### Summary
Mexico has become the top trading partner of the United States, surpassing China and Canada, with trade reaching $263 billion in the first four months of this year. This shift reflects an accelerated move towards "nearshoring" and regional trade, driven by factors such as increased protectionism and the desire for faster delivery times.
### Facts
- 🇲🇽 Mexico has overtaken China and Canada as the top trading partner of the US since the start of the pandemic.
- 🌍 The $263 billion worth of goods traded between Mexico and the US in the first four months of 2021 accounted for 15.4% of total US trade.
- 🌎 In comparison, trade totals with Canada and China were 15.2% and 12% respectively.
- 🚚 The practice of "nearshoring," where countries bring supply chains closer to home, has gained momentum, driven by factors such as increased protectionism and the demand for faster delivery times.
- 📉 The economic chaos of 2020 continues to shape the world economy, with regional trade and nearshoring becoming more prominent.
Please note that the article also mentions the improving relationship between the US and China, as well as the potential for growth in trade between Mexico and the US. However, these points are not included in the bulleted facts above.
### Summary
The latest trade figures for New Zealand show a larger-than-expected $1.1 billion trade deficit for July, mainly due to a 14% decrease in dairy exports and the economic slowdown in China.
### Facts
- 📉 New Zealand experienced a bigger-than-expected trade deficit of $1.1 billion in July, driven by a 14% drop in dairy exports.
- 📉 The 12-month running deficit is $15.8 billion, lower than the previous record of $17.1 billion in May but higher than the $12 billion deficit a year ago.
- 🌍 The overseas merchandise trade statistics focus on imports and exports of merchandise goods, while the balance of payments figures encompass the country's total transactions with the rest of the world.
- 📊 The current account deficit decreased to $33 billion in March, accounting for 8.5% of GDP compared to 9% in December.
- 📉 In July, goods exports fell by $890 million (14%) to $5.5 billion, while goods imports fell by $1.2 billion (16%) to $6.6 billion.
- 🥛 The largest export commodity group, including milk powder, butter, and cheese, dropped by $350 million (19%) to $1.5 billion compared to the previous year.
- 🔽 Exports to China decreased by $407 million (24%) year-on-year, with notable declines in meat and edible offal, preparations of milk, cereals, flour, and starch, and milk powder, butter, and cheese.
Trade between the US and Mexico has surpassed China and Canada as America's top trade partner, reaching $263 billion in the first four months of 2022, indicating a shift towards regional trade and nearshoring.
The weakening of the U.S. dollar could benefit companies that export products and services, while importers may have to pay more for the goods they bring in, leading them to hold off on purchases. However, a more stable dollar can benefit both importers and exporters.
China has a complex network of trade partnerships with over 200 countries, regions, and territories, and it has a trade surplus with the majority of them, including the US and India, while having deficits with major Asian economies like Taiwan, Japan, and South Korea. These trade relationships are influenced by historical, geopolitical, and strategic factors.
The US dollar will remain dominant in global trade, but China's yuan is gaining popularity among developing countries such as Russia, Brazil, India, and South Africa.
Despite U.S. trade shifting away from China, the country still relies on China-linked supply chains, leading to higher costs for consumers and uncertain benefits in terms of improved manufacturing efficiency, according to research presented at a Federal Reserve symposium.
China's dominance in rare earths poses vulnerabilities for U.S. supply chains and highlights the need for diversified options, according to U.S. Trade Representative Katherine Tai.
US imports of consumer goods, particularly home electronics, experienced a significant decline in the second quarter of 2023, following the end of the Covid-induced work-from-home electronics boom, while US manufacturing also slowed, indicating challenges in stimulating demand; however, claims that this decline in imports is solely due to re-shoring are false, as imports from US allies such as Mexico, Vietnam, and India have increased in tandem with China's declining exports to the US.
China's economic slowdown is causing alarm worldwide, with countries experiencing a slump in trade, falling commodity prices, and a decrease in Chinese demand for goods and services, while global investors are pulling billions of dollars from China's stock markets and cutting their targets for Chinese equities.
