Mexico Becomes Top US Trade Partner as Manufacturing Shifts Closer to Home

Mexico has surpassed China and Canada to become the US's top trading partner in 2023, with $798 billion in total trade. This is driven by nearshoring as companies move manufacturing closer to the US market.

Mexico offers tariff-free exporting, free trade agreements with the US, and geographic proximity, making it attractive for manufacturing. Issues like the US-China trade war and COVID supply chain disruptions have accelerated this trend.

Mexico saw $13 billion in manufacturing investments in 2023 and is forecast to gain the most exports from nearshoring to the Americas. Half of new industrial parks in Mexico have Chinese investors.

Beyond manufacturing, Mexico's agricultural exports to the US have seen huge growth year-round across fruits, vegetables and berries. Infrastructure at ports of entry has expanded to handle increased truck traffic.

Potential obstacles are currency issues making Mexican goods less competitive, cartel instability, and some gaps in availability of skilled labor. But market forces are already working to fill labor gaps.