2024-01-02 05:57:12
Since the pandemic exposed the fragility of supply chains and with the deterioration of political relations with China and the invasion of Ukraine, many countries are looking for new friends.
Surprising alliances are forming, such as BRICS, the original grouping of five countries – Brazil, Russia, India, China and South Africa – which has just admitted six new members, including Saudi Arabia and Ethiopia, to form a rather heterogeneous trading bloc.
As the great tectonic plates adjust to the new geopolitical context, nations continue to trade, and changes occur in the nature of trade.
Surprise, Mexico has just overtaken China among the United States’ main trading partners. Between 1989 and 2023, the share of US imports from Mexico, expressed in dollars, increased from 5.7% to 15.2%, according to figures from the US Census Bureau.
China’s share, which increased from 2.7% to 21.6% between 1989 and 2017, decreased to 13.2% in 2023. As for Canada, it remains the second largest trading partner of the United States. , but the share of Canadian imports to the United States fell from 18.6% to 13.5% of the total between 1989 and 2023.
The United States also has new friends, such as Vietnam and India, which have carved out a place in the list of major American trading partners.
It might be easy to conclude that the oft-stated intentions to shorten supply chains are starting to yield results. After all, Mexico is one of the United States’ two partners in what is considered the world’s largest free trade zone, CUSMA. He is the neighbor next door, so it would be normal for him to benefit from the reshuffling of international trade cards.
You might also think that globalization is unraveling, but that is probably premature. Trade barriers are increasing, it’s true. According to the International Monetary Fund, the number of new trade barriers has exploded since 2019 and reached 3,000 in 2022 alone.
Despite this explosion, world trade is holding up, with a 0.8% increase in the volume of merchandise trade forecast for 2023 by the World Trade Organization, in this year of widespread economic slowdown.
The United States is the largest importer of goods in the world. And they’re not really in the process of shortening their supply chain. China’s place in American imports has been taken in part by a neighboring country, but also by others just as distant. Vietnam and India export more to the United States, but also Taiwan, South Korea and Singapore, notes a TD Bank economist in a recent study1.
According to him, we should not conclude either that the United States is freeing itself from China. The countries that replaced it are often themselves dependent on Chinese investments on their territory and are in many cases intermediaries in the formidable economic machine that China has become.
China continues and will continue to be an important link in the American supply chain, despite the measures taken by the American government to free itself from it, for better or for worse.
Learn more
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- 3200 billion US
- Total value of US imports in 2022
Source: Office of the United States Trade Representative
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