Mexico gains as it takes export market share from China

Article Excerpt

Despite an ongoing trade war, high tariffs, and COVID-impacted supply lines, the U.S. still imported goods worth more than $500 billion from China in 2021. In that same year, Mexico was a distant second as a trade partner, delivering $385 billion of goods to the U.S. However, Mexico now seems poised to contribute a larger share of U.S. imports. The USMCA trade agreement, signed in July 2020 between the U.S., Mexico, and Canada, allows for low or no tariffs on many traded goods, subject to certain conditions and exclusions. In addition, labour costs in Mexico are now on par or lower than in China, and transportation costs from Mexico to the U.S. are lower. As a result, many companies are currently actively rethinking their supply lines after the difficulties experienced over the past three years in moving goods from China to the U.S. According to Mexico’s Economy Minister, more than 400 North American companies have indicated that they plan to carry out a relocation…