China dethroned as top source of US imports after 17 years, replaced by Mexico: census data
For the first time in 17 years, China was dethroned as the United States' top source of imports, offering fresh evidence that Washington's tariffs and supply-chain diversification efforts are bearing fruit.
Mexico outpaced China in 2023 in terms of total value of goods shipped to the US, according to data from the US Census Bureau released on Wednesday.
Total US imports from China last year reached US$427.2 billion, falling by 20.3 per cent compared to 2022, and slightly higher than the US$421.1 billion from Canada in 2023, census data showed.
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Meanwhile, the US bought US$475.6 billion worth of goods from Mexico in 2023, increasing by 4.6 per cent year on year.
China's share of US imports also dipped to 13.9 per cent in 2023, its lowest level since 2004. China's share peaked at 21.6 per cent in 2017, before the trade war began; it was 16.3 per cent for 2022.
China had been the top goods supplier to the US since 2007, when it surpassed Canada.
Geopolitical frictions, including intensifying economic disputes and a simmering tech war, have clouded relations between the world's two largest economies.
And tariffs in place since Donald Trump's presidency have hit direct shipments from China hard, at an average of 19.3 per cent.
Washington has also ramped up efforts to "de-risk" its supply chains, with American multinational corporations adopting a "China-plus-one" strategy and reducing reliance on the mainland as a production base.
Still, analysts say direct trade flow fails to reflect the growing complexity of global supply chains. More components made in China wind through Southeast Asia and Mexico - where final products are assembled - before arriving in the US, making it hard to track in detail.
More Chinese money is also flowing to Mexico, a key destination for US nearshoring. Chinese manufacturers for furniture, home appliances, apparel and automobile parts have flocked to the Latin American country to build production bases, vying for access to the US market.
However, Washington is becoming increasingly wary of the trend. In December, the US and Mexico agreed to monitor foreign investments and regularly share information about the screening process.
At a hearing about the United States-Mexico-Canada Agreement convened by US trade representatives on Wednesday, American auto-industry representatives said Chinese manufacturers investing in Mexico taking advantage of lower labour costs and tariffs were "a large problem."
Under the trilateral free-trade agreement that entered into force in 2020, 75 per cent or more of the components of passenger vehicles and light trucks should be produced within the region to qualify for duty-free treatment.
"You're going to have a hard time getting compliance with USMCA requirements," Jason Wade of the International United Auto Workers said at the hearing.
Describing China's approach in Mexico, Wade added: "They will take the infrastructure and ecosystem that's been developed over the last 25 years and just pay the fee and have access to the US market."
This article originally appeared on the South China Morning Post (SCMP).
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