COVID-19 Not The Only One Pummeling Mexican Exports

INEGI reports a drop of 40.9 percent in Mexico’s exports for the month of April 2020 when compared to that same month in 2019, according to a report from T21. The total value of this year’s April exports reached US$23.39 billion. The criteria that INEGI uses to break down this number is distributed into two categories: oil-related exports and non-oil-related exports. Oil-related exports accounted for US$758 million of that total number, while non-oil-related exports accounted for US$22.63 billion. One of the main reasons for the oil exports decline is due to the oil barrel price volatility. Another notable number within the non-oil-related category is automotive exports, which have decreased by 79.1 percent. This can be directly tied to the shutting down of automotive manufacturing after the Mexican government deemed it a non-essential activity in the midst of sanitary measures to combat COVID-19. Imports also decreased by a notable 30.5 percent, totaling US$26.47 billion in value.  

Mexico sends 81.43 percent of its non-oil-related exports to the US, according to another report from T21. This overwhelming preference is thanks to NAFTA, an agreement about to become obsolete. The report goes on to say that USMCA is scheduled to replace NAFTA on July 1 of this year and that it is expected that this paradigm shift could bring along a process of diversification that can disable some of the dependencies that have caused COVID-19 to have such an important impact on Mexico’s trade metrics. Once the Mexican manufacturing sector comes back, it will have to deal with the realities of a market drained of liquidity by this crisis. However, it will also find itself with new tools to commercialize its output.