For the first time in 20 years, the US imports more from Mexico than China

In the message. Mexico has overtaken China as the largest source of official US imports for the first time in 20 years, new data shows. It highlights heightened tensions over trade flows between Washington and Beijing.

• The US has a trade deficit with China 20% down to $427.2 billionThe overall US trade deficit fell 18.7 percent to $177.8 billion.
  • Despite a strong dollar and a weak global economy, total US exports rose slightly in 2023 from a year earlier.
  • U.S. imports fell as Americans bought less crude oil and chemicals and fewer consumer goods, including cellphones, clothing, camping gear, toys and furniture.

Geopolitical risks

Zoom in. The relative decline in trade with China is directly linked to tariffs imposed by the Trump administration and continued under Biden, with trade in products with high tariffs falling while trade in products without tariffs growing.

Broad trend of diversification in supply chains

Zoom in. Ongoing trade tensions between the US and China have led to a significant erosion in trade relations, with quarterly imports from China returning to levels seen a decade ago despite US economic growth.

• The shift points to a broader trend of diversification in supply chains as companies seek to reduce their reliance on China in favor of countries with low tariffs and stable trade agreements, such as Mexico and South Korea.
  • In December Surpassing Korean exports To the US, Korean exports to China for the first time in 20 years, thanks to exports of vehicles, electric batteries and other parts.
• Events such as Russia's invasion of Ukraine and China's alleged alignment with Russia have contributed to a reassessment of trade relations and strengthening ties between the United States and countries such as Mexico and South Korea.