TREND: In September 2020, US-Mexico bilateral trade grew 3.6% compared to the previous month and has hit its highest level since the pandemic started. Total trade flows in September 2020 trailed September 2019’s numbers by only 3.27%, which is a sign of a strong V-shaped recovery (September 2020’s vs 2019 comparison is smaller than last month’s difference by 8.42 percentage points). The latest data shows that the gap in total year-to-date flows between 2019 and 2020 tightened between August and September, however China has also increased its participation as a top US trade partner, toppling Canada as the US’ second trade partner and getting closer to Mexico’s 14.1% of total trade with the US.
- Between March and May, total US-Mexico bilateral trade contracted almost by half, but has recovered consistently between June and September in what is looking like a V-shaped recovery. Total bilateral trade in September 2020 trailed September 2019’s numbers by only 3.27%.
- 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. In total, bilateral trade between the US and Mexico has contracted 16.88% year-on-year, which is a 1.65 percentage point improvement compared to last months’ year to date contraction of 18.53%.
US-Mexico Total Trade (2020)
- As of September 2020, Mexico is the top trade partner of the US, however China displaced Canada as the US second trade partner. Total US-Mexico trade equals US $386 billion or 14.1% of total US trade, just barely ahead of China (US $385 billion) and Canada (US $383.1 billion). In 2020, the top 5 US trade partners are Mexico, China, Canada, Japan, and Germany.
- As of September 2020, Mexico remains the second top export destination for US products (14.7% share of total) just behind Canada (17.9%) and ahead of China (7.8%). Meanwhile, China remains the top source of US imports (18% of total), followed by Mexico (13.8%) and Canada (11.6%). The US increased its percent of total imports from China from 17.7% to 18% between August and September 2020, which pushed China ahead of Canada as its second largest trade partner.
- In September 2020, most US imports from Mexico increased compared to August; the ones growing the most were the (i) agricultural, (ii) animal and vegetable fats, oils, and waxes, and (iii) footwear and headgear sectors. Prolonged confinement has been behind the rise of agricultural and animal product imports from Mexico, which is projected to keep growing in the coming months as Covid-19 cases rise. US manufacturing imports from Mexico also grew in September although this trend might be impacted by the second wave of Covid-19 cases in key Mexican manufacturing states.
- During the same period, US exports to Mexico grew in most sectors between 8-20%, except for a few notable exceptions, like (i) arms & ammunitions and (ii) animal & vegetable fats, oils and waxes, which decreased in September. Works of art and antiques exports to Mexico grew 158.78% compared to August.
TAKEAWAY: US-Mexico bilateral trade continued to recover in September and has hit its highest point since the pandemic started. The year-to-date trade flows gap between 2019 and 2020 is narrowing, however trade competition with China is rising as the US has increased its imports from China which could displace Mexico as its top trade partner in the coming months. As bilateral trade continues to recover, further disruptions could also affect bilateral trade in the medium term considering the rise of Covid-19 cases on both sides of the border, which might prompt local governments to enact further lockdowns on key economic sectors in the US and Mexico. Controlling cases in the final quarter of the year will be critical to continue trade recovery and not be displaced by China as the US’ largest trade partner.
* 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