Mexico is the country that trades most with the United States
Published on 18 November 2020
Between January and July 2020, the trade movement between the two countries was the most significant despite the impact of the COVID-19 pandemic on hydrocarbons and automobiles.
North America is perhaps the region with the most complete integration between the chains of production, distribution and commercialization. The fact that it has large scale sources of raw materials, such as minerals and hydrocarbons, intermediate goods, such as chemicals and components of technological products or heavy industry, and final products, makes it practically self-sufficient. For this reason, the main cross-border exchange of products with the United States, the country with the second largest economy in the world, is with its neighbors Mexico and Canada. Between both countries, the first one has been more relevant throughout this year, due to the good performance of some technological products and natural gas. This article explains the details of this positioning.
The main commercial partners of the United State
The first step in understanding Mexico's position in U.S. foreign trade is to compare the exchange between both countries with that of other trading partners.
As the following table shows, the scale of regional trade is significantly larger than that of transoceanic trade. This is mainly due to the fact that the industry of intermediate and technological goods, as well as the consumption of natural resources by refineries and electricity generation plants, is of a large scale. The main reason for this is that the U.S. territory specializes in development and more than 325 million people live there, which puts it in third place among the countries with the largest population in the world. The following is the numerical difference between North America and the large Asian markets.
In 2020, Mexico takes the lead
Although in 2019 bilateral trade with Canada was slightly higher, Mexico has taken the lead between January and July of this year. The main movement has been in imports, mainly because the restriction to mobility did not affect the expansion of consumption of technological products. Similarly, natural gas was more in demand due to lower production from Mexican wells, the use of cross-border pipeline infrastructure and increased consumption by manufacturing and industry.
Trade with Canada differs from Mexico in the absence of technological products in the ranking and in the exception mentioned above for gas. In the following tables, the evolution of the trade between the United States and its two neighboring countries during the first seven months of the year is contrasted.
A look at the Mexican portfolio
The last detail to review is the list of the most exported and imported products to and from Mexico by the United States. As already mentioned, the exchange is based on hydrocarbons and manufactures for technology and means of transportation.
The detail of the product by product review, leads to an interesting point: both countries exchange technology and low-cost labor. This is seen in the case of processors, which are developed by the United States, and sent to Mexico to be assembled into components or finished products that return as imports.
Finally, the second factor is the contrast between the consumption of lower-priced products used in the home, such as computers, cell phones and televisions, and those that are more expensive or linked to paralyzed industries, such as automobiles and airplanes. The following tables show the most salient elements.
This dynamic is likely to continue in 2021, although industries linked to transport and energy may begin to recover slowly as economies are restored. However, Mexico has the advantage of being a major source of assembled products, while the rest of the list of highly relevant products is similar to that of Canada-U.S. trade, so it is at an advantage to aspire to remain its major trading partner.
In addition, Mexico's weight is not limited to the quantitative aspect, but is key to a high-value industry such as technology, which is why the United States' vanguard in this area would not be possible without the strong commercial relationship between the two countries.
For a better understanding of this commercial exchange, you can review the information available on the Veritrade portal.
Request your free trial at https://bit.ly/3pEbuub