For First Time in Two Decades, U.S. Buys More From Mexico Than China
For First Time in Two Decades, U.S. Buys More From Mexico Than China
The United States bought more goods from Mexico than China in 2023 for the first time in 20 years, evidence of how much global trade patterns have shifted.
The United States bought more goods from Mexico than China in 2023 for the first time in 20 years, evidence of how much global trade patterns have shifted.
In the depths of the pandemic, as global supply chains buckled and the cost of shipping a container from China soared nearly twentyfold, Marco Villarreal spied an opportunity.
In 2021, Mr. Villarreal resigned as Caterpillar’s director general in Mexico and began nurturing ties with companies looking to shift manufacturing from China to Mexico. He found a client in Hisun, a Chinese producer of all-terrain vehicles, which hired Mr. Villarreal to establish a $152 million manufacturing site in Saltillo, an industrial hub in northern Mexico.
Mr. Villarreal said foreign companies, particularly those seeking to sell within North America, saw Mexico as a viable alternative to China for several reasons, including the simmering trade tensions between the United States and China.
“The stars are aligning for Mexico,” he said.
New data released on Wednesday showed that Mexico outpaced China for the first time in 20 years to become America’s top source of official imports — a significant shift that highlights how increased tensions between Washington and Beijing are altering trade flows.
The United States’ trade deficit with China narrowed significantly last year, with goods imports from the country dropping 20 percent to $427.2 billion, the data shows. American consumers and businesses turned to Mexico, Europe, South Korea, India, Canada and Vietnam for auto parts, shoes, toys and raw materials.
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Although I'm sure the headline is true, at least with my industry it's a little misleading. All we did over the past few years was cut in Mexico as middle men.
There's no cost effective domestic source of a particular raw material so it's traditionally been purchased from China and turned into a product in the US. With various tariffs and labor costs it's now cheaper to purchase the same raw material from China, turn it into components in Mexico (thus a Mexican product), and then do final assembly in the US. On paper we're importing things from Mexico but the majority of the money still ends up in the same place.
I'm curious if that's the case for other industries.
Taking the manufacturing away is the first step in both independence from China and pushing Mexico towards raw materials refinement by reinforcing the trades that depend on them.
If we can manage to starve China of certain manufacturing jobs the skills won’t be passed down and they’ll be back to making the simple, inferior products they’re known for in less than a generation.
Many of the companies doing this ARE Chinese and the goal is to effectively launder the production and make what amounts to a Chinese product seem Mexican by offloading some of the component assembly to Mexican facilities. This lets them sidestep US tarriffs that were imposed by Trump. The article addressed this.