Mexico registered its best first semester in exports to the United States
Published on 16 October 2018
The newspaper El Economista highlighted that the first half of 2018 was outstanding for Mexican exports to the United States. With a rise of 9%, the value of shipments from the Latin American country was the one that grew the most among those that supply this market, and according to the US Department of Commerce, it is a record expansion for the first semester.
The Mexican offer is composed mainly of assembled products, to which oil, gold, silver and agricultural products are added. Comparative advantages such as the lower cost of labor at an affordable distance for land transport (even, the railroad is used as a means of transport), make it inefficient to produce in the United States. Therefore, Mexico is essential so that consumers and US industries can easily access intermediate and finished products at a low cost.
In the following table, we present the main categories that group the highest value shipments.
It is interesting to note that the main variations were in vehicle exports, while gold was benefited by the best prices in the first half compared to the same period of 2017, although the same is not expected for the second half of the year. Results like this make it easy to politicize US trade, and have led to the trade war unleashed in June this year, with tariffs of 25% on products such as steel from Mexico, Canada and China.
However, in reality bilateral trade between the United States and Mexico has been more dynamic in shipments from the first to the second of these two. The Economist stressed that the value of Mexican imports from its northern neighbor grew 10.26% in the first half of 2018, an advance that also implies a record. It is true that the cumulative figure of US $ 87.232 million of US exports led to a trade deficit of more than US $ 100 million, but the difference in growth rates shows that the gaps can be closed without the need for a commercial war.
For the time being, there is much to be taken advantage of due to the proximity between both countries and the synergies between specialization in design and engineering on one side, and low-cost assembly on the other. In addition, it is worth mentioning that in many cases the United States uses Mexican products as an intermediate good to promote more complex exports or redirect products, or even the profits generated by exports from companies with operations in Mexico can go to the accounts of the companies. American matrices.
The efficiency of producing in a cheaper country is complemented by the aforementioned lower cost, and that is an opportunity that should not be missed. As seen in the following graph, products enter the United States by road, and even by train.
The conditions are given to take advantage of the new Trade Agreement between the United States, Mexico and Canada (USMCA), replacing the North American Free Trade Agreement (NAFTA). The closing figures of 2018 will corroborate the importance of maintaining openness, either because of the stability achieved after the signature, or because of the negative effects caused by the tariffs of the commercial war.
For more information on Mexico's exports and imports, you can access the Veritrade page.
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