Historic Trade and Remittances Results Between Mexico and the US

Mexico has consolidated its position as the main commercial partner of the US during 1Q20. The COVID-19 pandemic, that hit China first during the first two months of 2020 helped to achieve this. According to data from the US, the influx of imports and exports between the two nations accounted to 15.3 percent of the US’ total trade balance. This is the highest quota that Mexico has registered in the US’ trade balance.

Also during 1Q20, Canada had a participation of 14.9 percent and China of 10.1 percent. In 2019, Canada was positioned as the US’ main commercial partner for six months, while Mexico took the lead the other six months. Mexico and Canada positioned as the main commercial partners of the US in 2019, taking advantage of the trade war that existed between China and the US.

Though both have started a series of talks destined to reduce animosity, the COVID-19 sanitary emergency that originated in China has led the US President and Secretary of State to claim that a Chinese lab is to blame for the virus. Accusations have been accompanied by threats of implementing new commercial sanctions to Chinese products as a punishment for the pandemic.

Mexico is expected to strengthen its participation in the US market and its position as the country’s main commercial partner once USMCA is enforced.

The commercial relation between the two countries is not the only thing on the table. Against all odds, in March 2020, remittances coming from the US experienced their best month since September 2003. According to data from Banxico, in March 2020, remittances experienced a 35.7 percent increase when compared to March 2019. The total amount of money that entered the country from Mexicans living in the US accounted to US$4.16 billion.

In an interview with El Financiero, Alberto Ramos from Goldman Sachs mentioned that the result was far superior than what the market was expecting, which was around US$2.75 billion. For Ramos, the increase in remittances is the result of the fear that exists of unemployment in the US, which is why many Mexicans took the decision to send more money and capitalize on the high exchange rate that exists between the Mexican peso and the US dollar.

After Banxico published information about remittances, President López Obrador took the opportunity in his morning briefing to thank Mexicans living in the US for their solidarity by sending money. During his remarks, President López Obrador said remittances results were historic and vowed once more to continue supporting those who need it the most during this COVID-19 pandemic through loans to SMEs as well as personal credits, housing credits and social programs to strengthen the popular economy.