The growth of Mexico’s automotive manufacturing sector has changed the balance of trade among the three countries that have been known as the three amigos of North America: Mexico has overtaken Canada as the United States’ chief supplier of imported goods.
In 2015, Canada and Mexico were tied. But in the first 10 months of this year, Mexico has overtaken Canada as the United States’ principal supplier.
The U.S. Commerce Department’s latest trade statistics show the U.S. imported US $245 billion in goods from Mexico during that period compared to $230 billion from Canada.
Automotive manufacturing, which has soared in Mexico in recent years due to lower labor costs and broad access to markets through trade agreements, is driving most of the growth in trade with the U.S.
But Mexico’s ascendance has meant Canada’s decline. The latter produced 2.2 million vehicles last year. Mexico produced 3.5 million, a number forecast to increase to 5 million by 2020.
Although Mexico has been hampered by organized crime and corruption, a professor of business at Canada’s York University says other factors are helping the country fulfil its economic potential.
Bernard Wolf said those factors include structural reforms that have improved competitiveness and funding for infrastructure, according to a report by BBC News.
In Canada, higher costs have resulted in its share of U.S. imports falling to about 13% from 20% 20 years ago, said a report by Bloomberg.
So far this year, Canada’s exports to the U.S. have fallen 7.7%, Mexico’s by 1.6%.
What will happen with these numbers in the future will depend on what Donald Trump does when he takes office as U.S. president next month.
As for the term three amigos, which dates back to chummier times for the three trade partners, it could well become history.