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Mexico No. 2 exporter of good to the U.S.

Mexico Overtakes Canada as No. 2 U.S. Exporter Ahead of Trump

Mexico is overtaking Canada as the No. 2 exporter of goods to the U.S. this year, in a sign of how economic ties have deepened between the two countries even as the relationship is being questioned by President-elect Donald Trump.

Shipments from Mexico totaled $245 billion in the first 10 months of the year, according to Commerce Department figures released Tuesday, ahead of Canada’s $230 billion. If the trend continues, it would be the first time ever the U.S. bought more imports from its neighbor to the south. The two countries ended 2015 tied in exports to the U.S.

The trend of catching up to Canada puts Mexico vs China as the top two exporters to the U.S. just as Trump prepares to take office in January, reflecting the strong pull of lower cost jurisdictions for the U.S. economy. Canada, which has one of the highest cost bases in the Americas, has seen its share of U.S. imports fall to about 13 percent from around 20 percent two decades ago.

“Integration with Mexico has become more solid than with Canada,” said Marco Oviedo, chief Mexico economist for Barclays Plc. “Manufacturing continues to be very competitive in terms of wages and location to other U.S. producers and suppliers.”

The growing links between Mexico and U.S. hinge on motor vehicles. Mexico has won new factories over the past six years from Toyota Motor Corp., Volkswagen AG’s luxury Audi unit, Kia Motors Corp. and BMW AG -- up to $25.9 billion in new auto investments since 2010, according to the Center for Automotive Research in Ann Arbor, Michigan -- fueling car shipments totaling $90 billion in the first 10 months. That’s versus $54 billion from Canada.

u.s. imports from mexico

Canada’s cost base is also a big part of the story. Canada’s labor bill has swelled with unit labor costs in U.S. dollars, a key index of competitiveness, increasing by 64 percent since 2002 even with Canada’s currency weakening in recent years.

Mexico’s average salaries meanwhile rose 0.5 percent a year in the decade through 2014, the least among the 11 largest Latin American nations after Venezuela, International Labor Organization data show.
Poloz’s Lament

“Our competitiveness hasn’t been what it could be,” Bank of Canada Governor Stephen Poloz, who grew up in General Motors Co.’s Canadian production hub of Oshawa east of Toronto, told lawmakers in October. Auto manufacturers “can just as easily do it in Mexico, and get a fine dedicated workforce, they get the advantage of lower costs.”

And the problems go well beyond the auto sector for Canada. In a down year for all shipments to the U.S., Canadian exports have fallen 7.7 percent so far in 2016, versus a 1.6 percent drop for Mexico.

The twist is that, even with Canada suffering from lost trade to Mexico, there is little populist anger. According to Oshawa Major John Henry, Canadians should rise to the challenge of competition and be a good friend in the world.

“The world has changed in the auto industry a lot since the 1990s, automation, more and more countries are making cars,” Henry said in an interview. “But based on the economics of Canada, given an equal playing field, we can build the best vehicles in the world.”

by Greg Quinn
and Nacha Cattan

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Co-Production International, Inc. Administrative Service Provider San Diego, California
Sales and Consultation Inquiries:
Toll Free: 855.480.0837

ico flag usaUSA Corporate Office
Ph: 619.429.4344
8716 Sherwood Terrace
San Diego, CA 92154
USA

ico flag usaMexico Corporate Office
Tel.: 664.454.3330
Boulevard Agua Caliente 4558
Int. 701, Colonia Aviación
C.P. 22014, Baja California
info@co-production.net

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Av. Benito Juarez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo Leon 64000, Mexico
info@co-production.net

Co-Production International, Inc. Administrative Service Provider San Diego, California

ico flag usaUSA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA

ico flag usaMexico Corporate Office
Tel.: 664.454.3330
Boulevard Agua Caliente 4558
Int. 701, Colonia Aviación
C.P. 22014, Baja California
info@co-production.net

ico flag usaMonterrey Nuevo León Office
Av. Benito Juarez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo Leon 64000, Mexico
info@co-production.net

ico flag usaUSA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA

ico flag usaMexico Corporate Office
Ph: 855.480.0837
Blvd. Tomas Alva Edison 14022
Int. 7A, Tomas Alva Edison
Tijuana, BC 22163, Mexico
info@co-production.net

ico flag usaMexico Monterrey Office
Av. Benito Juarez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo Leon 64000, Mexico
info@co-production.net