The purpose of this research is to calculate the value-added trade between Texas and Mexico. We argue that a better metric to understand trade flow should be based on value added. U.S. trade deficit with Mexico only reflects gross trade and does not accurately portray the complexities of commercial flows between the two countries. Given that Mexico is Texas\u27 most important trading partner, the transformation of gross trade into value-added trade flows will provide a clearer understanding of this important relationship
