President Joe Biden and Mexican President Andrés Manuel López Obrador

*Trade between the US and Mexico reached $263 billion during the first four months of this year.

*That pushed Mexico past China and Canada as its top trade partner since the start of the pandemic.

*China was America’s top partner for much of the 2010s and again at the start of the pandemic.

Introducing America’s renewed and enduring ally on the global economic stage.

As per a recent update shared by Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas, Mexico has once again solidified its role as the United States’ primary trade partner.

Over the initial four months of this year, the exchange of goods between these two nations reached a substantial $263 billion.

Mexico’s trade contribution represented 15.4% of the total imports and exports of the US, surpassing trade figures with Canada and China, which stood at 15.2% and 12% respectively.

Even amid the world’s transition away from the peak of the pandemic, Mexico’s ability to dethrone China,

which had progressively integrated itself into the US economy over the past two decades, serves as a clear indicator that the economic turbulence of 2020 continues to shape the global economy for the foreseeable future.

According to Torres, the groundwork for this shift was laid before the pandemic,

with former President Donald Trump’s imposition of tariffs on select Chinese goods and the formulation of the US-Canada-Mexico trade agreement—a modernized iteration of the nearly thirty-year-old NAFTA accord.

Moreover, these changes also point to an accelerated trend of “nearshoring,”

where countries relocate supply chains for essential goods to neighboring nations that share physical and political proximity.

“While recent nearshoring data remains limited and mainly anecdotal,

Torres noted that heightened protectionism and concurrent industrial policy changes align with reduced global trade.

This shift points towards an increase in regional trade, alongside trends in nearshoring and reshoring of production to domestic locations,” stated Torres.

The surge in nearshoring during the pandemic can be attributed to higher shipping costs across the Pacific

and the growing consumer preference for quicker delivery times, often referred to as “The Amazon Prime Effect.”

The New York Times’ Peter S. Goodman mentioned earlier this year that companies like Walmart were increasingly seeking local solutions

due to escalating political tensions between the US and China.

Michael Burns, managing partner at Murray Hill Group, an investment firm specializing in supply chains,

emphasized to Goodman that this trend doesn’t signify deglobalization but rather represents the next phase of globalization, with a focus on developing regional networks.”

Trucks at the Port of Manzanillo, Mexico

In her new book, “The Globalization Myth: Why Regions Matter,” Shannon O’Neil argues in favor of regionalization over globalization.

She emphasizes the importance of keeping production closer to home to benefit American workers.

NPR’s Greg Rosalsky summarized her argument, highlighting that O’Neil noted around 40% of imports from Mexico are US-made components, compared to 25% for Canadian imports and just 4% for products from China.

Despite this, recent efforts by President Joe Biden, including meetings between Secretary of State Antony Blinken

and China’s leader Xi Jinping, aim to improve the US-China relationship after a period of growing tension.

Treasury Secretary Janet Yellen also expressed hopes for closer collaboration between the two countries due to the world’s ample opportunities.

Amid this dynamic landscape, trade between Mexico and the US remains robust and poised for growth.

By Chinedu

2 thoughts on “Mexico replaced China as America’s top trade buddy”
  1. Hey There. I found your weblog the use of msn. That is an extremely smartly written article.
    I will be sure to bookmark it and come back to learn extra of your useful
    information. Thanks for the post. I’ll definitely return.

Leave a Reply

Your email address will not be published. Required fields are marked *