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Trade Why Mexico Should Look to Asia for Trade and Be Less Reliant on the U.S.

jets2345

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Why Mexico Should Look to Asia for Trade and Be Less Reliant on the U.S.


Mexico and the United States share a unique relationship. From a geographic perspective, one cannot exist without the other. Even more so, their neighbors on the North American continent have shared a trading partnership for decades. However, as the world is evolving, it’s time for Mexico to look beyond its neighbor’s borders and focus more on Asia for trade. The U.S. has bullied Mexico for years, and its dependency on the U.S. market is leading to lopsided trade deals. This blog explores why Mexico needs to change its strategy and how focusing on Asia can benefit the country.


1. U.S. trade-deal bullying is driving Mexico to look toward Asia

Over the past few years, the United States has bullied Mexico into accepting lopsided trade deals to secure their advantage in the relationship. For example, the USMCA agreement has made it difficult for Mexico to export cars with high local content. Similarly, Mexico agreed to buy more U.S. products than it exports to the U.S. While Mexico has agreed to these deals, it is aware of the lopsided nature of these agreements. Turning away from the U.S. is not only necessary but long-overdue.

2. Asia is a vast, untapped market

Asia is one of the fastest-growing markets globally, with China and India leading the pack. The region accounts for one-third of the world's gross domestic product (GDP), and it's only growing. In contrast, the U.S. economy is stagnant. Diversifying trade strategies to tap into these vast markets must be on the Mexican government's priority list.

3. Shift in global power

The rise of China and India's economies has shifted the balance of world power, and it's essential that Mexico pivots to look east. According to the IMF, by 2024, China and India will account for almost 45% of the World's GDP. As the balance shifts, Mexico needs to change its trade strategies to capitalize on this shift in power.

4. Mexico's strategic location

Mexico's strategic location as a gateway to North and South America has driven its focus on the U.S. markets for decades. However, as trade routes shift towards Asia, its geographical location can also benefit Mexico strategically. It has the opportunity to become a hub for exports and imports between Asian countries and the Americas. Full capitalization of this opportunity will take some time, but it's a pivot worth investing in.

5. Reducing reliance on the U.S. Market

Mexico has relied on the U.S. market for far too long. In 2020 alone, 77% of Mexico's exports went to the U.S. market. Relying on a single market for a country's economy is never safe. The U.S. economy is unpredictable, and Mexico has experienced this through the Trump era's policies. Diversifying its trade strategies with Asia can provide Mexico long-term economic stability.


In conclusion, the trade market is evolving, and Mexico must adapt to it to remain competitive. Relying on the U.S. market for trade is not a long-term solution. Mexico has the opportunity to tap into one of the fastest-growing markets globally by focusing on Asia. However, pivoting towards Asia must be strategic and should not undervalue the importance of the U.S. market. Mexico should continue to have healthy trading partnerships with the United States but must ensure that it does not fall prey to unfair trade deals. It's time to prioritize diversifying its trade strategy and tapping into Asia's vast markets.
 
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