By J.P. Carroll *
This year, in a major shift of global trade flows, Mexico has become the top trading partner of the United States, dethroning China which can no longer lay claim to that title. While a variety of factors have come into play with this result, ultimately this is good news for both Mexico and the United States.
The new dynamic in Mexico-U.S. trade relations is primarily the result of two major factors: a decline in U.S.-Sino relations and a rise in Mexican manufacturing.
First, the U.S. and China’s trade ties have been deteriorating for years, particularly since the onset of the COVID-19 pandemic, which severely impacted supply chains and global trade flows. Additionally, during the Trump administration, a variety of tariffs were imposed on Chinese goods, which for the most part remains unchanged under the Biden administration.
Second, Mexican manufacturing has been on the rise for some time now. The auto industry in particular bears notable mention as playing a central role in trade between Mexico and the United States.
Ultimately, the United States is increasingly expanding its view of trade policy beyond the decades-long paradigm of seeking cheap goods which can be quickly produced for immediate availability to consumers. With increased tensions between the United States and China, trade policy is increasingly being shaped by – among other things – national security concerns, resulting in a major push by U.S. policymakers to push for American businesses to embrace near-shoring, ideally capitalizing on trade ties with several Western Hemisphere partners.
This progress in Mexico-U.S. trade ties is in part structurally preserved and enabled by the USMCA trade agreement, which was signed during the Trump administration and revived its predecessor agreement, NAFTA. Yes, challenges in the U.S.-China relationship have certainly benefited Mexico, but regardless, at its heart, Mexico is, was, and always will be a vitally important U.S. economic partner and friend in advancing the prosperity of both the Mexican and American people.
Looking ahead, both Mexico and the United States have elections in 2024 – Mexico’s elections in June of that year and the United States’ elections in November. Unknown for now is which political parties – or candidates for that matter – in each country have the best chance of reelection – or election – to office.
The Mexico-U.S. relationship is far too important to politicize or allow for electioneering to jeopardize sound policies which undoubtedly greatly benefit both countries. Rather than focus on current tensions and difficulties in the bilateral relationship, leaders in both countries should work to strengthen ties, including on issues of trade, security cooperation, and educational as well as cultural exchanges.
Back in 2016, relations between Mexico and the United States were clearly at a low point due to then-candidate Trump’s rhetoric regarding immigration. This ultimately culminated in a tense meeting between Trump and then-Mexican President Enrique Peña Nieto ahead of the 2016 U.S. election.
In spite of those aforementioned tensions, Mexico-U.S. relations – particularly trade relations – saw great improvement. This was the result of the USMCA negotiations and signing of the new trade agreement. The success of the USMCA negotiation proved that even at their worst, diplomatic and trade relations between Mexico and the United States, can and always ought to be preserved and strengthened through open dialogue on sound policy that is to the benefit of both countries as neighbors, partners, and allies.
These latest developments around trade policy are worth celebrating. Let us hope that policymakers on both sides of the border work not only to preserve, but also to strengthen these links.
* J.P. Carroll is a Senior Fellow for National Security and Inclusive Governance with the Joseph Rainey Center for Public Policy and is based in Washington, D.C. Twitter @JPCarrollDC1.
