(24 July 2023 – United States) Mexico has raced past China as the United States (US) largest trading partner in 2023 as corporate’s “reshoring” impulse gathers pace globally.
The milestone represents a paradigm shift in global economic dynamics, Corporates are increasingly prioritising greater efficiency over low prices and fragile supply chains as highlighted in Citi’s recent research “Uncertainty in Global Supply Chains is Going to Stay”.
Declining China trade implies higher costs and inflation pressure for the US while also reflecting deteriorating diplomatic relations between the two countries, despite recent moves by the Biden administration to improve relations with China.
While there are enormous economic ramifications for associated trade partners, growing geopolitical tensions in the South China Sea pose an even more pressing concern for pacific rim nations.
“The auto industry accounts for nearly a quarter of the total manufacturing trade activity between the US and Mexico at US$69 billion. China exports more to the US than the US sends to China, totalling US$47 billion, but trade with Mexico is more balanced between imports and exports” said Axios Markets Correspondent, Emily Peck.
“Geopolitics in action! Mexico, not China, is now the biggest trading partner of the US. That's reshoring and global decoupling for you” commented The Demographics Group Co-Founder and Director, Simon Kuestenmacher.
“Today’s global economic relationships encompass a myriad of concerns, among them national security, climate policy and supply chain resiliency” stated Federal Reserve Bank of Dallas Senior Business Economist, Luis Torres.
Source: Axios Visuals, US Census
