We have already written about the effects of the trade war between the United States and China and the rise of the nearshoring phenomenon. We have also written about how Mexico was benefiting from this process. Well, in July, Mexico became the leading exporter of goods to the United States, with 15% of U.S. imports coming from its southern neighbor. Imports from China that month accounted for 14.6%.

The close trade relationship between Mexico and the United States has a long history. As early as the 1960s, Mexico began to transform into a manufacturing economy with the introduction of the maquila model —assembly plants that produce goods from parts, largely imported—which gained new and strong momentum in the 1990s with the North American Free Trade Agreement (now the USMCA following its renegotiation under the Donald Trump administration). 

Now it is nearshoring’s turn, and the clearest sign of its growth is the increase in foreign direct investment flows, which—in 2023, and not counting the megafactory that Tesla will build in Monterrey—had grown by 40% compared to the previous year. Meanwhile, industrial space in Monterrey has expanded by 30% since 2019, and the vacancy rate in industrial parks nationwide has fallen to 2.1%.

The challenge for Mexico is to turn this new momentum into a catalyst for growth that spreads to the rest of the economy, according to Bloomberg. Over the past 30 years, the Mexican economy has grown by an average of just 2% annually. Will it succeed this time?