According to Brookings, USMCA compliance among Mexican and Canadian exports to the U.S. rose to nearly 80% of trade value in 2025. Mexico became the top U.S. trading partner with $873 billion in bilateral trade, surpassing Canada ($719B) and China ($419B). Manufactured goods trade between Mexico and the U.S. hit $791 billion—16.6% of all U.S. manufacturing trade. Mexico also overtook China as the leading source of U.S. Advanced Technology Products, with data server exports exceeding $79 billion in late 2025. No evidence of Chinese trade diversion via Mexico or Canada was found in 2025 data.
According to www.brookings.edu, the United States-Mexico-Canada Agreement (USMCA) has strengthened economic integration across North America, with Mexican and Canadian compliance in USMCA rules rising from less than one-half to almost 80% of trade value in 2025 — driven by higher U.S. tariff rates for non-USMCA goods.
Mexico Emerges as Top U.S. Trading Partner
Mexico became the United States’ largest trading partner at the beginning of 2023 and maintained that position in 2025, with total bilateral trade totaling $873 billion. Canada ranked second at $719 billion, while China fell to third place with $419 billion — down from its peak in 2014. In 2025, Mexico–U.S. trade represented 15.6% of all U.S. goods exports and imports; Canada’s share was 12.8%, and China’s slumped to 7.5%.
Manufacturing Trade Dominates Growth
Total trade in manufactured goods between Mexico and the U.S. reached $791 billion in 2025 — surpassing Canada ($524 billion) and China ($387 billion). This accounted for 16.6% of all U.S. manufacturing trade, compared to Canada’s 11.0% and China’s 8.1%. The motor vehicles sector still accounts for 40% of U.S. goods imports from Mexico, but growth is accelerating in higher-value sectors.
Advanced Technology Products Shift to Mexico
Mexico eclipsed China as the United States’ principal source of Advanced Technology Products (ATPs) in 2025. Exports of automatic data processing machines (HS code 8471), including data servers and components for AI data centers, exceeded $79 billion in the 12 months ended November 2025 — more than doubling year-on-year. Exports of server boards and related parts (HS code 8473) grew even faster. Medical device exports rose from $9.0 billion in 2017 to $20.6 billion over the same 12-month period ending November 2025.
Trade Diversion and Resilience Drivers
While U.S. direct imports from China continue to fall, no evidence of trade diversion or transshipment through Mexico or Canada appeared in 2025 data. Both countries raised tariffs on select Chinese goods, and China redirected export growth elsewhere. The shift toward North America reflects both heightened U.S. trade tensions with China during the first Trump administration and pandemic-driven supply chain disruptions that incentivized nearshoring for resilience.
Challenges Amid Integration
Uncertainty around the 2026 USMCA review contributed to subdued investment in Canada and Mexico, and manufacturing employment remained weak on both sides of the U.S.–Mexico border in 2025. Yet Mexican manufacturing continues to diversify beyond labor-intensive segments, with mandated wage increases prompting growth in higher value-added areas — suggesting an evolution in how USMCA supports industrial upgrading.
Source: www.brookings.edu
Compiled from international media by the SCI.AI editorial team.
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