Mexico surpasses China as the biggest U.S. trade partner

Several regions in Texas are already seeing benefits from the strengthening economic relationship.

By Sean SaldanaFebruary 12, 2024 1:12 pm,

For most of the past few decades, the title of top trading partner to the U.S. has belonged to China. Well, no longer. 

Data released by the U.S. Census Bureau shows that last year, the United States’s biggest trading partner was Mexico

In 2023, the U.S. imported more than $427 billion worth of auto parts, medical equipment, electronics and other goods from our neighbors to the south. 

Raymond Robertson is director of the Mosbacher Institute at Texas A&M University and senior fellow at the Texas Mexico Center at Southern Methodist University. He joined Texas Standard to talk about what it means now that Mexico is the United State’s biggest trading partner. Listen to the interview above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: Well, Mexico is the U.S.’s biggest trading partner. How big of a deal is that?

Raymond Robertson: Actually, it’s very significant. And the main implication is the passing of China.

China, as you know, was our main source of imports. We’ve had lots of tension with China, and there’s been a big push to try and move those products to Mexico. And apparently it seems to be working.

So what are some of the reasons China has moved to the number two spot? Is it this effort by the U.S. to move things to Mexico? Is that a U.S. effort or is that a Mexican effort? How is that working? 

Oh, it’s almost certainly a U.S. effort, because when you look at the statistics over the last couple of months, Mexico, their trade with the United States has been increasing, but not that rapidly. But what really has been changing a lot is the U.S. imports from China, which had fallen almost 20%. And so given this big drop in imports from China, that relatively makes Mexico look more important. 

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So are the U.S. and China becoming less economically dependent on each other, or is that too big of a statement? 

Well, I think we’re still very, very dependent on China, and people don’t appreciate how important that relationship continues to be.

But there is a movement in the private sector and in the public sector to disentangle or separate the production out of the heavy reliance we’ve had on China. And because of those efforts, to answer your previous question as well, there has been a lot of production shifting out of China to the rest of the world, and that includes Mexico. 

And now is that primarily for, I guess, for lack of a better word, security reasons? Just sort of a lack of trust in this economic dependance on China?

Well, that’s a great question. I think it’s got a combination of factors.

One is the security issues, where there’s belief among many in Washington that any production in China puts us at a security risk, which might not be true for all goods, right? There are some goods that might not be as sensitive.

But also the other big issue, I think, was the pandemic. And what happened during the pandemic was that there were these big disruptions in supply chains, and people felt that having production located more closely to the United States would basically make it more secure and safer and less volatile. 

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Well, I was going to ask if this is a one-off or if we expect Mexico to remain our biggest trading partner, and it sounds like it could be that way and just continue to get bigger. Is that the right assumption?

I think there’s a number of factors in Mexico that need to be resolved for Mexico to secure its spot.

Mexico still has some infrastructure issues on the border. Obviously, our attempts to secure or lock down migration have implications for trade, which makes it more costly to trade with Mexico. And we need to think about those all the time.

And also, there are some lingering security issues within Mexico that, you know, if you go to El Paso, I’ve been to El Paso several times and they’ll tell you it’s very safe. And that’s true. But inside Mexico, there still are lot of concerns about security with the gangs and the drug cartels. 

Now, what are some of the areas where the U.S. and Mexico have had the strongest economic relationship? 

Well, motor vehicles is number one. And it’s actually really critical for Texas as well. About 80% of the auto parts that are produced in Texas go to Mexico. So auto parts remains number one.

Another one that people don’t fully appreciate is computers and high tech devices and instruments. And those are also growing. Mexico’s been doing a really good job of producing engineers and developing their technological capacity. And they’re also doing machinery – like heavy machinery and even lighter machinery as well. Those are the three main industrial areas. 

Well, you mentioned El Paso. Of course, Texas shares this long border with Mexico. Are there any local or regional economies here in the Lone Star State that you expect to benefit from a stronger trade relationship between the U.S. and Mexico? 

Well, absolutely. So there’s three main areas that I think benefit a lot.

Number one is that because of the increased investment in the high tech goods in Mexico – this rising computer parts and others – has really benefited the Dallas/Fort Worth area because Dallas/Fort Worth have been a major center for headquarters and for distribution.

But also this benefits motor vehicle-producing areas down in San Antonio. That area has also been growing as a result of trade.

But the other main area that this benefits a lot, of course, is the border areas – not just El Paso, but all the way down to Brownsville and Laredo and places in between.

So, yeah, this is really a benefit for lots of areas in Texas.

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