They say all is fair in love and war — but what about trade wars?
The ongoing United States-China trade war escalated in 2018 when President Trump implemented an array of tariffs and other protective tactics to prevent the trade deficit from further deepening.
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It had been cruising in the fast lane for a while. In 2011, Obama officials and U.S.-based companies complained that China had not exactly been acting in the spirit of liberal mercantilism that the U.S. hoped it would when it admitted the ascending country to the World Trade Organization (WTO) in 2000.
So by 2018, with Trump two years into the Oval Office and plenty of hawkish China rhetoric already whipping his base into a frenzy, reports that the U.S. had lost at least six million manufacturing jobs to the eastern empire were something of the last straw. And the so-called Trade War began.
The war continues to rage under President Biden. The current president has maintained many of the Trump era protective tariffs and has implemented a few new ones of his own, namely to protect sensitive U.S. intellectual property and proprietary chipmaking processes and materials.
As such, the U.S. has quietly looked elsewhere for goods. And recent reports suggest it's been getting quite cozy with a nearby neighbor for imports.
A new country beats China for most exports
According to a new report by Bloomberg and similar findings by Market Watch, Mexico has overtaken China for the most exports into the U.S.
"US-China tensions are rewiring global trade, as the US seeks to reduce supply-chain reliance on geopolitical rivals and also source imports from closer to home. Mexico appeals on both counts — which is one reason it’s just overtaken China as the biggest supplier of goods to the giant customer next door," Bloomberg reports.
Market Watch posits that Mexico has reigned supreme exporter since the beginning of 2023 — at least.
"But really, America’s southern neighbor has held the title for all of 2023. Here at MarketWatch, we like simpler calculations. Drawing on a quarterly series measuring trade on a balance of payments basis, Mexico took the lead in the third quarter of 2022," the outlet writes.
Whatever the case, more analysts and data suggest that Mexico is slowly becoming America's best friend in the world of goods. According to The Observatory of Economic Complexity, our southern neighbor's biggest exports are, unsurprisingly:
- Cars
- Motor vehicle parts and accessories
- Computers
- Delivery trucks
- Crude petroleum
Given America's ongoing car shortage, it's clear that it needs most of these things that Mexico is producing cheaply and quickly.
According to The Observatory of Economic Complexity, the U.S. largest imports match up nicely. They are:
- Cars
- Crude petroleum
- Computers
- Broadcasting equipment
- Packaged medicaments
Bloomberg says that Mexico only narrowly edged out China, accounting for 15% of U.S. imports in July versus China's 14.6% in the same month.
This comes just months after Mexican President Andrés Manuel López Obrador officially announced that Tesla (TSLA) -) would build and operate a new factory in Mexico as soon as 2026.
And on Tuesday, President Biden vowed to the 78th Session of the United Nations General Assembly in New York City that he would "manage competition" between China and the U.S.
"When it comes to China, I want to be clear and consistent. We seek to responsibly manage the competition between our countries so it does not tip into conflict," he said. "I’ve said, 'We are for de-risking, not decoupling with China.' We will push back on aggression and intimidation and defend the rules of the road, from freedom of navigation to overflight to a level economic playing field that have helped safeguard security and prosperity for decades. But we also stand ready to work together with China on issues where progress hinges on our common efforts."
