- The US is importing more goods from Mexico than China for the first time since 2003.
- The reversal in trend comes as economic tensions between the US and China remain heightened.
- US companies have been diversifying their production out of China amid geopolitical tensions.
Our Chart of the Day is from Bank of America, which shows that the US is importing more goods from Mexico than China for the first time since 2003.
The reversal of a decades long trend comes amid heightened economic tensions between the US and China, and as geopolitical tensions flare.
Amid those tensions, US companies have been quick to diversify their supply chain and production capabilities out of China and into other countries. Over the summer, computer maker HP said it would shift its production of millions of laptops to Thailand and Mexico from China.
Even Apple, which makes most of its products in China, is starting to diversify its supply chain out of the country and into a number of others throughout Asia.
Also helping boost Mexico's share of US imports are American car companies that have increasingly shifted production to Mexico over the past decade. Ford, General Motors, Chrysler, Kia Motors, Volkswagen, Nissan, and Mercedes-Benz are just a few car companies that have a manufacturing presence in Mexico.
The ultimate concern for US companies that have manufacturing exposure to China is the potential for a conflict between China and Taiwan, which if it happens could lead to a significant shutdown in economic relations between the US and China, similar to what happened between the US and Russia after the outbreak of the Russia-Ukraine war in 2022.