Mexico was the United States’ top trade partner in the first nine months of 2023, according to new U.S. government data, with two-way trade worth almost US $600 billion.
Data published by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis on Tuesday showed that Mexico beat out Canada and China to claim the coveted position of leading trade partner of the world’s largest economy.
Neighbors and economic partners
Two-way trade between Mexico and the United States was worth US $599.79 billion between January and September. That figure is up 2.1% compared to the same period of 2022, and an impressive 59% compared to a decade ago.
Trade between Mexico and the U.S. accounted for 15.7% of the United States’ total trade with all its economic partners in the first nine months of the year.
Canada-U.S. trade accounted for 15.3% of the total, while China-U.S. trade made up 11.1%. The United States’ trade with those two countries declined in annual terms in the first nine months of the year.
Trade between Mexico and the United States was worth $67.11 billion in September, down from $70.77 billion in August. Despite the month-over-month decline, Mexico was the United States top trade partner in September.
These figures, of course, don’t account for illicit trade – the shipment of contraband such as drugs and weapons across the Mexico-U.S. border. Needless to say, such trade is very lucrative for the criminal organizations involved in it.
Mexican exports to the U.S. increased
Mexico shipped exports worth a record high $356.25 billion to the United States between January and September. That’s an increase of 4.3% compared to the same period of last year.
Mexico had a 15.5% share of the export market to the U.S., ahead of Canada and China, which both had a 13.7% share in the first nine months of 2023.
Mexico exports a wide range of goods to the United States including vehicles, auto parts, crude oil, electronics, fruit and vegetables, meat and beverages such as beer and tequila.
In September, Mexican exports to the U.S. were worth $39.54 billion, down from $41.75 billion in August. On an annual basis, Mexican exports to the U.S. fell 5.1% in September, the biggest decline in over three years.
According to the Bank of Mexico, Mexico’s exports to the United States in September accounted for 83.7% of the country’s total exports.
U.S. imports to Mexico declined
U.S. imports were worth $243.5 billion between January and September, an annual decline of 0.9%. It was the first time since 2020 that imports from the U.S. declined in the first nine months of the year.
U.S. imports to Mexico include gasoline, agricultural products including corn used as livestock feed and capital goods such as machinery and plastics.
U.S. imports to Mexico in September were worth $27.65 billion, down from $29.01 billion in August.
Mexico records a healthy trade surplus
Mexico’s surplus with its northern neighbor in the first nine months of the year was a record high $112.7 billion. That figure is 17.7% higher than the surplus Mexico recorded in the same period of 2022.
Mexico’s trade surplus with the U.S. in September was $12.74 billion.
Analyst: Mexico has benefited from the China-U.S. trade war
Gabriela Siller, director of economic analysis at Mexican bank Banco Base, said that Mexico’s foreign trade performance has improved as a result of the China-United States trade war.
While Mexico’s exports to the U.S. increased 4.3% in the first nine months of the year, China’s exports to the same country declined 24.4%.
While Mexico is now the United States’ top economic partner, Siller warned that a slowdown of manufacturing activity in the United States and the appreciation of the Mexican peso are affecting trade between the two countries.
Citing Mexico’s export performance in September, independent economist Mario Correa made similar remarks.
Siller said that the stability (or otherwise) of the USD:MXN exchange rate and the economic situation in the United States will have a significant impact on Mexico’s export performance moving forward.
The newspaper El Economista reported that Mexico appears on track to maintain its position as the United States’ top trade partner through to the end of 2023.
Correa said that Mexico needs to have a “diversified supply chain” and ensure that it complies with “increasingly important” environmental, social and corporate governance criteria set by its most important trade partner in order to main its strong economic ties with the U.S.
One factor that is set to benefit Mexico’s export performance in the future is the relocation of foreign manufacturing companies here.
Foreign direct investment in Mexico reached a record high of over $29 billion in the first half of 2023, and incoming capital flows appear likely to grow even more in the coming years.