Beyond the border: Your briefing on US-Mexico commerce
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Welcome to the inaugural edition of “Beyond the border: Your briefing on US-Mexico commerce.”
The US-Mexico bilateral relationship has profound direct—and indirect—implications for most of the over 460 million people living in the two countries. So, where is the relationship headed and how can the United States and Mexico make its commercial ties work better?
This newsletter will offer new ways of thinking about US-Mexico ties with concise, sharp analysis and data-driven insight on some of the most pressing issues shaping our two countries’ futures.
Our vision is simple: to bring together some of the best minds in business, policy, and academia to offer fresh perspectives on what lies ahead for the United States and Mexico and how the United States can best position its ties to achieve national objectives. Dive into these perspectives and much more below.
BY THE NUMBERS
Here’s the deal: The pandemic ushered in a new era of trade, and states across the United States are now more interconnected than ever with Mexico.
The takeaways
First: Mexico and the United States have become increasingly interdependent—supply chains transcend borders to optimize production. Supply chains cross the border multiple times. For example, for every dollar in manufactured goods that Mexico exports to the United States, about 30 cents of every dollar’s value comes from US-produced content or materials. Two years ago, Mexico became the United States’ top trading partner (see our graph on US imports by country), a position it solidified in 2024, surpassing China, Canada, and other advanced economies. This reflects the revitalization of Mexico’s export sector—a result of many factors including nearshoring trends and intensifying US-China competition that has favored Mexico. With the likely implementation of 25-percent US tariffs on Mexico as soon as February 1, these growth trends may evolve: For example, Mexico’s commercial growth related to the United States may substantially slow down.
Second: US states heavily rely on imports from Mexico—in some cases, for close to half of all their imports (see our map on key states that rely on imports from Mexico). These imports would, presumably, be subject to the 25-percent tariffs. And while US state-level exports to Mexico (when taken as a percentage of global exports) are not as significant, they could be subject to retaliatory tariffs from Mexico and thus could further shrink in size (see our map on key states that rely on exports to Mexico).
FIRST-HAND INSIGHTS
“So, you know, just as an example, with Mexico—we’re dealing with Mexico, I think, very well.” —US President Donald Trump, in remarks at the World Economic Forum in Davos, Switzerland
On January 20, Trump was inaugurated as president for the second time. During his first administration, Trump delivered on his promise to end the North American Free Trade Agreement—which he called “the worst trade deal ever.” He replaced it with the United States-Mexico-Canada Agreement (USMCA), an agreement the president called the “most modern, up-to-date, and balanced trade agreement in the history of our country.” At Davos this year, the US president said, “we’re dealing with Mexico, I think, very well.” Days earlier, US Secretary of State Marco Rubio stated during his nomination hearing: “Mexico’s economy in many ways is a very vibrant one and has made tremendous advances and continues to be a very strong regional power . . . Our economic interests are so deeply intertwined.”
In this new term, Trump is likely to focus more on improving security, stopping migration, and reducing Chinese influence and fentanyl flows, by utilizing tariffs—such as the ones expected to be placed on Mexico as soon as February 1—to help accomplish these goals. Mexican President Claudia Sheinbaum has presented the ambitious “Mexico Plan,” which will concentrate efforts on boosting nearshoring, strengthening coordination with the private sector, and increasing the independence of North American production chains from Asia. Countering China’s growing footprint in North America will require both countries to align strategically, seeing as the US and Mexican economies are intertwined at the local, state, and federal levels. This is especially the case for areas such as manufacturing, the automotive sector, the aerospace industry, and high value-added technological production. Long-term policy to diminish Chinese influence will invariably require bipartisan leadership and support in the US Congress.
Mexico has an outsized role in US jobs and economic security. The United States and Mexico trade over $800 billion annually in goods (nearly $300 billion just from the top six exporting states, as shown in the graph above). More than one million US jobs are tied to cross-border commerce and over five million US jobs depend on commerce with Mexico, all intertwined in a highly diversified supply chain that keeps everything from cars to avocados flowing.
What they’re saying
FROM THE HILL
US Representative Juan Ciscomani (R-AZ-6): “I always say, there are three buckets related to the southern border—security, immigration, and commerce. We can, and must, work to address and improve these three areas. Mexico is Arizona’s largest trading partner by four, encompassing nearly twenty billion dollars in trade every year. The goods, services, and tourism that flows between Mexico and my district is vitally important to the economic well-being of my constituents.
