Cargo trucks in Tijuana queue at the U.S. border.GUILLERMO ARIAS/AFP/Getty Images
For decades, Canada has been the largest foreign buyer of U.S. goods, a point Ottawa and the provinces have stressed in their push to get the Trump administration to lower its tariffs on Canadian goods.
Now Mexico has surpassed Canada to become the U.S.’s top customer.
In recent years, as Mexico steadily closed the gap in buying U.S. stuff, there were occasional months when it actually edged out Canada for the top spot.
But in July and August, Mexico’s imports of U.S. goods soared, topping Canada’s purchases by a combined US$4.9-billion, according to the U.S. Census Bureau.
The decline in U.S. exports to Canada is partly owing to Ottawa’s countertariffs on certain U.S. goods, which made them more expensive. All those retaliatory duties were lifted in September.
Consumer boycotts of U.S. products and bans by some provinces of U.S. alcohol are also weighing on demand.
For Mexico, the biggest factor propelling it as a buyer of U.S. goods is also what has helped fuel its success this year as an exporter to the U.S.: computer equipment.
There’s been a large increase in the flow of tech hardware both ways between Mexico and the U.S. since the Trump administration slapped steep tariffs on China. Computer equipment manufacturers have rushed to shift production away from China, and Mexico has been a big beneficiary of that trend. That’s made it a top destination for U.S.-made equipment, including semiconductors.
During July and August U.S. shipments of computers, servers, chips and other equipment to Mexico surged 426 per cent from the year before to nearly US$4.4-billion.
This isn’t the first trade title Canada has lost to Mexico. Canada was once the largest exporter to the U.S., too, but was overtaken first by China in 2009 before falling to third place behind Mexico in 2016.
Decoder is a weekly feature that unpacks an important economic chart.