How Mexico is Transforming the Global Economy?
According to recent data from Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas, Mexico has reclaimed its position as America’s leading trade partner. A staggering $263 billion worth of goods exchanged hands between the two nations in just the first four months of this year. This trade accounted for 15.4% of all goods exported and imported by the U.S., edging out both Canada and China, which stood at 15.2% and 12%, respectively.
This shift is not merely a post-pandemic phenomenon; its roots can be traced back to policy changes initiated before the global health crisis. Former President Donald Trump’s tariffs on select Chinese goods and the updated US-Canada-Mexico trade agreement laid the groundwork for this transformation. Torres suggests that these changes have accelerated the trend toward “nearshoring,” where countries move their supply chains closer to home, both geographically and politically.
The pandemic further fueled nearshoring due to rising shipping costs across the Pacific and consumer demand for quicker delivery times, often referred to as “The Amazon Prime Effect.” Companies like Walmart have also been exploring closer-to-home options to meet their needs, especially as U.S.-China relations continue to be strained.
Michael Burns, a managing partner at Murray Hill Group, an investment firm focusing on supply chains, argues that this isn’t about deglobalization but rather the next phase of globalization, which emphasizes regional networks.
In her book “The Globalization Myth: Why Regions Matter,” Shannon O’Neil makes a compelling case for regionalization. She points out that the average import from Mexico is “40% US-made,” highlighting the interconnectedness of the two economies. In contrast, only 4% of products imported from China are made in the U.S.
Despite ongoing efforts by President Joe Biden to mend U.S.-China relations, the robust trade relationship between Mexico and the U.S. shows no signs of weakening and is likely to continue to grow.
This is where our company, MexPortal.com, can make a significant impact. We specialize in helping companies, factories, and manufacturers relocate to Mexico. By doing so, these businesses can take advantage of zero import tariffs when exporting products to the USA and Canada, offering a substantial competitive edge in today’s rapidly transforming global economy.
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