Exporting to Mexico - Market OverviewMexico - Market Overview
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Top Five Reasons Why U.S. Companies Should Consider Exporting to Mexico:
- Mexico is the 15th largest economy in the world.
- Given Mexico’s large, diversified market, most U.S. products can be sold successfully.
- Mexico continues to experience stable economic growth.
- Recent economic reforms have liberalized key sectors such as energy and telecommunications, creating market opportunities.
- Close cultural, social, and economic ties make Mexico a natural market to consider for first-time and expanding exporters.
Today, Mexico is our third largest trading partner (after Canada and China) and second largest export market. Two-way trade in goods and services totaled almost USD 1.6 billion daily in 2016, and this trade directly and indirectly supports millions of U.S. jobs. Mexico imported USD 231 billion of U.S. products in 2016 and U.S. exports of services to Mexico were USD 31.1 billion for 2016, for a total of USD 262 billion in U.S. sales to Mexico. Mexico is the first or second largest export destination for 28 U.S. states. Mexico is the third largest agricultural export market for the United States, taking USD 18.7 billion in U.S. agricultural products, including corn, soybeans, dairy, pork, beef, fish, and forestry products in 2016. Mexico brings in nearly four-fifths of its total food imports from the United States.
Both countries have nearly USD 130 billion in bilateral, reciprocal foreign direct investment (FDI). Mexico is the 16th largest investor in the United States, having invested a total stock of USD 34.4 billion at the end of 2016. The FDI stock between the two markets has risen more than six-fold since 1996. U.S. affiliates of Mexican-owned firms, in such diverse sectors as cement, baked goods, retail, and publishing, employed 77,800 American workers in 2014. Over the last 20 years our supply chains have become increasingly integrated. On average, Mexican exports to the United States contain nearly 12 percent U.S. content, supporting U.S. jobs and production. In the auto sector the North American content can reach upwards of 70 percent, according to industry sources.
The North American Free Trade Agreement (NAFTA), which came into force in January 1994, created a free trade zone for Mexico, Canada, and the United States. As a result of NAFTA, there are no tariffs for qualifying goods and services traded between the three countries. In this timeframe, U.S. goods exports to Mexico and Canada grew from USD 142 billion in 1993 to USD 496.9 billion in 2016.
NAFTA has been at the center of the U.S.-Mexico commercial relationship. In 2016, with two –way trade totaling just under USD 580 billion, the United States had a USD 7.6 billion surplus in trade in services and a USD 63.2 billion deficit in trade in goods with Mexico. This trade deficit in goods represented 8.6 percent of the global U.S. goods trade deficit (USD 736.8 billion). While our economies and businesses have changed considerably over the last 24 years, NAFTA has not.
The United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities under NAFTA. A review of NAFTA will help make the United States, and North America, a stronger, more attractive place to do business and a model for the rest of the world in the 21st century. To this end, all countries began negotiations on August 16, 2017. Topics that will help inform the direction, focus, and content of the NAFTA negotiations include: trade in goods; sanitary and phytosanitary measures; customs, trade facilitation, and rules of origin; technical barriers to trade; good regulatory practices; trade in services, including telecommunications and financial services; digital trade in goods and services and cross-border data flows; investment; intellectual property; transparency; state-owned and controlled enterprises; competition policy; labor; environment; anti-corruption; trade remedies; government procurement; small- and medium-sized enterprises; dispute settlement; and currency.
Mexico is a member of the World Trade Organization (WTO), the Asia-Pacific Economic Cooperation (APEC), the G-20, and the Organization for Economic Cooperation and Development (OECD). Mexico has more free trade agreements (FTAs) than any other country in the world – 12 FTAs covering 46 countries – which include the European Union, European Free Trade Area, Japan, the Pacific Alliance, Israel, and ten countries in Latin America. For U.S. exporters, this means that the Mexican market is one of the most open and competitive in the world.
Mexico is the most populous Spanish speaking country in the world. Seventy-nine percent of its 123 million inhabitants live in urban areas. Ten percent of the population is considered wealthy and about 46 percent live in poverty. The remaining 44 percent of the population is considered middle class. Mexico has a very young population with a median age of 28. It offers a large market with a GDP of approximately USD 1.1 trillion with a 2016 estimated per capita income of USD 18,864 (purchasing power parity). There is a large installed base of manufacturing in a wide range of sectors.
Although Mexico’s GDP growth has slowed in the past few years, the growth rate has exceeded expectations. The International Monetary Fund recently revised its estimated real GDP growth from 1.7 percent to 1.9 percent in 2017, with growth strongly tied to the U.S. economy and world oil prices. In 2013 and 2014, Mexico passed sweeping reforms in the energy, telecom, labor, financial, and education sectors. These reforms should enable Mexico to increase its global competitiveness. The energy and telecom reforms particularly offer a multitude of new opportunities for U.S. firms. Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Mexico Trade Development and Promotion