By Sam Klebanov
If sending stuff to America were an Olympic sport, Mexico would be biting a gold medal before thanking geopolitics and market forces. The country surpassed China as the top exporter to the US last year for the first time in 20 years, according to data the Census Bureau shared yesterday.
It's as much a China flop as a Mexico triumph: The US-China trade deficit (aka the difference between imports and exports) shrank to the lowest level last year since 2010.
While that might be partially due to the US pulling back on its post-pandemic shopping spree, according to the WSJ, the trend signifies China losing its status as America’s go-to trade partner.
Here’s Why It’s Happening…
Goodbye China?
Foreign investment in Mexico rose 21% last year, partially due to exporters ditching China. Other countries are also vying to become America’s factory: The share of US imports coming from South Korea and India grew over the past year.
But…China still plays a major role in making the products that get shipped to US shores. Even for US imports made elsewhere, Chinese companies often supply the components, and they’ve been pouring billions into manufacturing facilities in Mexico as a way to sidestep the US’s punishing tariffs.
Looking ahead…US-China trade might get squeezed even more. Donald Trump recently said he’s considering a 60% tariff on Chinese goods if he’s elected president again.—SK
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