The United States imports a large number of goods from Mexico, thanks primarily to their close proximity and low production costs. Being one of the largest trading partners of the United States, Mexico often takes up the top three spots in terms of total value traded, so it’s vital for American businesses to get to grips with this key part of the economy.
In this article, we will explore the value of goods imported from Mexico and how the integrated relationship between the US and Mexico will continue to evolve in the longer term.
Promotion of trade between the US & Mexico
Over the course of two centuries, the United States and Mexico have shared a prosperous cultural and economic relationship. Free trade agreements have been in place between the two countries for decades and have recently been updated to the United States-Mexico-Canada Agreement (USMCA).
In recent years, the US has entered into a trade deficit with Mexico, importing more goods from the country than it exports in return. This trade imbalance is largely due to the strong dollar and the high domestic demand for fuel and other products in the US.
What does Mexico Import to the United States
The USMCA has created an easy gateway for many goods and services to flow between both countries. In 2021 alone, the United States imported $384.7 Billion worth of goods from Mexico, making Mexico the second largest supplier of goods for that year.
Here are some of the top Mexican imports into the US:
- Vehicles and car parts
Among the imports from Mexico, the highest valued goods are from the auto industry. From engines to car seats, this category accounts for at least one-third of the total Mexican imports to the US and was valued at close to $100 billion in 2021.
While this may seem huge, up to 40% of the imports from Mexico are actually also made in the US. This is a process called production sharing, where both countries work together to produce the individual parts of a final product. Sometimes as a part of this process goods will cross the border several times before being finally assembled.
- Computers, Semiconductors, and Hardware
Second to the automotive industry but growing rapidly is the technology sector. Hardware such as computers, audio and video equipment as well as domestic appliances are manufactured in Mexico. Combined, they amounted to a whopping $51.5 billion in 2021. While semiconductors are more commonly manufactured by countries in Asia, more and more chipmakers are reinforcing their supply chains in North America.
- Oil and Gas
Oil rose in import volume to $8.8 billion in 2021. This import of fuel is expected to surge with the rebound in the domestic manufacturing sector. Also, with the trade sanctions placed on Russia, the US is expected to import more of its fossil fuels from Mexico and Canada in the coming years.
- Agricultural Produce
Agricultural imports from Mexico are largely made up of avocados, tomatoes and cucumbers. In 2021, the sector was responsible for nearly $39 billion worth of goods. This is thanks to Mexico’s early adoption of advanced farming methods such as protective culture farming helping increase their production yield of fresh fruits and vegetables. Another favorite Mexican import is alcohol, with beverages such as beer and tequila being immensely popular choices.
Which US states import the most from Mexico?
Due to the high level of foreign direct investments in Mexico by US-owned affiliates, most imports are produced by American companies and designed for domestic consumers.
Many of us may correctly predict that most US-Mexico trades occur in the border states including Arizona, Texas, and New Mexico, but a remarkable amount of other states have access to Mexican produce. States like Alabama, Kentucky, Michigan, and Utah also import primarily from Mexico.
Among these states, Michigan ranks as one of the highest with Mexican imports consisting of up to 40% of its total imports. This is largely thanks to the automotive sector as many factories in the automotive industry are based in Detroit and its neighboring cities.
The future of the US-Mexico Trade?
The US economy has been hampered with a lot of uncertainty in recent years. Key macro trends like rising inflation, thanks in part to deteriorating relationships with China and Russia, are causing serious economic problems that are driving many to look closer to home for a solution. The future of the US-Mexico trade is likely to be further strengthened as both economies start to rely on each other more to weather these tough times.
The bilateral relationship has been of keen economic interest to both countries over time, and whatever the future may hold, the US-Mexico trade will likely continue to be a key part of the US economy moving forward, impacting the livelihoods of millions of people on both sides of the border in the process.
Given the ease of trade, the skilled workforce and the close geographical proximity, we can see that most imports from Mexico to the US were made by US-based companies looking to take advantage of lower production costs. Manufacturing your goods in Mexico could allow you to take a cue from them, helping you take advantage of the USMCA to significantly lower your operating costs.
At Zipfox, we carefully selected our Mexican manufacturing partners to ensure that whatever your production needs, you’ll be able to find a manufacturing partner with the skill and the facility to suit you. Click below to browse our hand-picked selection of factories and get started today!