Mexico Has Replaced China as America’s Top Trade Buddy Cork Gaines - Business Insider Mexico
go to original July 14, 2023

President Joe Biden and Mexican President Andrés Manuel López Obrador. (Hector Vivas/Getty)

Meet America's new, old best friend in the world economy.

According to a new post from Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas, Mexico has once again cemented its place as America's top trading partner, with $263 billion worth of goods passing between the two countries in the first four months of this year. Trade with Mexico accounted for 15.4% of goods exported and imported by the US, just ahead of America's trade totals with Canada and China, which were 15.2% and 12% respectively.

Even as the world moves on from the height of the pandemic, Mexico's ability to take the top spot away from China — which had spent the last two decades integrating itself further into the US economy — is a clear sign of how the economic chaos of 2020 is set to continue to define the world economy for years to come.

Torres said the seeds for this shift were sown before the pandemic — with former President Donald Trump's tariffs on some Chinese goods and the signing of the US-Canada-Mexico trade deal, a slight update of the nearly three-decades-old NAFTA deal. But Torres said the changes also suggested an accelerated shift toward "nearshoring," a practice in which countries bring supply chains for crucial goods to countries that are close physically and politically.

"While data on recent nearshoring is thin and evidence of it is largely anecdotal, increased protectionism and related industrial policy are consistent with less global trade, more regional trade, and nearshoring and reshoring (returning production to the home country)," Torres wrote.

Nearshoring increased during the pandemic because of the increased cost of shipping products across the Pacific and the consumer demand for faster delivery times — we'll call the latter "The Amazon Prime Effect." The New York Times' Peter S. Goodman also wrote earlier this year that companies like Walmart were increasingly looking closer to home for ways to fill their needs as political tensions between the US and China heated up.

"It's not about deglobalization," Michael Burns, a managing partner at Murray Hill Group, an investment firm focused on the supply chain, told Goodman. "It's the next stage of globalization that is focused on regional networks."

Read the rest at Business Insider Mexico

Related: AMLO: Mexico’s Economy Will Be in Global Top 10 Within Decades (Mexico News Daily)

Related: Mexico Sees Biggest Minimum Wage Increase in OECD Since 2020 (Mexico News Daily)

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