China is no longer America’s largest trading partner. The superpowers’ share of exports to the US fell to their lowest level this year since 2006, according to data released by the US Census Bureau on September 6.
In its place is Mexico, which has emerged as a new alternative to imported goods as the US has reduced its dependence on Chinese goods, a shift driven primarily by increased investment from the US auto industry.
GM, Kia Motors and BMW have all made electric vehicle investments in Mexico since 2021, Bloomberg reports. In May, Tesla announced at its annual shareholder presentation that it was building a factory in Monterrey, Mexico.
In July, U.S. goods imports from China reached $36 billion, while Mexican goods imports reached nearly $39 billion, according to the Census Bureau.
Bloomberg analysis found that China’s share of US imports averaged 14.6% in the 12 months to July – its lowest level since 2006. Mexico’s average share during the same period was 15%.
Luis Torres, a senior trade economist at the Federal Reserve, said the shift began during President Donald Trump’s trade war with China.
China’s share of US goods imports reached its peak in the 12 months to March 2018, averaging 21.8%. Yaorusheng/Getty
“The situation changed in 2018 when the U.S. imposed tariffs on Chinese goods and the subsequent pandemic-era supply-chain disruptions that followed, which caused economic losses around the world,” Torres, who works at the Fed’s San Antonio branch, wrote in a July article. “Changed international trade and investment flows.” Fed website.
According to Bloomberg, China’s share of imports of US goods reached an average of 21.8% in the 12 months to March 2018, just before Trump’s tariffs were implemented on March 22, 2018.
The auto industry is a major factor in the growth of US-Mexico trade, which Torres calls “a particularly active example of the cross-border manufacturing relationship.” In July, Mexico exported vehicles and parts to the US at a record high of $14.6 billion. Japan stood second with $4.9 billion.
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