NCPA - National Center for Policy Analysis

Some U.S. Regions Might Feel Brazil's Pain

January 25, 1999

While few analysts expect Brazil's economic woes to derail the hard-charging U.S. economy, some areas of the country could be affected. If Brazil's difficulties spill over into Mexico, areas of the U.S. which export heavily to countries south of our borders would be vulnerable, economists warn.

  • With Brazil its top export destination and its number three source of tourists, Florida is at greatest risk.
  • If Mexico fell off the brink, Texas would be affected -- along with Detroit's auto industry.
  • Wyoming, Alabama, Michigan and Mississippi -- all states which direct between 20 to 25 percent of their total exports to Latin America -- could feel the impact.
  • Delaware, Arkansas, Louisiana, Georgia and Arizona -- which ship between 17 and 20 percent of exports to Latin countries -- could see a slowdown.

Trade experts say that Asia has not sufficiently recovered to pick up the slack from an ailing Latin America. Although some economists predict that it will take months to feel the effect of Brazil's devaluation of the real -- which has made U.S. good more expensive for Brazilians -- some business owners here say they have already been hit hard.

U.S. exports to all of Latin America totaled $123.5 billion in 1997 -- less than the $213.5 billion that went to Asia that year.

Top exports to Latin America include chemicals and coal, heavy machinery, telecommunications and other electronic equipment, and automobiles.

Source: Darren McDermott, "Brazil's Woes to Hit Some U.S. Regions," Wall Street Journal, January 25, 1999.


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