the Mexico has been replaced China (And Canada) as the country’s largest trading partner United StateWhich indicates a major shift in the global economy. A practice known as “Close to the beach“It could indicate greater regionalization of global trade.
The Federal Reserve Bank of Dallas announced the news. Mexico now 15.4% of the US trade share, with Canada trailing at 15.2% and China in third place at 12%.
Ten years ago, in 2013, it was the United States’ three largest trading partners China, Japan And Germany. Since then, the trade war and global pandemic have completely changed the economic landscape.
After Covid affected the living standards of the entire world population, a paradigm shift occurred. A move called “nearshoring”: the practice of moving production plants to countries that are politically and culturally closer to home.
Michael Burns, managing partner of Murray Hill Group, calls it, “The next phase of globalization focused on regional networks.Through Nearshoring, American factories can move their factories to low-labor-cost countries without causing a geopolitical headache in Washington.
The transformation has been slow but steady. Technology companies such as horse And apple, whose conflict with China escalated after the country banned the use of iPhones by government employees, is moving some production lines to Mexico. Many American and European automakers, incl strongholdchevron, Volkswagen Mercedes-Benz is moving slowly in Mexico.
“Made in Mexico”
The main reason Western companies are fleeing China is that the country’s workforce is becoming increasingly expensive. China has fueled its unprecedented economic growth with cheap labor and has managed to become the best country The second largest economy in the world.
As China grew richer, so did its workforce, which began to demand higher wages to accommodate the rising costs of life and quality of life.
Now, China is among the Asian countries with the most expensive workforce. On the other hand, higher education in the country also opens up more specialized jobs in the manufacturing sector, which has made the country Germany Today’s industrial giant.
Unfortunately for China, the shift from low-wage, low-skilled jobs to high-wage, high-skilled jobs is happening too quickly. This leads to a rise The unemploymentAs educated Chinese cannot find suitable jobs in their country.
On the other hand, Mexico not only has lower labor costs, but is also geopolitically safer relative to the United States. China’s expansionism threatens American hegemony in the world, and Washington cannot allow this, so American companies must adapt.
But cheap Mexican labor has a price to pay. Mexico is a very unstable country that governs entire regions Drug gangs Violent and corrupt. The process of proximity to the border cannot be completed until Mexico becomes a fully stable and independent country.
However, once the Mexican government realizes the economic opportunities of this change, every effort will be made to turn the country into a safe haven for American companies.
Article published on Money.it International Edition On 2023-09-12 18:25:13. Original title: Mexico officially overtakes China as the United States’ largest trading partner
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