By EARL ANTHONY WAYNE, former U.S. ambassador to Mexico
North America is still the commercial dynamo for the United States, Mexico and Canada with $3 million per minute in goods traded between the United States and its two neighbors in the first nine months of 2022.
Canada and Mexico are the top two U.S. trade partners, together accounting for more than twice what the U.S. trades with China. North American trade is growing at double digits within the framework of the United States-Mexico-Canada Agreement (USMCA), which came into effect in 2020.
From 2020 to 2021, U.S. trade with Canada grew by 26 percent, and trade with Mexico grew 23 percent, as the three economies rebounded from the pandemic. Total 2021 commerce amounted to over $2.5 million a minute.
The rebound continues this year. From January through September 2022, U.S. trade with Canada grew by 24.7 percent over the same period in 2021, and U.S. trade with Mexico was up 20.7 percent. This North American trade amounted to just over $3 million per minute through September 2022.
In addition, Mexico is receiving extra economic benefit via remittances from Mexicans living in the United States. Mexican families received a record high of $48.3 billion from abroad from January to October 2022. The number represents an increase of 14.6 percent over the same period in 2021, according to recent Mexican Central Bank (Banxico) data. Almost 95 percent of Mexico’s remittances came from the United States in 2021. U.S. trade and remittances have been the most powerful drivers of Mexico’s economic rebound during these years.
Trade with North America is also growing as a percentage of U.S. trade with the world, indicating the rising importance of regional commerce. U.S. trade with Mexico and Canada accounted for some 29.8 percent of total U.S. trade in the first nine months of 2022, up from 28.9 percent in 2021 and 28.3 percent for 2020. It will be important to look for the numbers on services trade when they are available, as the amount of services trade should also be growing within the USMCA framework.
Trade with the U.S. accounts for about 80 percent of Mexico’s total trade and over 66 percent of Canada’s trade. In the most recent study available, North American trade was estimated to support over 12 million U.S. jobs in 2019, and millions more in Mexico and Canada. The three governments have important tests ahead to demonstrate that they can resolve serious disagreements over compliance with commitments in the USMCA. Some practices of each partner are being questioned. The outcomes of these disagreements will impact the credibility of the USMCA going forward. The three governments also need to demonstrate their ability to cooperate on the kind of policies and investments that will fortify future-oriented sectors and key supply chains, as well as to encourage private enterprise to build more resilient and efficient manufacturing and commercial networks across the continent. Progress on this broader competitiveness agenda demands serious collaboration and hard work outside of the USMCA in the existing bilateral U.S.-Canada and U.S.-Mexico mechanisms, as well as within the framework of the North American Leaders Summit (NALS).
North America is demonstrating the clear potential to emerge more competitive globally vis-à-vis China and other commercial powerhouses, as the world transforms under the impacts from the covid pandemic, the war in Ukraine and other disruptions.
Key will be in how well the United States, Canada and Mexico can work through differences and unlock the opportunities to sustain the growth that can boost the continent’s prosperity and well-being. We should get a sense of their progress with the next North American Leaders Summit to be held in Mexico on Jan. 9 through Jan. 10.