TREND: In the last 3 months we have seen an almost complete recovery of monthly US-Mexico trade flows to pre-pandemic levels due to the gradual reopening of both economies. In August 2020, total bilateral trade flows trailed August 2019’s flows by only 11.69%, representing a slight decrease from July 2020 but a significant increase compared to numbers during the Q2 2020, when businesses on both sides of the border were most disrupted by the pandemic.
- Between March and May, total US-Mexico bilateral trade contracted almost by half, but recovered between June and August. As of August 2020, Mexico is still the top trading partner of the US, leading Canada and China. In total, bilateral trade between the US and Mexico has contracted 18.53% during this year compared to 2019.
- As of August 2020, Mexico is the top trading partner of the US. Total US-Mexico trade equals US $337.5 billion or 14.1% of total US trade, ahead of Canada (US $335.3 billion) and China (US $332.2). During 2020, the top 5 US trading partners were Mexico, Canada, China, Japan, and Germany.
- Total US-Mexico trade flows decreased by 46.17% in April of this year compared to April 2019 and hit its lowest point in May, with a 53.58% contraction compared to May 2019’s numbers. However, June and July exhibited a strong recovery in trade flows. Total bilateral trade during August 2020 trailed August 2019’s numbers by only 11.69%, which signals a strong recovery compared to the earlier months of the pandemic.
- As of August 2020, Mexico remains the second top export destination for US products (14.7% share of total) just behind Canada (17.8%) and ahead of China (7.6%). Meanwhile, China remains the top source of US imports (17.7% of total), followed by Mexico (13.7%) and Canada (11.6%).
- Bilateral trade between the US and Mexico contracted in all sectors except: arms and ammunition, animal and vegetable fats, oils and waxes, foodstuffs, beverages, spirits, vinegar, and tobacco, and vegetable products.
- The biggest contractions in bilateral trade were in works of art and antiques, and vehicles, aircraft, vessels, and transportation equipment, which contracted by more than 35% during the first half of 2020.
TAKEAWAY: Although Covid-19 severely disrupted supply chains and trade flows between April and May of this year, US-Mexico bilateral trade recovered during June and August. Bilateral trade is back on track to finish the year strong and recover from Q2 2020 contraction, but it all depends on controlling the rise in Covid-19 cases on both sides of the border, not instituting further lockdowns on key economic sectors in Mexico, and on the impact of the US presidential election which might affect demand in the final months of the year.
* Spotlight by AmCham/Mexico´s Trade & Investment Center. The American Chamber of Commerce of Mexico seeks to facilitate commercial integration between Mexico and the US, build a favorable business environment, and contribute with proposals to consolidate Mexico’s competitiveness and development as a top destination for American investment. By connecting companies and sharing trends and market intelligence, its Trade & Investment Center boosts cross-border business. Twitter: @amchammexico