Competition between Mexico and China for the U.S. market increased in 2023, according to data from the Department of Commerce.

China has the advantage of being by far the world’s largest exporter of products, has a broad base of suppliers of inputs, parts and components, and can plan its production and national strategies without the short-termism of many nations due to electoral pressures.

Mexico has the advantage of proximity, production sharing with the United States, an efficient and relatively cheap labor force, free trade with North America and a wide availability of both local and imported raw materials with no or low tariffs.

China exported US$276 billion worth of goods to the United States from January to August 2023, a 25.1% decrease over the same period last year.

In contrast, Mexican exports to the same destination grew 4.9% year-on-year to 317 billion dollars.

As a result, Mexico is poised to become the largest supplier of products to the U.S. market by 2023.

If this is achieved, Mexico would displace China from that position, which it has held for the past 16 years.

Competition

Mexico and China compete in the U.S. market mainly in the manufacturing industry, specifically in products such as televisions, computers, telephones, refrigerators and medical equipment, among others.

The United States is the world’s largest export market for both China and Mexico.

Another prominent supplier is Canada, whose merchandise sales to its southern neighbor were $280 billion in the first eight months of 2023.

During the first half of 2023, U.S. consumer price inflation continued to decelerate rapidly, but remained above the Federal Reserve’s target range.

In Heitman US Real Estate Securities Fund‘s view, first-quarter 2023 U.S. GDP data signaled a slowdown in the U.S. economy and an increased risk of recession.

Real GDP grew from Q4 2022 to Q1 2023 at an annualized rate of only 1.1%. This was significantly slower than the 2.6% growth rate of the previous quarter.