Mexico recorded its highest ever annual trade surplus with the United States last year amid uncertainty surrounding the new North American trade agreement and tariff tensions.

Data published yesterday by the United States Department of Commerce shows that Mexican exports to the U.S. increased by 10.3% in 2018 to reach just over US $346.5 billion while Mexico paid $265 billion for imports from north of the border, 8.9% more than in 2017.

The net result: a surplus for Mexico of just over $81.5 billion, 15% higher than the $71 billion surplus of 2017.

It was the fifth consecutive annual surplus increase for Mexico with its northern neighbor, while the United States’ global deficit hit a record $891.3 billion even though U.S. President Donald Trump has pledged to reduce it.

Almost half of the United States’ deficit was generated via a trade imbalance with China while just over 9% is a result of the surplus achieved by Mexico.

The positive result for Mexico came despite the United States government’s tariffs on Mexican steel and aluminum, which were imposed on June 1 last year.

Mexico responded swiftly with a range of “equivalent measures” on some U.S. imports including pork, apples and a range of cheeses.

During most of 2018, there was also uncertainty about whether Mexico, the United States and Canada would reach an updated trade deal to replace the quarter-century-old NAFTA.

Trump repeatedly threatened to pull out of the three-way accord and raised the possibility that the United States would enter into separate bilateral deals with its neighbors.

However, a new deal – the United States-Mexico-Canada Agreement (USMCA) – was eventually signed on November 30, Enrique Peña Nieto’s last day as president.

The agreement, which sets stricter rules of origin for the automotive sector among other modifications to NAFTA, must be ratified by the legislatures of the respective countries before it takes effect.

But trade officials in Mexico have indicated it will not ratify the deal unless the U.S. withdraws the metal tariffs.

Source: El Economista (sp)