In 2003, China surpassed Mexico as the largest exporter of goods to the U.S. However, in recent years, Mexico has begun to regain ground. According to Bloomberg Businessweek, while in 2018 China exported US$200,000 million more to the U.S. than Mexico did, between June 2021 and June 2022 the gap narrowed to US$130,000. The reason? Largely, China itself. The restrictions imposed on U.S.-China trade due to the trade war launched by President Donald Trump in 2016 have led many Chinese manufacturers to set up operations in other countries to export to the U.S. Thailand and Vietnam have been two of their favorite destinations, but Mexico has also been able to become part of the strategy to maintain market share in the U.S. despite the tariff war. 

The numbers speak for themselves. Despite some ups and downs, net investment from China and Hong Kong in Mexico has risen from US$65 million in 2013 to US$493,000 million in 2021, according to figures from Mexico’s Ministry of Economy. 

Mexico’s main advantages are its proximity to the U.S. market and the free trade agreement it has with the U.S. and Canada (USMCA). Its disadvantage lies in the limitations of its local supply chain in meeting the origin labeling requirements mandated by the USMCA.

Annual Net Investment in Mexico by China and Hong Kong

(millions of U.S. dollars)

Source: Mexican Ministry of Economy.