UBS reports higher than expected profits, job creation in the US slows, and markets rally on weaker economic data and hope for a pause in interest rate hikes. China's factory activity shrinks but at a slower pace, while retail sales increase. There are opportunities for investors in other Asian markets.
Oil prices ease as China's manufacturing activity drops and investors await U.S. personal consumption expenditure report, while U.S. government data shows tighter crude supplies and concerns arise over potential crude oil supply disruptions due to a military coup in Gabon.
China's economic slowdown, driven by a debt-ridden and overbuilt property sector, is not expected to have a significant impact on the global economy or US exports, although a prolonged downturn could have broader consequences. While companies like elevator maker Otis will feel the effects, China's reduced growth is unlikely to be contagious beyond its borders.
Despite efforts by the U.S. and other countries to reduce reliance on Chinese supply chains, Chinese companies have successfully expanded their presence in key markets such as cutting-edge materials and electric vehicles, making it difficult for countries to ensure their economic security.
China's imports and exports experienced a monthly decline in August, with exports falling by 8.8% and imports falling by 7.3%, indicating ongoing challenges despite some slight improvement.
China's total import and export value in the first 8 months of this year slightly decreased by 0.1 percent compared to the previous year, but exports have continued to grow and the global market share remains stable, highlighting the overall stability of China's foreign trade operations.
The decline in Chinese imports into the U.S. is impacting steel prices and raising concerns about sourcing steel and other metals.
China's economic problems are more likely to impact its neighboring countries and Europe than the United States, according to U.S. Deputy Treasury Secretary Wally Adeyemo, who emphasized the need for China to address its structural economic issues.
China's struggling economy, including its deflation and property crisis, will have a significant impact on the US due to its high foreign investment exposure in China and the dependence of key exporting countries like Chile, Australia, and Peru on the Chinese market.
China has promised to increase imports from Southeast Asian countries in order to boost trade ties amidst rising tensions between China and the United States.
American firms in China have become less optimistic about the country's future, with a survey revealing that only 52% of respondents are positive about the five-year outlook, the lowest since the survey began in 1999, and 40% of US firms are shifting their supply chains and investments away from China due to geopolitical tensions and regulatory uncertainties.
The outlook of U.S. companies on China's markets in the next five years has hit a record low due to factors such as political tensions, tariffs, slow Covid recovery, and issues in the real estate market; however, complete decoupling between the two economies is unlikely.
U.S. companies are losing confidence in China and some are limiting their investments due to tensions between the two countries and China's economic slowdown.
Major U.S. companies are increasingly seeking manufacturing alternatives in countries like India to diversify their supply chains and reduce dependence on China due to the pandemic and escalating tensions between Washington and Beijing.
US companies' optimism about their business prospects in China is at a record low, with US-China tensions and negative effects on businesses being the biggest challenges, according to a survey by the US-China Business Council. Despite the low optimism, China remains a top-five priority market for 74% of companies surveyed.
Asia-Pacific markets fell ahead of China's industrial data and Australia's inflation figures, while the US experienced a sell-off after disappointing economic data, causing the Dow Jones Industrial Average to fall below its 200-day moving average for the first time since May. Additionally, oil prices continue to rise, putting crude on track for its best quarter in over a year, and Tesla shares dropped after reports of an EU investigation into whether the company and other European carmakers are receiving unfair subsidies for exporting from China.
The US trade deficit in goods decreased by 7.3% in August to $84.3 billion, mainly due to reduced consumer imports like the new iPhone, which could boost the gross domestic product (GDP) for the third quarter.
The process of derisking supply chains from China, as the U.S. seeks to reduce its dependence, introduces new risks that must be identified, evaluated, mitigated, and responded to by American firms.
China's increased imports of corn from Brazil have contributed to a decrease in U.S. corn prices, as weakening demand and high supply take a toll.
U.S. Treasury Secretary Janet Yellen warns that the United States is too reliant on China for critical supply chains, particularly in clean energy products, and needs to diversify its sources of supply.
Chinese exporters are navigating a bumpy road back overseas amid a turbulent economic recovery, but are adapting to changes in global supply chains by diversifying production lines and exploring new markets such as the US.