- Trade between the United States and Mexico reached $263 billion in the first four months of the year.
- That makes Mexico the largest trading partner since the pandemic began, surpassing China and Canada.
- China has been America’s top partner for much of the 2010s, and was no less when the pandemic began.
Meet America’s old and new best friends in the global economy.
According to a new post by Luis Torres, senior business economist at the Dallas Fed,Mexico has re-established itself as America’s largest trading partner, with $263 billion worth of goods moving between the two countries in the first four months of the year. Trade with Mexico accounted for 15.4% of U.S. imports and exports of goods, slightly ahead of total trade with Canada and China (15.2% and 12%, respectively).
Even as the world emerges from the midst of a pandemic, it won’t be until 2020 that Mexico can take the top spot from China, which has spent the past two decades further integrating into the U.S. economy. It clearly shows what economic turmoil looks like. It will continue to define the global economy for years to come.
Torres said the seeds for this change had been sown before the pandemic. It was due to former President Donald Trump’s tariffs on some Chinese goods and the signing of the U.S.-Canada-Mexico Trade Agreement, a minor renewal of the nearly 30-year-old NAFTA agreement. But Torres said the change also suggests an accelerating shift to “nearshoring” — the practice of countries bringing their supply chains of critical goods to countries that are physically or politically closer to them. Ta.
“Recent data on nearshoring are sparse, and the evidence is largely anecdotal, but the rise of protectionism and related industrial policies has led to a decline in global trade, an increase in regional trade, nearshoring and reshoring ( It is consistent with the return of production to the home country.” Torres wrote.
Nearshoring Increases During Pandemic This is due to rising costs of shipping goods across the Pacific and consumer demand for faster delivery times. The latter is called the “Amazon Prime Effect”. New York Times Peter S. Goodman He also wrote earlier this year that as political tensions between the U.S. and China escalate, companies like Walmart are increasingly looking for ways to meet their own needs.
“It’s not about deglobalisation,” Michael Burns, managing partner at supply chain-focused investment firm Murray Hill Group, told Goodman. “This is the next stage of globalization with a focus on regional networks.”
In his new book, The Myth of Globalization: Why Locality Matters, Shannon O’Neill argues for regionalization over globalization, saying that bringing production closer to home will help American workers. In a review of O’Neill’s bookNPR’s Greg Rosalski summarized the discussion as follows:
“O’Neill writes that the average import from Mexico is ‘40% made in the USA,’ which means that 40% of the components used in the final product are still made in the United States. On the other hand, 25% of the average Canadian import is made in the United States.” “For products coming from China, only 4% are made in the United States,” she wrote.
Still, President Joe Biden has sought to improve U.S.-China relations in recent months, seeing rifts widening in recent years, including the downing of a Chinese spy balloon in February. Secretary of State Antony Blinken met with Chinese leader Xi Jinping in June, and Treasury Secretary Janet Yellen recently made a four-day trip to China.
Mr. Blinken and Mr. Xi promised to stabilize relations between China and the United States. Yellen, meanwhile, expressed concern about “unfair economic practices” but said she hoped the two countries could work closer together because “the world is big enough for both of us to thrive.” .
Relations with China in particular are always moving, but for now one thing is clear. That said, trade between Mexico and the United States is as strong as ever and should continue to grow.
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