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November 14, 2024
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Mexico, yes or yes, the US’s first trading partner… but little taken advantage of

Mexico, yes or yes, the US's first trading partner... but little taken advantage of

In recent years, the allies for Mexico to increase its shipments of merchandise to the United States are the trade war against China, the T-MEC and the relocation of “nearshoring” companies.

According to data from the United States Census Bureau, between January and September 2024, Mexico’s share of the neighboring country’s import market is 15.7%.

In 2018, when Trump declared a trade war on China, Mexico closed with a 13.6% share; In 2019 it rose to 14.3%.

But in 2020, as a result of the pandemic, Mexico’s share of total US imports fell to 13.9% and it was not until 2022 when it recovered again and rose to 14%. In 2023, Mexico managed to displace China as the main seller to the United States, with a share of 15.4%.

Although experts point out that Mexico can remain the main partner of the United States and grow its imports, they doubt the use, since the country has grown 2.1 percentage points compared to the end of 2018, while Vietnam has grown by 2.2 percentage points.

“The question is, are we taking advantage of our proximity? Is Vietnam going to displace us? Well no, Vietnam is very far away, it will never displace us,” says Carlos Elizondo, professor at the School of Government and Public Transformation at Tec de Monterrey.

But the specialist highlights this case, because Mexico, with its proximity to the United States and a larger economy, is growing at the same rate as a smaller economy that does not have the same geographical location.

Banco Base also highlights the role of Vietnam in one of its analyses, being the main winner with the trade war in terms of the growth of the share of imports from the United States, above Mexico, the largest partner.

According to the IMF’s list of global economies by GDP size, Mexico occupies 12th place and Vietnam 35th.

Will the opportunity continue?

The Ministry of Economy has a study in which it has detected six sectors in which Mexico can benefit if China continues to lose ground: semiconductors and other electronic components; manufacturing of electronic lighting equipment; communications equipment; manufacturing of magnetic and optical media; manufacturing of furniture for the home, office and kitchen and manufacturing of electronic equipment.

Banco Base states that China is not expected to regain market share with the United States. President-elect Donald Trump has mentioned more restrictions on imports from the Asian country.

Carlos Elizondo points out that, beyond Mexico maintaining itself as the United States’ largest trading partner, we must consider how much it is expanding its presence, in what type of manufacturing, with how much added value, how much we can substitute Chinese imports. that uses the country as an input for part of these Mexican manufacturing exports that go to the neighboring country, a project also from the secretariat led by Marcelo Ebrard.

For the academic, this is a more complex film that, in addition to the federal level, requires state capacities and clarity regarding the rules.

The challenge for the growth of Mexico’s exports will be the trade policy that Trump decides to implement, who has already threatened with tariffs on the entire world, but more so on Mexico and China.

That would generate difficulty in the growth of global trade with the United States, coupled with possible retaliation of also imposing tariffs on the largest economy in the world, as Ebrard already showed.

“We could enter a world where talking about opportunity would be almost idle, because we would really be rewriting and living by the rules of the new game. That would be complicated and expensive for Mexico. So, assuming that that is not on Trump’s radar, that he does not do what he has said he is going to do, even in that context, we are going to be living in a more protectionist world. But if Mexico does things well, it will be able to take advantage of it,” comments the specialist from the School of Government and Public Transformation of the Tec de Monterrey.

The Mexico research center, how are we doing? He says that the issue of China will continue to be crucial for the country and the United States, because while the latter is reducing its imports from the Asian country, in Mexico they are increasing.

The think tank points out that before Trump’s trade war, in 2016 the first measures were already beginning to be taken to curb the Chinese presence in its internal market, both in imports and investments.

“With this, it began a regionalization of trade where dependence on its North American partners grew. That is why Mexico’s presence in United States imports has gained ground, becoming its main trading partner,” he indicates.



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