Mexico Replaces China as America’s Top Trade Partner, While China’s Foreign Trade Continues to Decline

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Mexico has become the largest trading partner of the United States, surpassing China and Canada, according to the latest statistics released on July 12.

The trade volume between the United States and Mexico reached $263 billion in the first four months of this year, said Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas in a post. It accounted for 15.4 percent of goods exported and imported by the United States, which surpassed America’s trade totals with Canada and China, which were 15.2 percent and 12 percent respectively.

According to public data, China was the largest partner of the United States for most of the 2010s, until 2020 at the beginning of the outbreak when it was replaced by Mexico.

Mr. Torres said that the change showed the effect of the “U.S.–Canada–Mexico Trade Agreement” finalized during former U.S. President Trump’s tenure. It indicated a shift towards a “nearshoring” practice in global trade, which is to bring supply chains for crucial goods to countries that are close physically and politically. Such practice not only reduces the pressure on the long-distance offshore supply chain but also poses a challenge to China’s world economic status as it reduces the world’s dependence on Chinese goods.

U.S. President Donald Trump signs trade sanctions against China in the Diplomatic Reception Room of the White House in Washington, on March 22, 2018. (Mandel Ngan/AFP/Getty Images)

Since China’s accession to the World Trade Organization in 2001, China has been integrated into the U.S. economy despite not complying with economic and trade regulations. The United States has expressed concern about China’s unfair economic practices, as recently voiced by the Secretary of the Treasury Janet Yellen during her visit to China.

The outbreak of COVID-19 in 2020 and the regime’s draconian lockdown measures which severely disrupted global supply chains began to accelerate the process of companies shifting their supply chains out of China.

Michael Burns, a managing partner at Murray Hill Group, an investment firm focused on the supply chain, pointed out that the new change of businesses relocating production and supply chain closer to their markets is not about “deglobalization” but a shift of focus onto regional networks.

China’s exports fell 12.4 percent in June from a year earlier, which is the lowest since March 2020. Imports fell by 6.8 percent year-on-year, which was significantly lower than expected, according to official data. The official explanation for the drop given by the Chinese regime was that demand in the international market had declined.

However, many Chinese companies are also building a large number of factories in Mexico, moving production out of China, which also contributed to the rise of Mexican manufacturing, according to U.S.-based current affairs commentator Qin Peng in his talk show on NTD “Qin Peng Observing.”

Workers assembling toys at the Mendiss toy factory in Shantou, Guangdong Province, on May 20, 2020. (Noel Celis/AFP via Getty Images)

Meanwhile, the average U.S. tariff on Chinese goods is 19.3 percent, far higher than the 9 percent level of other “most-favored nations.”

The tensions between the United States and China in recent years have led to the West’s derisking from China which significantly affected China’s foreign trade. Observers believe it won’t change in the foreseeable future despite recent visits to China by high-level U.S. officials.

On July 13, major Chinese finance media editorial stated that “the differences between China and the United States are in multiple areas and deep-seated. No one expects that a few visits by high-level officials will bring the relationship between the two countries back on track. However, maintaining contact and strengthening communication can at least prevent the situation from getting out of control.”

Zheng Xuguang, the host of Xuguang Times Review, told The Epoch Times on July 13 that the three components of China’s GDP—exports, investment, and consumption—are all declining.

“China’s economy is mainly driven by exports. In fact, judging from the figures in the first half of this year, Guangdong Province’s exports in the first half of the year were negative, while Jiangsu Province’s growth was probably less than 1 percent. Overall China’s import is even worse. I think China’s current foreign trade is in a very dangerous situation because the crises are from the top and bottom.

“The middle and low-end manufacturing is now being transferred to Vietnam, India, and Mexico. Not only foreign companies are moving, Chinese companies are also leaving. The high-end manufacturing is affected by the United States’ increased sanctions, especially the restriction on exporting high-end chips to China. This means that Apple’s mobile phones’ production in China may be finished, which is very bad for China’s economy,” Zheng said.

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