TREND: In December 2020, bilateral trade flows finished strong with a 0.09% increase compared to November. This trend is great news because in the last 10 years total trade in December has never exceeded November’s total trade numbers. For example, trade flows decreased -7.02% between November and December 2019. This increase is a positive sign of trade growth and a strong recovery. However, China grew its participation as the US’ top trade partner from 14.7% to 14.9% and closed 2020 as the US’ largest trade partner.
• US-Mexico bilateral trade flows continued to grow and maintained a strong performance as US imports from Mexico in December 2020 decreased only 0.94% and US exports to Mexico grew 1.69%. So total bilateral trade in December 2020 was record-breaking.
• Total US-Mexico bilateral trade finished the year strong. Bilateral trade between the US and Mexico in 2020 contracted 12.44% compared to 2019, however this is positive, considering that total trade contracted by half in May 2020 and that last month the year-on-year contraction was 13.92%. The total trade flow difference between 2019 and 2020 has been consistently decreasing since June.
• As of December 2020, Mexico is still the second top trade partner of the US, with China continuing to grow its participation as the US’ top trade partner. Total US-Mexico trade equals US $538.1 billion or 14.3% of total US trade, which is now lower to China (US $560.1 billion) but still larger than Canada (US $525.8 billion). For most of 2020, the top 5 US trade partners were China, Mexico, Canada, Japan, and Germany. In the span of 3 months China’s percentage of total US trade grew from 14.4% to 14.9% between October and December while the rest of the countries’ percentages stayed the same.
US Total Trade with Mexico and China (2020)
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Source: US Census Bureau, data in millions of USD
• The pandemic helped China recover as the US’ largest trade partner. China closed the year as the top source of US imports (18.6% of total), followed by Mexico (13.9%) and Canada (11.6%). It is important to note that US imports from China have been increasing consistently since April 2020, the same month that Mexican imports contracted the most. Between January and March 2020 Chinese exports were declining until April when they experienced a drastic rebound. Between August and December 2020, the US increased its percent of total imports from China by 0.9 percentage points (17.7% to 18.6%). The US only increased its imports from Mexico by 0.2 percentage points (13.7% to 13.9%) during the same period.
US Exports to Mexico and China (2020)
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Source: US Census Bureau, data in millions of USD
• In December 2020, most US imports from Mexico decreased compared to November; the only 2 categories that grew were (i) vegetable products (9.73%) (ii) animal & vegetable fats, oils & waxes (6.89%). The top 5 US imports from Mexico with the most growth this year were: (i) vegetable plaiting materials, (ii) arms and ammunition, (iii) miscellaneous chemical products, (iv) soap, waxes, polish, candles and dental preps, and (v) cereals.
US Imports from Mexico and China (2020)
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Source: US Census Bureau, data in millions of USD
• During the same period, US exports to Mexico recovered compared to last month and increased in 9 sectors. The three that grew the most were: (i) animal & vegetable fats, oils & waxes (25.56%) (ii) live animals & animal products (11.83%) and (ii) precious stones, metals, pearls & coins (8.02%). The top 5 US exports to Mexico were (i) Furskins and artificial fur, (ii) manufacturing of straw, basketware and wickerwork, (iii) arms and ammunition, (iv) edible vegetables and certain roots & tubers (v) textile art, needlecraft sets, worn text art.
TAKEAWAY: US-Mexico bilateral trade closed the year with record-breaking growth, considering total trade flows had not increased between November and December for the last 10 years. However US imports from China continue to grow at a faster rate than Mexico’s, strengthening its position as the US’ top trade partner starting 2021. The fact that trade with China grew even amidst trade tensions with the US is a red flag for Mexico. President Biden’s future relationship with China, particularly his policies around decoupling, promoting North American trade and investment, and the US’ adhesion to the CPTPP will impact the future of US-Mexico trade. The good news is that US-Mexico trade has continued to grow and is poised to keep growing in 2021. In the first quarter of 2021, securing and guaranteeing a rapid rollout of the COVID-19 vaccine and controlling cases on both sides of the border will be critical for Mexico to compete with the rising levels of Chinese exports to the US.
* 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
