We have a unique relationship with our southern neighbor. Our border totals 1,954 miles and traverses different terrain, including deserts, urban areas, cities, and more. The two countries also share a lot of business and workers that travel back and forth across borders. Our exports to Mexico have changed over the course of the last few decades. Still, they remain an essential part of the country’s economy, just like our imports from Mexico make up essential goods that we see in the supermarket every day. Understanding this complex relationship and some of the new regulations can help make exporting to Mexico much more manageable.
Trading with Mexico and Why They are a Good Trading Partner
If you are a U.S company doing business with Mexico, there are plenty of reasons to consider it. Proximity is not the only thing that ties us to Mexico and establishes a good trade relationship. We share a lot of history and culture, as well as deep trade and investment relations that have formed over many years. Mexico’s USD 1.3 trillion economy is the 2nd largest economy in Latin America and the 15th largest economy in the world. The median age in Mexico is 28 years old, making it a vibrant market for many U.S goods. Mexico has also seen a steady increase in growth for the past thirty years. Aside from unprecedented disruptions—including the COVID 19 pandemic— the country’s economic fortitude has proved relatively steady.
Fun Facts about Mexico and U.S Trade Relations:
Our trade relationship with Mexico has been steady and consistent, especially after NAFTA was signed in the 1990s.
- In 2019, Mexico’s GDP was an estimated $1.3 trillion, with a population of 126 million.
- Mexico is currently our largest trading partner, with a total of $614.5 billion.
- According to the Department of Commerce, in 2015, U.S exports of goods and services were directly tied to up to 1.2 million jobs. This means that our trade relationship has a big impact on the economy of the U.S as a whole, including people’s livelihoods.
A Snapshot of Exports and Imports to Mexico
The story of exports and imports illustrates the complex economic relationship between the two countries.
- Mexico is the United States’ 2nd largest export market.
- The top categories in 2019 include machinery, electrical machinery, mineral fuels, vehicles, and plastics.
- U.S. exports of agricultural products totaled $20 billion in 2019
- U.S. exports of services to Mexico estimated #32.9 billion in 2019.
- Mexico was the United States’ 2nd largest supplier of goods in 2019.
- U.S goods imports from Mexico totaled $358 billion in 2019. This is up 4% from 2018 and a jump of 102—6% from 2009.
- The top import categories in 2019 were vehicles, machinery, electrical machinery, optical and medical instruments, and mineral fuels.
- U.S total imports of agricultural products was a total of $28 million.
What Do I Need to Know When Exporting to Mexico?
The U.S.-Mexico border is always a topic of much politicization, but as the political rhetoric continues, importing and exporting more forward as usual, as both countries benefit from the trade relationship and have for many years. If you are a business owner interested in exporting to Mexico, it is still an exciting growth market with plenty of potential in industries like:
- Auto parts
- Education services
- Environmental technology
The USMCA modernizes and balances the trade dynamic by reducing incentives to outsource. It does this by placing a new emphasis on labor protections, as well as enforceable environmental regulations. If you had been trading under NAFTA, it means you will have to reassess your products and ensure that they comply and qualify with the new regulations of the USMCA.
(H3) A Look Into The Mexican Market
So if you are an exporter looking into the Mexican market, here are a couple of things to consider and factor in as you look into exporting your goods across the border.
- Mexican compliance laws. Mexico has many different laws than the United States, and some of these can directly affect your business with Mexico. Consult an experienced customs broker or legal counsel before embarking on trading agreements with the country.
- The Mexican banking system: Interest rates in the Mexican banking system can be high and/or very different from the U.S. This can make it difficult for smaller entities to obtain financing.
- Mexican customs regulations, labor laws, and standards of certain products. Just like exporting to any nation, they are likely to have their very own customs regulations. Mexican customs regulations can be very different. This is where your trusted customs broker comes in. Some of these laws can present challenges, and you want to make sure you are prepared to face them efficiently and effectively.
- Mexican security. For many years Mexico has suffered from sporadic violence from drug groups and criminals. This can often make the security situation in the country a little less stable. Keep this in mind if it affects the delivery and distribution of your goods.
Exporting Your Goods with a Trusted Customs Broker
RM Customhouse can help you approach your exporting business the right way. There can be a lot of hoops and regulations to get across before things start rolling. We help businesses and enterprises interested in the Mexican market’s potential and navigate the difficult process of getting started and staying in compliance with changing laws.
Are you looking for a customs broker to export to Mexico or other countries? Call RM Customhouse today and find out how we can help.