Mexico Captures a Fourth of China’s Lost US Market Share

Mexico has emerged as one of the top beneficiaries of global trade shifts, capturing 24% of the US import market share lost by China between 2018 and 2024, according to Mexico’s Ministry of Finance and Public Credit (SHCP). In its Economic Policy Guidelines 2026, the ministry underscores that the external sector remains a pillar of growth for the remainder of 2025 and into 2026.

Tariff Advantage Against China

Mexico’s position is underpinned by significant tariff differentials. As of July 2025, the country’s effective tariff rate stood at 4.7%, one of the lowest worldwide, compared with 9.7% globally, 9.1% in the European Union and a steep 40.4% for China, reports SHCP.

Recent changes have widened this gap: from 2024 to 2025, tariffs rose 29.5% for China, but only 4.5% for Mexico. This translated into a relative advantage of 35.6% over China, far greater than the 6.6% spread that previously enabled Mexico to gain nearly a quarter of China’s lost share in US imports.

“Even smaller tariff gaps have proven decisive in shifting trade flows,” SHCP notes, emphasizing that the magnitude of difference opens unprecedented opportunities to expand exports, production and employment in manufacturing.

Manufacturing Leads the Way

Manufactures account for 91% of Mexico’s exports to the United States, with standout growth in high-value sectors. Between January and July 2025, exports of computer equipment and electronics surged 49% annually, consolidating Mexico’s role in advanced manufacturing.

Even in the automotive sector, where total export value declined, Mexico increased its US market share by 1.3 percentage points, showcasing adaptability in a strategic industry.

A flexible exchange rate has helped buffer uncertainty. The peso depreciated an average of 12.9% between January and July 2025 compared to the prior year, bolstering competitiveness while keeping inflation in check, 2.1% general and 2.8% core inflation over the same period.

For 2026, SHCP projects GDP growth between 1.8% and 2.8% in 2026, with inflation declining to 3.0% and Banxico’s policy rate easing to 6.0%. The peso is expected to appreciate 5.6% to MX$18.9 per dollar, while the current account deficit will remain modest at 0.6% of GDP.

Oil production is forecast to reach 1.8 million bpd, supported by PEMEX’s 2025–2035 Strategic Plan and over 20 exploration and production projects.

USMCA Review as a Turning Point

The 2026 review of the USMCA will be critical to consolidating Mexico’s competitive edge by ensuring clearer rules on market access and origin requirements. Greater certainty, SHCP argues, will unlock further investment and deepen regional value chains with higher national content.

A Strategic Window for Mexico

While global trade faces heightened uncertainty, Mexico’s tariff advantage over China positions it to keep gaining share in US imports, says SHCP. With strong manufacturing, exchange rate flexibility, and preferential trade access, the external sector is set to remain a central engine of growth.

“The tariff differential offers Mexico its largest opportunity yet to strengthen its role in North American trade and generate broader benefits for the national economy,” says the SHCP.