Japan-Mexico Trade Relations: A Long Standing Friendship

Japan and Mexico have a tradition of friendly relations that date all the way back to the XVII century, when Mexico was still under Spanish rule. In 2025, the countries celebrate the 20th anniversary of their Economic Partnership Agreement (EPA), fostering bilateral trade and cooperation and creating business opportunities for companies on both sides of the Pacific ocean.

In 1888, with Mexico established as an independent country, both nations signed the Treaty of Amity, Commerce and Navigation. This was especially significant for Japan as it was the country’s first equal treaty with another nation, without the treaty granting Japan any other rights over Mexican territory; in this treaty both nations recognized each other as equals. Given the significance of this treaty, Mexico was given a special location for its embassy in Tokyo, which remains there to this day, signaling the good faith and friendship between the two countries.

In 2023, Japan and Mexico celebrated 135 years of diplomatic relations, interrupted only once during WWII when Japan was part of the Axis powers and Mexico of the Allied powers, relations returned to normal once the war was over and have not been interrupted ever since,

Japan is recognized as a strong export-oriented economy, particularly in the manufacturing and technology sectors, ranking as the 5th global economy in terms of GDP, driven by advanced manufacturing, high-quality, and innovative products like automobiles, electronics, and industrial machinery. This achievement was reached through profound industrial reforms and through the reconstruction efforts after WWII, which overturned Japan’s economy in the 60s, a period known as Japan’s miracle, making it grow potentially over the decades.

Post-WWII, Japan's economic development has been characterized by significant growth in overseas sales, contributing substantially to its economy despite exports maintaining a consistent share of the Gross National Product (GNP). Since the late 1960s, Japan has consistently achieved a trade surplus, often among the largest globally. This export success stems from diverse industrial output, a focus on high-value-added products, and strong competitiveness, particularly in key industries. However, challenges such as intense competition from neighboring Asian economies, protectionist sentiments, currency valuation issues, and the impact of the pandemic continue to affect Japan's export performance.

Mexico-Japan Trade Relationship

Mexico and Japan’s shared commitment to global economic integration is evident in their joint memberships in numerous international organizations, including the Asia-Pacific Economic Cooperation, CPTPP, G20, IMF, OECD, and WTO. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is particularly instrumental in fostering strong economic ties between both countries. Beyond multilateral frameworks, Japan and Mexico have signed several bilateral agreements. This year, the countries celebrate the 20th anniversary of the Economic Partnership Agreement (EPA), in force for both countries since April 1, 2005. In its first two decades, the EPA has increased bilateral trade, making Japan Mexico's sixth largest trading partner.

Japan is the Asia-Pacific country with the largest foreign investment in Mexico since 1999, totaling more than US$37 billion by mid-2024, with nearly 1,500 Japanese companies in the country. Japanese multinational companies such as Bridgestone, Mazda, Hitachi, Honda, Kyocera, Mitsubishi, Nippon Express, Nissan, Sojitz, Sony, Toyota, and Toyota Tsusho (among others) operate in Mexico. Meanwhile, Mexican multinational companies such as Grupo Altex, KidZania, Orbia, Proeza, San Luis Rassini, and Sukarne (among others) operate in Japan.

Trade relations between Japan and Mexico are generally strong and cooperative, especially in the automotive sector. Japanese automotive manufacturers have a significant presence in Mexico, with numerous assembly plants and a robust supply chain built over decades. This sector is a major driver of trade and investment between the two countries. Japan is a major investor in Mexico, particularly in manufacturing. This investment creates jobs and facilitates the transfer of technology and expertise.

Between January and December 2024, foreign direct investment (FDI) from Japan to Mexico reached US$4.28 billion. In the same period, the Mexican states that received the highest FDI from Japan were Guanajuato (US$1.95 billion), Mexico City (US$727 billion), and Baja California (US$592 billion).

Japan's main exports to Mexico include electronics, motor vehicles, rolled products of iron steel or non-alloy steel, tubes and pipes, medical equipment, video gaming consoles, and plastic. The main product bought by Mexico from Japan in 2024 was Parts and Accessories of Motor Vehicles (US$1.92 billion). The main destinations of purchases made to Japan were Mexico City (US$4.63 billion), Guanajuato (US$2.91 billion), and Nuevo Leon (US$2.28 billion).

From January 1999 to December 2024, Mexico has received a total of US$38.9 billion in FDI from Japan, distributed in inter-company debts (US$14.4 billion), equity capital (US$12.4 billion), and reinvestment of earnings (US$12.1 billion).

Mexico's main exports to Japan include: electrical equipment, telephones and mobile phones, copper ore and other minerals, silver, parts and accessories for motor vehicles, steel, iron, chemical based products, meat, fruits, and alcohol.

The main sale from Mexico to Japan in 2024 was Copper Ores and Concentrates (US$532 million), with Sonora (US$824 million), Mexico City (US$774 million), and Coahuila de Zaragoza (US$383 million) as the top exporters.

In April 2025, international sales from Mexico to Japan were US$348 million, while international purchases reached US$1.76 billion, resulting in a trade balance of US$1.41 billion in favor of Japan.

Outlook on Mexico-Japan Trade

Mexico is actively pursuing the diversification of its trade partners, with Japan emerging as an important destination in this strategy. This effort is crucial for Mexico to broaden its economic horizons beyond its predominant reliance on the United States market.

Mexico also stands to benefit significantly from the ongoing nearshoring trend. Despite potential threats of US tariffs, various companies continue to invest and reinvest in Mexico, indicating that the country remains an attractive investment destination. This appeal is largely driven by its strategic geographical location, extensive network of free trade agreements, and established manufacturing capabilities. However, the landscape is complicated by US protectionist policies, particularly under the Trump administration. The recent imposition of US tariffs on Japanese products creates uncertainty within global supply chains. 

As part of a broader strategy to reduce dependence on Asian manufacturing, the US aims to lessen its reliance on countries like Japan. This dynamic could indirectly benefit Mexico, as Japanese companies may seek to further localize production within North America to circumvent US tariffs and maintain efficient access to the large US consumer market. Consequently, while US protectionism presents challenges, it simultaneously reinforces Mexico's attractiveness as a nearshoring hub for Japanese firms.