Mexico, challenging expectations, emerges as the leading supplier of manufactured products to the United States, overtaking China.
View the chart "U.S. Manufacturing imports".
This success follows a period of uncertainty and challenges, including NAFTA renegotiation and the pandemic, which negatively impacted its exports and the automotive industry. Nearshoring and capacity expansion are driving its growing share of the U.S. market.
Data released by the U.S. Census Bureau highlights Mexico as the leading supplier of manufactured goods to the U.S., challenging the widely held belief that Vietnam had been the main beneficiary of U.S. imports in recent years. Mexico's performance in this area suffered prior to the pandemic, by the uncertainty caused by the difficult NAFTA renegotiation. This period negatively impacted investments and the expansion of installed capacity, leading to a boom in imports from Vietnam, especially in the wake of the tariffs implemented during the Trump presidency and the context of treaty renegotiation, which benefits Asian suppliers.
Furthermore, since 2018, the Mexican automotive industry, crucial for its export volume and extensive supply chains, has faced significant challenges. The agreement renegotiation brought uncertainty around rules of origin, affecting the industry. Subsequently, during the COVID-19 pandemic recovery, the global shortage of semiconductor chips severely impacted the sector, limiting its recovery capacity and highlighting its vulnerability to supply chain disruptions.
However, the current figures are conclusive: Mexico is steadily and structurally increasing its share of the U.S. market. This progress is due to nearshoring, driven by the expansion of existing production lines (78%) and new investments (22%) in key sectors to strengthen supply chains. Investment in forward and backward linkages is critical to repositioning global supply chains and increasing their resilience.
It's important to recognize that Mexico continues to expand its installed capacity. Based on data from the Nearshoring Observatory, this growth is expected to be reflected in increased exports and a greater presence of Mexican manufactured goods in the U.S. market in the upcoming months.
Source: Fortuna