Why Mexico has a sudden trade surplus
MXPE Weekly Essentials ft. services overtake manufacturing, beginnings of beef bonanza?, and other highlights in Mexican politics, policy, and markets from the past week.
MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.
Uncharted Mexico: It’s the geopolitics, stupid
Structurally, China lies at the heart of Mexico’s surging surplus.
On the demand side, Mexico’s tariffs on many foreign goods, along slowing consumption, has reduced the need to import as much from Asian countries. Meanwhile, on the supply side, exports to the US are booming as Donald Trump’s own trade war with China has allowed Mexico to fill the void.
Non-automotive manufactured exports have been growing at rates of between 20 to 34% month-on-month since late last year.
But the most immediate change in Mexico’s trade balance has a lot to do in the short term with conflict in the Middle East. For the first time in a while, Mexico’s oil exports have been doing pretty well—not in terms of volume but for the high prices it has been able to sell crude and refined petrochemicals for.
All of this is somewhat awkward as USMCA negotiations hang on Trump’s concerns regarding the US trade deficit with its neighbours.
Source: INEGI
Last week’s highlights:
End of auto pilot—As opposed to most other sectors, the auto industry in Mexico continues to flag.
