Wednesday, August 09, 2023

Mexico seeks to solidify rank as top U.S. trade partner, push further past China

Luis Torres - July 11, 2023

Mexico became the top U.S. trading partner at the beginning of 2023, with total bilateral trade between the two countries totaling $263 billion during the first four months of this year.
Mexico's emergence followed fractious U.S. relations with China, which had moved past Canada to claim the top trading spot in 2014. The dynamic changed in 2018 when the U.S. imposed tariffs on China’s goods and with subsequent pandemic-era supply-chain disruptions that altered international trade and investment flows worldwide.
Mexico’s gains mirror its rise in manufacturing, a key component of goods moving between it and the U.S. During the first four months of 2023, total trade of manufactured goods between Mexico and the U.S. reached $234.2 billion.
Mexico positioned as a manufacturing base
Mexico’s expanding manufacturing base has offered an alternative to producing in China. Sourcing or producing goods in a nearby country is sometimes referred to as “nearshoring.”
More activity in Mexico would support increased bilateral manufacturing with the U.S. It would also bolster Mexico’s standing as the U.S.’ leading manufacturing trading partner, a ranking it achieved in 2022.
Luis Torres is a senior business economist in the San Antonio Branch of the Federal Reserve Bank of Dallas.