TREND: In October 2020, bilateral trade flows grew 10.55% compared to the previous month and hit its highest level this year, including the months before the pandemic started. For the first time since March, total trade flows in October exceeded 2019’s numbers by 0.54%, which is a positive sign of economic recovery in both countries. The latest data shows that the gap in total year-to-date flows between 2019 and 2020 continued to tighten between September and October. However, China has toppled Mexico as the US’ largest trade partner this year.
- As of October 2020, Mexico is now the second top trade partner of the US, with China rising from third to first in a span of two months. Total US-Mexico trade equals US $439.7 billion or 14.3% of total US trade, which is now lower to China (US $444.5 billion) but still larger than Canada (US $431.6 billion). In 2020, the top 5 US trade partners are China, Mexico, Canada, Japan, and Germany.
US-Mexico Total Trade (2020)
- Bilateral trade between the US and Mexico has contracted 15.09% year-on-year, which is a 1.79 percentage point improvement compared to last months’ year to date contraction of 16.88%. Over the last two months there has been consistent growth in month-on-month trade.
- As of October 2020, Mexico remains the second top export destination for US products (14.8% share of total) behind Canada (17.9%) and ahead of China (8.2%). Mexico expanded its share of percent of total US exports by 0.1% points this month compared to last month (from 14.7% to 14.8%).
- Meanwhile, China remains the top source of US imports (18.3% of total), followed by Mexico (13.9%) and Canada (11.6%). Between August and October 2020, the US increased its percent of total imports from China by 0.6% (17.7% to 18.3%), while only increasing its imports from Mexico by 0.2% (13.7% to 13.9%). This pushed China ahead of Mexico as its largest trade partner this month.
- In October 2020, for the second month in a row most US imports from Mexico increased compared to September; the ones growing the most were the (i) works of arts and antiques (207.39%), (ii) vegetable products (34.89%) , and (iii) vehicles, aircraft, vessels & transport equipment (14.19%). Recovery in the manufacturing sector in Mexico during October led to the growth in US manufacturing imports this month. However, this trend might be impacted by the second wave of Covid-19 cases in key Mexican manufacturing states. As we mentioned last month, prolonged confinement has been behind the rise of agricultural and animal product exports, which are projected to keep growing in the coming months as Covid-19 cases rise
- During the same period, US exports to Mexico grew in most sectors, except for a few notable exceptions, like (i) products of the chemical & allied industries (7.30%), (ii) works of art & antiques (-13.10%), and textiles (-1.39%) which decreased in October. Arms & Ammunition exports to Mexico grew 146.06% compared to September, which is a significant increase considering that last month there was an important decline in exports.
TAKEAWAY: US-Mexico bilateral trade continued to recover in October and has hit its highest point this year, surpassing even October 2019’s total trade flows. However US imports from China have grown at a faster rate than Mexico. As bilateral trade continues to recover, further disruptions could also affect bilateral trade starting 2021 considering how President Biden might respond to the continuing rise of Covid-19 cases on both sides of the border, and the fact that some local governments in Mexico like Nuevo Leon, have enacted further lockdowns on key economic sectors. Controlling cases in the final quarter of the year will be critical to continue trade recovery and competing with China’s rise in exports.
* 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