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Despite Trump's tariff, border threats, Mexico passes China as the largest U.S. trade partner

MEXICO CITY – President Trump has threatened to rip up NAFTA. To shut the border with Mexico. To impose tariffs on the thriving car industry in Mexico. "They are the killing us on jobs and trade," he said as a candidate. And yet, two years into his presidency, a strange thing has happened Mexico has become the No. 1 U.S. trading partner U.S. census data released last week showed that Mexico trade with the United States rose to $ 97.4 billion for the first two months of the year &#821 1; enabling it to leapfrog ahead of Canada ($ 92.4 billion) and China ($ 90.4 billion). there's no guarantee Mexico will hold on to the No. 1 spot. Economists note that a major reason was that U.S. trade with China shrunk by more than 10 percent in January and February compared with the same period in 2018. That was because of trade disputes and seasonal factors. Still, the numbers show that Mexico is an increasingly vital economic partner of the United States, despite Trump's frequent disparagement of the country. here. “Mexico is a very important market for the United States, and it's going to be the biggest market for the United States in the world.” [Trump’s North American trade deal at risk of stalling in Congress] It's not quite there yet. For the first two months of the year, Mexico was the second largest export market for the United States, trailing Canada $ 45.8 billion to $ 42.1 billion. Exports…

President Trump has threatened to rip up NAFTA. To shut the border with Mexico. To impose tariffs on the thriving car industry in Mexico.

“They are the killing us on jobs and trade,” he said as a candidate.

And yet, two years into his presidency, a strange thing has happened

Mexico has become the No. 1 U.S. trading partner

U.S. census data released last week showed that Mexico trade with the United States rose to $ 97.4 billion for the first two months of the year &#821

1; enabling it to leapfrog ahead of Canada ($ 92.4 billion) and China ($ 90.4 billion). there’s no guarantee Mexico will hold on to the No. 1 spot. Economists note that a major reason was that U.S. trade with China shrunk by more than 10 percent in January and February compared with the same period in 2018. That was because of trade disputes and seasonal factors.

Still, the numbers show that Mexico is an increasingly vital economic partner of the United States, despite Trump’s frequent disparagement of the country.

here. “Mexico is a very important market for the United States, and it’s going to be the biggest market for the United States in the world.”

It’s not quite there yet. For the first two months of the year, Mexico was the second largest export market for the United States, trailing Canada $ 45.8 billion to $ 42.1 billion. Exports to America’s southern neighbor were flat compared to the same period in 2018.

But U.S. Imports from Mexico were up around $ 3 trillion in January and February. Trump has expressed concern about the growing trade deficit with Mexico. The Free Trade Agreement took effect in 1994.

“For the rest of the world, the US is a market – that’s true for China, Korea, etcetera, ”De la Calle said.“ With Mexico and Canada and the United States, we trade in order to produce things together. ”

Is Mexico likely to remain the No . 1 U.S. trading partner? Economists say it will continue to fight out with China

William Reinsch, a trade expert at the Center for Strategic and International Studies, says Chinese shipments to the United States rose and then dropped sharply in recent months because companies there front loaded exports before American tariffs took effect

In addition, he said, China’s production typically slows down in February because of the Lunar New Year holiday.

“I think you’ll see imports from China ticking back up as the year wears on, unless Trump does something new, ”he said.

But Mexico will probably remain a top trading partner. The three members of NAFTA have updated an updated version of the deal after months of uncertainty and complaints from Trump that the original pact hurt American workers.

Trump has argued that the new accord, known as USMCA – the US-Mexico Canada Agreement – will result in more investment and jobs in the US car industry. Much of the growing trade deficit with Mexico is linked to its auto production.

The new deal still must be ratified by the countries’ legislatures before it can take effect.

“The outlook for Mexico U.S. trade relations is about as good as it’s been in the last 18 months or so, ”said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. “That’s probably giving companies some confidence.”

Not that it’s all smooth sailing between Mexico and the United States . The Trump administration slapped hefty tariffs on steel and aluminum imports from Mexico, Canada and the European Union a year ago. Those countries have retaliated with their own import taxes on American products.

At the same time, though, Mexico appears to have benefited from the wide array of tariffs that the Trump administration has imposed on Chinese goods, As Mexican-based firms, they have stepped in to supply those goods to the United States

The Mexican and US economics will probably become even more integrated, analysts say, with American firms to continue to benefit from cheaper Mexican wages and the country’s proximity.

“The trend you’re observing is a culmination of something happening for a number of years,” Reinsch said, “Mexican officials have celebrated the new economic data, which was released just weeks after Trump threatened to shut the US-Mexico border in retaliation for what he says is Mexico’s failure to stop a rising flow of migrants through the country.

He ultimately backed off, but would not pay tariffs on Mexican car exports if the situation didn’t improve over the next year.

“Trade in the first two months of the year grew 3.4 percent – against all predictions,” Foreign Minister Marcelo Ebrard said at a news conference on Tuesday.

“If we are the top trading partner of the United States, instead of our relations being increasingly conflictive, we should find a way to have a consistency that’s as productive as possible.”

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