Mexico Overtakes Canada as No. 2 U.S. Exporter Ahead of Trump – by Greg Quinn and Nacha Cattan (Bloomberg News – December 6, 2016)

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Mexico is overtaking Canada as the No. 2 exporter of goods to the U.S. this year, in a sign of how economic ties have deepened between the two countries even as the relationship is being questioned by President-elect Donald Trump.

Shipments from Mexico totaled $245 billion in the first 10 months of the year, according to Commerce Department figures released Tuesday, ahead of Canada’s $230 billion. If the trend continues, it would be the first time ever the U.S. bought more imports from its neighbor to the south. The two countries ended 2015 tied in exports to the U.S.

The trend of catching up to Canada puts China and Mexico as the top two exporters to the U.S. just as Trump prepares to take office in January, reflecting the strong pull of lower cost jurisdictions for the U.S. economy. Canada, which has one of the highest cost bases in the Americas, has seen its share of U.S. imports fall to about 13 percent from around 20 percent two decades ago.

“Integration with Mexico has become more solid than with Canada,” said Marco Oviedo, chief Mexico economist for Barclays Plc. “Manufacturing continues to be very competitive in terms of wages and location to other U.S. producers and suppliers.”

The growing links between Mexico and U.S. hinge on motor vehicles. Mexico has won new factories over the past six years from Toyota Motor Corp., Volkswagen AG’s luxury Audi unit, Kia Motors Corp. and BMW AG — up to $25.9 billion in new auto investments since 2010, according to the Center for Automotive Research in Ann Arbor, Michigan — fueling car shipments totaling $90 billion in the first 10 months. That’s versus $54 billion from Canada.

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