can be looked at as arbitrage of the USD as a reserve currency. We pay an IOU and get cars, they give us cars and get a means of parking their money safely. This being said, comparative advantage is a simplistic but not terrible way of looking at international trade in general. Though US workers are more productive at making cars than Mexican workers, they're also more productive at other things and you end up with more net production at some form of equilibrium when the workers that were making cars do something else. Now, the funny thing about auto manufacturing is that the job losses we've seen are all due to automation. We keep making just as many cars, and it's unlikely that we'll ever employ as many people making cars as we used to, because people can only use so many cars at once. Mexico could fall into the ocean and this trend would not change.