MEXICO CITY – President Trump has threatened to rip up NAFTA. To shut the border with Mexico. To impose tariffs on the thriving car industry in Mexico.
"They're killing us for jobs and trade," he said as a candidate.
And yet, two years into his presidency, a strange thing has happened.
Mexico has become the No. 1 U.S. trading partner.
U.S. The census data released last week showed that Mexico's trade with the United States in the first two months of the year rose to $ 97.4 billion, enabling it to leapfrog ahead of Canada ($ 92.4 billion) and China ($ 90.4 billion).
Of course, there's no guarantee Mexico will hold it to the No. 1
Still, numbers show that Mexico is an increasingly vital partner of the United States, despite Trump's frequent disparagement of the country.
"The fact that this surprises a lot of people is a reflection of the ignorance in the United States about this theme," said Luis de la Calle, former undersecretary of the economy here. "Mexico is a very important market for the United States, and it's going to become the largest market for the United States in the world."
It's not quite there yet. For the first two months of the year, Mexico was the second largest export market for the United States, trailing Canada from $ 45.8 billion to $ 42.1 billion. Exports to America's southern neighbors were flat compared with the same period in 2018.
But U.S. imports from Mexico were up about $ 3 billion in January and February. Trump has expressed concern about the growing trade deficit with Mexico.
Much of the US-Mexico commerce involves multinational companies that send products across and across borders as part of a gigantic, integrated manufacturing process that has flourished since the North American Free Trade Agreement took effect in 1994.
"For the rest of the world, the US is a market – that's true for China, Korea, and so on, "De la Calle said. "With Mexico and Canada and the United States, we trade in order to produce things together."
Is Mexico likely to remain No. 1 U.S. trading partner? William Reinsch, a trade expert at the Center for Strategic and International Studies, says that Chinese shipments to the United States rose and then sharply dropped in recent months, as companies with front- loaded exports before American tariffs took effect
In addition, he said, China's production is slowing in February because of the Lunar New Year holiday.
"I think you'll see imports from China ticking back up as the year. wears on, unless Trump does something new, "he said.
But Mexico will probably be a top trading partner. Trump has argued that the new agreement, known as the USMCA – the US-Mexico-based, has been stunned by the United States, Canada Agreement – will result in more investment and jobs in the US car industry Much of the growing trade deficit with Mexico is linked to its auto production.
The new deal must still be ratified by the national legislatures before it can take effect.
"The Outlook for Mexico-U.S. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said: "Trade relations are about as good as it has been in the last 18 months." "That's probably giving companies some confidence."
Not that it's all smooth sailing between Mexico and the United States . The Trump administration slapped hefty tariffs on steel and aluminum imports from Mexico, Canada and the European Union a year ago. At the same time, however, Mexico seems to have benefited from the wide range of tariffs that the Trump administration has imposed on Chinese goods, as Mexican-based companies have stepped in to provide these goods to the United States.
The Mexican and US Analysts say, economies will become even more integrated, with American firms continuing to take advantage of cheaper Mexican wages and country proximity.
"The trend you're observing is the culmination of something going on over the years". Reinsch said.
Mexican officials have celebrated the new economic data, which was released just weeks after Trump threatened to shut the US-Mexico border for retaliation for what he says is Mexico's failure to stop rising migrants flow through the country.
He ultimately backed off, but warned he would impose tariffs on Mexican auto exports if the situation did not improve over the next year.
"Trade in the first two months of the year grew 3.4 percent – against all predictions," Foreign Minister Marcelo Ebrard said at a news conference on Tuesday.
"If we are the top trading partner of the United States, instead of our relations being ever more conflictual, we should find a way to have the same consistent as possible."