The dynamics of global trade are ever-changing, and recent data reveals a significant tilt. According to a Bloomberg analysis of U.S. Census Bureau data, there's a notable decline in the proportion of goods the U.S. imports from China, highlighting a broader movement in global supply chains.
The Decline of Chinese Imports
Goods imported from China to the U.S. accounted for 14.6% of all shipments in the 12 months leading up to July. This is a steep drop from a peak of 21.8% in the 12 months until March 2018 – right before then-US President Donald Trump dialed up the intensity of the trade war against China.
Interestingly, this is also the lowest percentage of US imports from China recorded since 2006. The shift suggests not just a temporary recalibration but potentially a more long-term realignment of global trade routes. As the U.S.
has lessened its dependence on China, other countries have been quick to fill the void.
Rise of Mexico and Vietnam
Two nations, in particular, have seen their shares of the U.S. import market rise: Mexico and Vietnam. Mexico's share of goods imported into the US hit a commendable 15 percent in the 12 months up to July.
Vietnam, though a smaller player, has also been steadily increasing its share, hitting 3.7% just below its all-time high set in 2022. It's no small feat that Mexico surpassed its northern neighbor, Canada, to become the U.S.'
s top trading partner in early 2023. With almost 16% of the total trade pie, Mexico stands as the USA's primary trading partner, a relationship valuing nearly $462 billion as of July. "Mexico's gains mirror its rise in manufacturing, a key component of goods moving between it and the US," commented Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas.
Furthermore, Mexico's geographical proximity to the U.S. positions it as a strategic alternative to China, especially for manufacturers targeting the vast U.S. consumer market. What's even more telling is that it's not only U.S.
companies that are shifting operations. Several Chinese manufacturers, in a bid to serve their U.S. clientele better amid ongoing tensions between Washington and Beijing, have relocated to Mexico. Among these are notable firms such as TV manufacturer Hisense and auto components producers like Minth Group and Binzhou Bohai Piston Co.
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