The 3 Top trade partners of the USA in 2023
- Andres Vite
- Oct 17, 2023
- 5 min read
The 3 Top trade partners of the USA in 2023 are Mexico, Canada and China, according to the latest data from the U.S. Census Bureau*. These three countries account for nearly $1.9 trillion worth of imports and exports between the U.S. and the rest of the world. However, the trade patterns and trends with each of these partners have changed significantly over the past decade, reflecting the shifts in the global economy and the impact of the COVID-19 pandemic.
Mexico: The Top Trading Partner of the USA in 2023
Mexico has become the U.S.'s top trading partner since the start of the pandemic, surpassing both Canada and China. Trade between the U.S. and Mexico reached **$263** billion during the first four months of 2023, making up **15.4%** of total U.S. trade. This is a remarkable increase from 2010, when Mexico was the third-largest trading partner, with a share of 12.5%.
One of the main reasons for this growth is the implementation of the USMCA trade agreement, which replaced NAFTA in 2020 and created a more integrated and competitive regional market for goods and services. The USMCA also reduced some of the trade barriers and uncertainties that were created by the U.S.-China trade war, which started in 2018 and imposed tariffs on hundreds of billions of dollars worth of products from both sides.
Another factor that boosted trade with Mexico is the trend of nearshoring, which refers to relocating production or sourcing closer to the final market. Nearshoring became more attractive during the pandemic, as global supply chains faced disruptions, transportation costs increased, and consumer demand shifted rapidly. Many U.S. companies chose to move some of their operations or suppliers from China or other distant countries to Mexico, which offers lower labor costs, proximity, and preferential access to the U.S. market.
Some of the main products that the U.S. imports from Mexico are vehicles, electrical machinery, machinery, optical and medical instruments, and agricultural products. Some of the main products that the U.S. exports to Mexico are electrical machinery, machinery, mineral fuels, plastics, and agricultural products.
Canada: The Close Neighbor
Canada has been a close and consistent trading partner for the U.S., thanks to their geographic proximity, cultural similarity, and shared values. Canada was the U.S.'s top trading partner for most of the 2000s and 2010s, until it was overtaken by China in 2015 and by Mexico in 2019. Trade between the U.S. and Canada reached **$250 billion** during the first four months of 2023, making up **15.2%** of total U.S. trade. This is a slight decrease from 2010, when Canada had a share of 15.7%.
Like Mexico, Canada also benefited from the USMCA trade agreement, which preserved and modernized the trilateral trade relationship in North America. However, Canada also faced some challenges during the pandemic, such as border closures, lockdown measures, and reduced demand for oil and other commodities. These factors affected its trade performance with the U.S., especially in 2020 when it dropped to the third place behind Mexico and China.
Some of the main products that the U.S. imports from Canada are vehicles, mineral fuels, machinery, plastics, and wood products. Some of the main products that the U.S. exports to Canada are vehicles, machinery, electrical machinery, mineral fuels, and plastics.
China: The Rival Superpower
China has been a dominant force in global trade for decades, becoming the world's largest exporter and second-largest importer of goods. China was also the U.S.'s top trading partner for several years since 2015 until it was surpassed by Mexico in 2019. Trade between the U.S. and China reached **$203 billion** during the first four months of 2023, making up **12%** of total U.S. trade. This is a significant decrease from 2010, when China had a share of 13.9%.
One of the main reasons for this decline is the ongoing trade war between the two countries, which has escalated since 2018 and resulted in tariffs, sanctions, and restrictions on various sectors and products. The trade war has also increased the political and economic tensions between the two superpowers, as they compete for influence and leadership in areas such as technology, security, and human rights.
Another factor that affected trade with China is the COVID-19 pandemic, which originated in Wuhan and disrupted the country's production and exports in early 2020. However, China was also one of the first countries to recover from the pandemic and resume its economic activity, which boosted its trade performance in the second half of 2020 and 2021. China also benefited from the increased global demand for medical supplies, personal protective equipment, and electronic devices during the pandemic.
Some of the main products that the U.S. imports from China are electrical machinery, machinery, furniture, toys, and footwear. Some of the main products that the U.S. exports to China are soybeans, aircraft, vehicles, electrical machinery, and oil seeds.
Future Forecasts and Implications
The trade patterns and trends with the U.S.'s top three partners are likely to continue in the near future, as the global economy recovers from the pandemic and adapts to the new realities. Mexico and Canada are expected to remain as the U.S.'s top trading partners, as they offer stability, proximity, and integration to the U.S. market. China is expected to remain as a major trading partner, but also as a strategic rival, as the trade war and the geopolitical competition persist.
The U.S. trade policy under the Biden administration will also play a key role in shaping the future of trade with these partners. The Biden administration has signaled a more multilateral and cooperative approach to trade, while also maintaining a tough stance on China and pursuing a "Buy American" agenda to support domestic industries and workers. The U.S. may also seek to rejoin or renegotiate some of the trade agreements that it withdrew from under the Trump administration, such as the Trans-Pacific Partnership (TPP) or the Transatlantic Trade and Investment Partnership (TTIP).
The implications of these trade trends and policies for the U.S. economy and society are manifold. Trade can bring benefits such as lower prices, higher quality, more variety, and more innovation for consumers and businesses. Trade can also create jobs, increase incomes, and foster growth and development. However, trade can also have costs such as job losses, wage stagnation, environmental degradation, and human rights violations. Trade can also affect the distribution of income and wealth, creating winners and losers among different sectors, regions, and groups.
Therefore, it is important for the U.S. to pursue a balanced and fair trade policy that maximizes the benefits and minimizes the costs of trade with its partners. It is also important for the U.S. to address the challenges and opportunities that trade poses for its economy and society, such as enhancing its competitiveness, diversifying its markets, improving its infrastructure, strengthening its labor standards, protecting its environment, and promoting its values.
Is your company planning to import or export from North America?
If your company is looking to relocate its production to North America and you are looking for specific information about the most important potential markets in which to invest in, I recommend that you Download my Reports on the Top Industrial Real Estate Markets in North America, so you will be able to know key indicators, such as asking rental price per square foot. , absorption, vacancy or inventory levels. They are completely FREE, you just have to register and you will be able to access the most up-to-date information updated every quarter on cities like Dallas, Los Angeles, New York and several more.
References
* https://www.census.gov/foreign-trade/statistics/highlights/top/top2104yr.html
* https://money.cnn.com/interactive/news/economy/how-us-trade-stacks-up/index.html
* https://www.dallasfed.org/research/economics/2023/0711
* https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_United_States
* https://www.businessinsider.com/us-mexico-china-trade-world-economy-changing-2023
* https://www.weforum.org/agenda/2021/07/usa-us-trade-canada-mexico-china-imports-exports/
* https://ustr.gov/countries-regions
* https://www.statista.com/chart/7749/most-important-trading-partners-of-the-united-states/
* https://crsreports.congress.gov/product/pdf/if/if11189
* https://www.bbc.com/news/business-45899310
* https://www.nytimes.com/2021/02/05/business/economy/china-trade-coronavirus.html
* https://www.brookings.edu/blog/order-from-chaos/2021/01/28/bidens-trade-policy-for-the-middle-class-takes-shape-and-it-starts-in-europe/