Mexico overtakes China as the biggest exporter to America
Mexico has overtaken China as the biggest exporter to America for the first time in 20 years as geopolitics and “friend-shoring” redraw global trade patterns.
Mexico exported $475 billion of goods to the US in 2023, a 5 per cent increase on the year, while the value of Chinese exports fell 20 per cent to $427 billion, according to the US Department of Commerce.
It is the first time since China’s entry into the World Trade Organisation that Mexico has overtaken China regarding trade with the world’s largest economy.
Mexico has been one of the big beneficiaries of the drive for “friend-shoring” in western countries, where supply chains are being boosted among like-minded countries, reducing dependence on geopolitical rivals.
Successive US administrations under Donald Trump and Joe Biden have taken an increasingly bellicose attitude towards China, with Washington last year implementing bans on the sale of chip technologies to Beijing.
Biden’s landmark Inflation Reduction Act is also designed to create local supply chains for raw materials and electric vehicles as part of a “Made in America” policy directed against China’s dominance in these sectors. Mexico and Canada are among the US trade allies that will benefit from the US government’s green subsidies under the act.
Mexico exports four fifths of its oil to the US, as well as equipment, machinery and food. Overall US-Mexico trade rose to just under $800 billion last year, the commerce department said.
America’s trade deficit with Mexico increased 17 per cent to $152.4 billion in 2023. Meanwhile, its deficit with China narrowed 27 per cent to $279.4 billion, falling to the lowest level since 2010, according to the US data.
As a whole, the total US trade deficit in goods and services — which measures the difference between exports and imports — was $773.4 billion last year, a 19 per cent decline from 2022, the largest annual decline in the trade deficit since 2009.
Antonio Gabriel, global economist at Bank of America, said: “Global supply chains are gradually shifting their approach from one based on efficiency to one increasingly based on geopolitical risk management.
“Since [US-China] trade tensions began, ‘nearshoring’ may have brought up to 3 per cent of Mexico’s GDP in additional net exports, about 60 per cent of the increase in gross exports to the US of about 5 per cent of GDP.”
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