The trade friction between the two neighboring countries is increasingly affecting US sales to Mexico. This has brought considerable uncertainty in different sectors such as the agricultural industry. It is already struggling with excess supply and commodity prices. According to the US Department of Agriculture data, Mexican imports of soybeans from the US that are used to feed livestock and poultry decreased by 15% over the first four months of 2017. This is the first drop in four years. US chicken meat exports to Mexico decreased by 11%. This marks the most significant drop since 2003. On the other hand, Mexico’s corn imports from the US declined by 6%.
The decline in sales of these three products should serve as an alarm. Mexico is the largest US export market for these commodities. Studies by trade analysts and officials have shown how Mexican companies are now buying more chicken from Brazil. They are also purchasing grains on a short-term basis. The country is switching to the aspiration of reducing the reliance on the US by buying food from different countries.
The Top US Exports to Mexico in 2017
In 2017, trade between the US and Mexico increased to $462.9 billion as compared to $437.52 in the last year. This represents a 5.8 percent rise, according to the latest analysis. Imports to Mexico rose by 6.54%, while the exports to the United States increased by 4.86%. The trade deficit between the two countries stood at $59.7 billion.
With these trade values, Mexico ranked in position 3 on the list of top US trade partners in 2017. This was just like in the previous year. The top customs trade districts of Mexico include Laredo, El Paso, San Diego, Nogales, and Houston. These top five represented 89.07% of the total value of Mexico’s trade with the US. This represents a slight drop as compared to 2016 values for these five districts (it was formerly 90%).
Trade with Laredo increased to $244 billion, which represents 7.73%. The exports grew to $104.91 billion, or 6.98%. The imports increased by 8.3%. Trade with the third custom district rose by 2.5%, while the exports also increased by 2.5 percent. The imports grew by 7.14%. The trade with the last of the top five custom districts rose to $16.01 billion. The exports rose by 26.04 and 23.92%, respectively. The imports in this custom district rose by $29.79 billion.
Finally, only two of the top five customs districts recorded a decline in trade, exports, and imports. The trade with El Paso declined by 2.57%, while the exports dropped by 6.57%. The imports increased by 0.63%. The trade with Nogales/Phoenix, which ranks fourth among the top five custom districts that trades with Mexico, declined by 7.54%. The exports registered an 8.15% decline. The imports dropped by 7.14%.
According to the ranking, the top five shipments to Mexico up to October by value were computer accessories, gasoline and other fuels ($15.96 billion), motor vehicle parts ($13.45 billion), computer chips ($5.19 billion), and low-value shipments ($5.63 billion). These commodities represent 24.28% of the total shipments to Mexico.
Exports That Provided a Positive Return
Despite trade friction between the US and Mexico, most exports were able to record a positive return in 2017. For instance, sales of gasoline and other fuels rose to $15.96 billion, which is a 23% rise as compared to the previous year. Vehicle parts exports also provided a positive return. It increased by 2.2% as compared to 2016 values as it reached $13.5 billion.
Low-value exports increased to $5.63 billion, which represents a 4.43% rise as compared to 2016. Finally, computer chips exports also registered a 2.16% positive return as it hit $5.2 billion. This is higher than the previous year value.
In the agricultural sector, the sales of most crops and meat have slowed down owing to the uncertainty of trade talks between the two countries. However, USDA data shows that for the first four months, Mexico was buying more US eggs and beef as compared to the previous year. Besides, soybean exports rose to $18.6 billion, which represents a 6% rise as compared to 2016.
Exports that Yielded a Negative Return
The trade frictions and uncertainty have affected some of the shipments to Mexico from the US. This is especially true in the agricultural sector. This has caused considerable worry to the US agricultural officials who fear this uncertainty could spoil one of the key US markets with the American farmers struggling with low prices. According to a report from the Agricultural Department, for the first four months this year, soybean meal exports to Mexico declined by 15%. Additionally, US chicken meat shipments to the country dropped by 11% while corn exports declined by 6 percent. On the other hand, computer parts shipments dropped by 6.59% to $8.72 billion as compared to last year.
What to Expect in 2018
There are many expectations in 2018 about the US and Mexico trade after analyzing this year’s statistics. However, the expectations are dependent on the outcome of the trade negotiations, especially the NAFTA agreement. There are also expectations to see a stronger reaction from Mexico about US claims and demands. The data shows that the country might continue to work on reducing the reliance on American food imports.
The outcome of the trade talks will address some of the critical concerns that have led to friction between the two principal trading partners. These include loss of jobs, especially in the manufacturing sector, and the rising trade deficit, which has become higher in recent years.
Mexico is one of the leading US markets regardless of the trade friction between the two countries. According to the latest annual figures, the trade between the US and Mexico stood at $525.11 billion, making it the third primary trading partner after China and Canada. The trade wars and the outcome of the trade negotiations are affecting both sides. Therefore, there is a great need to handle the raised concerns with caution and urgency.