As vice-chair of the Arizona-Mexico Commission, I worked extensively to facilitate trade, tourism, and investment opportunities. That’s why, in Congress, I am committed to advancing policies that promote trade and tourism, which are essential to the success of both our economies.
In particular, I am concerned over China’s efforts to increase their influence in Mexico, and across Latin America. The Americas are our hemisphere. We must do more to promote commerce between us while limiting China’s malign attempts to undermine US interests. We must work collaboratively with our partners in the region to ensure they know the value of our collaboration not only on trade, but for security cooperation and supply chain resiliency as well. In his first term, President Trump negotiated the United States-Mexico-Canada Agreement (USMCA), which greatly benefited Arizona’s trade relationship with Mexico and Canada. I look forward to working with the president to strengthen our important bilateral relationship.”
US Representative Veronica Escobar (D-TX-16): “The United States-Mexico-Canada Agreement (USMCA) has been instrumental in enhancing economic integration across North America. In 2019, I supported the USMCA, recognizing its potential to benefit all of the El Pasoans dependent on a prosperous border economy.
As we approach the 2026 review, it’s imperative to focus on:
- Ensuring that labor provisions are effectively implemented to protect workers’ rights across all member countries.
- Strengthening commitments to environmental protections to promote sustainable development. There are communities on both sides of the US-Mexico border that have endured decades of environmental harm and we need to do everything possible to address these issues. In El Paso, we have already started this work by pushing towards removing commercial traffic from the Bridge of the Americas.
- Enhancing infrastructure at ports of entry to streamline trade and address bottlenecks. Additionally, we need to ensure both the US and Mexico are investing in the roads travelers use to get to these ports of entry.”
FROM THE MEXICAN CONGRESS
Senator Waldo Fernandez, chair of the USMCA Oversight Committee, sent us his thoughts on the future of cross-border commerce.
- What is your view on the USMCA, its importance, and its impact?
The USMCA is a strategic agreement that has successfully consolidated North America as an integrated and highly competitive region. The economies of the United States, Canada, and Mexico have significantly benefited from the agreement in terms of employment, trade, and investment. The agreement contains clear and expeditious mechanisms to resolve disputes between partners. That is why the USMCA provides certainty for trade, business and investment. But it goes further: Besides being economic partners, the three nations are today strategic allies, who face common challenges such as security and migration. Therefore, we must continue working together, promoting dialogue and collaboration to boost competitiveness, trade, and investment, as well as strengthening supply chains and coordination to face challenges. - What are the lessons learned in the first five years of the USMCA? What needs to be done?
The economic and commercial relationship between Mexico, Canada, and the United States is broad, solid, and constantly evolving. It has been a constructive, deeply positive relationship not only for Mexico but also for our neighbors in the north. Thanks to the treaty, we have consolidated important markets at the international level, such as the automotive and agricultural markets. Thus, the first five years of the USMCA confirm that more things unite us than divide us. Throughout these years, the will and willingness to build agreements prevails. It seems to me that in the revision of the treaty, this goodwill will continue to be important, as well as the recognition that today the three nations are of equal importance and relevance in the agreement. - What are the main challenges that North America is facing?
There are challenges in terms of commercial triangulation, customs fraud, and unfair trade practices by some countries in Asia that export to North America. In that sense, the USMCA has been a very effective instrument to counteract or at least mitigate these challenges. The rules and mechanisms of the USMCA have worked successfully to resolve differences, provide certainty to businesses, and combat unfair trade. - What are the main opportunities for the countries of the region?
The 2026 review of the USMCA represents the main opportunity to build in North America the most competitive and most dynamic region in the world in terms of trade, investment, growth, technology, and innovation. In addition, the review of the USMCA in the context of the relocation of companies could be used to establish conditions for the benefit of the population, such as job generation, regional content promotion, development of technology, and clean energy projects, among others. - Finally, how do you see the relationship between the United States, Canada, and Mexico after the 2026 review?
I am sure there will be a recognition of the need to maintain and strengthen a stronger, more united, and more competitive region. Only this way will we be able to successfully face global challenges as a bloc.
