In the year 2023, the value of the goods coming into the United States from Mexico exceeded those from China, marking the first time this has happened in over 20 years. U.S.-China relations have been strained in recent years, with China’s aggressive trade practices and threatening military strategies spurring the U.S. to decrease importing from that region. The Trump administration began imposing tariffs on Chinese imports in 2018, which continued after President Joe Biden took office. Instead of importing from China, U.S. companies are employing strategies of “friend-shoring,” “reshoring,” and “near-shoring,” and Mexico has become an attractive alternative for U.S. manufacturers.
Despite the apparent shift from Chinese to Mexican imports, the picture is not so simple. Several Chinese manufacturers are taking advantage of the 3-year-old U.S.-Mexico-Canada Trade Agreement, which allows for duty-free trade among the member countries in North America. President Andrés Manuel López Obrador of Mexico has suggested that Mexico is in a position of leverage, saying that it would be difficult for the U.S. to close the countries’ border, a move that had been proposed as part of negotiations on a border bill in the U.S. Senate. In the upcoming years, it appears that the U.S.’s discomfort with reliance on Chinese goods may persist.
The trade balance with the rest of the world — the gap between what the U.S. exports and imports — decreased by 10% in 2023 to $1.06 trillion, marking a significant change. Though originally reduced as a response to tensions between the U.S. and China, changing the nature of international trade can have long-term and far-reaching effects.