Exports make up a significant percentage of the Mexican economy. With such close proximity to the USA, it’s not surprising that most of their exported goods flow into the US market, but what might surprise you is the nature of those exports, and the opportunities this might present.
In this article, we will explore some of the biggest categories of imports from Mexico into the US market to help give us an understanding of a few of the investment opportunities that might be on offer.
Why does the US import so much from Mexico?
On a daily basis, billions of goods cross the Mexico-US border. In fact, the US imports more finished goods from Mexico than it exports to Mexico, elevating the Mexican market’s importance in the national security and development of the US.
Such a high volume of imports doesn’t happen by accident – there are a few key reasons why Mexican imports are so attractive to the United States:
- Geographical proximity
Being in close geographical proximity, imports from Mexico can reach customers in the US in a timely fashion. US companies are able to realize some serious cost savings thanks to the lower shipment fees compared to international options.
- Tariff-free imports from Mexico to the US
On top of being geographically near to the US, the two countries also share some very strong economic ties thanks to many decades of close trade. Chief among these is the free trade agreement between Mexico and the U.S.
The introduction of the United States-Mexico-Canada Agreement (USMCA) has encouraged the transaction of numerous goods between Mexico and North America as tariffs are waived. This makes commodities imported from Mexico much cheaper than imports from other countries.
- Lower prices & high-quality Mexican imports
Thanks to relatively low wages and overheads, the cost of Mexican imports is very competitive. On top of these initial savings, Mexican factories are sophisticated and advanced enough to handle complicated manufacturing and assembly of high-value and quality products, such as medical devices, and they boast a highly skilled workforce ready to make great use of those facilities. With the high cost of production in the US, it makes a lot more economic sense for US businesses to import than to produce domestically.
What are the USA’s main imports from Mexico?
Mexico is the United States’ second-largest supplier of goods for strategic national growth. The biggest import markets are the following:
Vehicles and car parts account for nearly a quarter of all Mexican imports into the US. Many American carmakers like General Motors and Ford have manufacturing plants in Mexico. While some of these vehicles are intended for the South American market, the majority of them are destined for the American market. Automotive companies have invested heavily into Mexican facilities over the years, giving Mexico access to the absolute cutting edge of industrial technology, so the combination of lower up-front costs and the same level of technical competency is hard to beat.
- Machinery and mechanical Appliances
Goods under this category largely include home appliances such as washing machines, refrigerators, and air conditioners. Major appliance manufacturers from the US such as Electrolux, General Electric and Whirlpool have been manufacturing their products in Mexico for decades.
- Electrical machinery and equipment
With many well-established semiconductor supply chains in Mexico, the import of semiconductors, computers, phones and televisions shows no sign of slowing down. More and more US-based companies like Intel and Skyworks are increasing their investment in research and development in Mexico.
- Optical, photo, and medical equipment
Nearly 90% of the medical devices produced in Mexico are bound for the overseas market. Mexico’s sophisticated manufacturing facilities and top manufacturing talent have supported the production of medical equipment for companies such as Medtronic, Johnson & Johnson and General Electric Medical Systems.
- Mineral fuel and oil
While the US has one of the world’s largest oil reserves, domestic production remains consistently lower than consumption. Coal, natural gas, and petroleum are therefore commonly imported from Mexico to the US Gulf Coast where US oil refineries are located.
- Agricultural produce
Mexico accounts for the largest volume of agricultural produce for the US market. Thanks to a strong culinary tradition spanning back centuries, Mexico grows some of the highest quality produce in the world. Mexico commonly exports fresh fruits and vegetables including avocados, tomatoes, and onions to the USA. Besides that, the US also imports a sizable amount of Mexican alcoholic beverages including popular Mexican spirits like Tequila and Mezcal, as well as beers like Corona.
Thanks to a tenured partnership spanning decades, trade between the US and Mexico is strong and isn’t showing any sign of slowing down. We believe this is a solid foundation for American businesses to build on, and the first step of that process is developing an understanding of the key elements of the Mexican export market.
Importing from Mexico could be an ideal choice for your business, helping you ramp up production, cut down on costs and beat your competition to the market. At Zipfox, we have a list of handpicked suppliers from Mexico that you can connect with to get started importing your goods right away. Click below to learn more today.