FROM THE BORDER
Glenn Hamer, president and CEO of the Texas Association of Business: “Trade with our largest trading partner, Mexico, is responsible for over five hundred thousand jobs in Texas and $270 billion in economic activity. Tariff-free trade with Mexico allows Texas companies to maintain efficient supply chains, which increases the competitiveness and resiliency of our economy. Simply put, we build products together. As the nation’s top export state, the USMCA has benefited Texas more than any other state. More trade with Mexico would mean more prosperity for Texans. The Texas Association of Business is committed to building on the USMCA, which is probably the most important trade deal in US history.
Gerry Schwebel, executive vice president, Corporate International IBC Bank–Texas and Oklahoma: “Communities along the US-Mexico border are so integrated economically and culturally that we often say we are ‘one city in two countries.’ We border communities experience the benefits of a robust bilateral trade relationship between the United States and Mexico every day and are an integral part of the success of an equally robust supply chain network.”
FROM THE DESK
Mexican Senator Cynthia López Castro: Why an integrated US-Mexico relationship is vital
North America’s success as an economic region is indisputable. According to the International Monetary Fund, North America contributes 17.9 percent of the world’s gross domestic product (GDP). That means that just three countries contribute almost one-fifth of the world’s GDP. The integration of North America as a region is an indisputable foreign policy success of the three countries.
NAFTA succeeded in integrating value chains, connecting Mexico’s economy with the world (and specifically, the United States and Canada). It created a collaborative industrial ecosystem in the region characterized by the transfer of knowledge, with the capacity to produce complex goods such as automobiles. While there are many critics and doubts about the domestic benefits of NAFTA and then the USMCA, the benefits of the free trade agreement are tangible: Twenty-five years after the agreement came into force, trade with Canada and Mexico had nearly quadrupled, reaching $1.3 trillion; and Canada and Mexico bought more than one-third of US merchandise exports. In addition, 68 percent of inputs for US-produced goods come from Canada and Mexico, and trade with Mexico and Canada supported fourteen million US jobs.
Needless to say, the trade relationship with the United States is indispensable for Mexico. However, this relationship is asymmetrical: The United States is the destination for more than 80 percent of Mexico’s exports and the source for 40 percent of Mexico’s imports. Most analysis focuses on the enormous concentration of Mexico’s exports and the vulnerability that this entails, but rarely does it highlight the global importance of Mexico’s trade relationship with the United States. Mexico’s importance to the United States is so significant that, in 2023, Mexico was the top US goods trading partner in 2023, with total two-way goods trade of $807 billion, surpassing China.
To put this into context: The United States remains the undisputed economic superpower of the world, and Mexico is its leading trading partner, not only surpassing but displacing the rising superpower that is China. It should be clear to both sides that the narrowness of the US-Mexico relationship protects the United States from becoming too dependent on its main commercial and political rival and guarantees Mexico privileged access to the world’s most important market for its agricultural and manufactured products. Taking care of it is not optional for any of the parts involved.
Mexico’s relationship with the United States is unavoidable, and strategically vital for both countries, in terms of not only trade but also security, migration, and the environment. For example, whether the United States cooperates with Mexico on security is not a question, seeing as Mexico defends North America. The government of Mexico (through its president, Claudia Sheinbaum) has reiterated that it is committed to the bilateral relationship because it is aware of both the relationship’s present relevance and its future potential.
Cynthia López Castro, member of the Mexican Senate, member of the North America Commission, and Atlantic Council Millennium fellow (2024-2025)
ICYMI
- How Sheinbaum can strengthen US-Mexico ties in Trump’s first 100 days – Atlantic Council
- Experts react: Claudia Sheinbaum is Mexico’s new president. Here’s what to expect. – Atlantic Council
- Following President Trump’s announcement around potential 25-percent tariffs on imports from Mexico, what are the possible economic implications for both the United States and its southern neighbor? The measure could go into effect as soon as February 1, 2025. This explainer provides key data and perspectives to understand this topic.

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.
Image: Drivers wait in line on the international border bridge Paso del Norte to cross to El Paso EEUU from Ciudad Juarez in Ciudad Juarez, Mexico December 28, 2016. Picture taken on December 28, 2016. REUTERS/Jose Luis Gonzalez