Durable New Trade Pattern? Mexico, Port Laredo Are On Top Through Q1

For the first time, Port Laredo is the nation’s leading gateway for U.S. trade through the first quarter of the year, according to the latest U.S. Census Bureau data.

The position had long been held by the Port of Los Angeles — until the first quarter of 2022. Last year at this time, Chicago’s O’Hare International took the top spot with a record-setting $83 billion in trade.

Port Laredo has never finished a year as the nation’s leading U.S. gateway for international trade. O’Hare did so in 2022 and the Port of Los Angeles had done so consistently in the decades prior.

So far this year, it’s the Texas border town that sits across the Rio Grande from Mexico and the industrial hub of Monterrey that is on top. It’s a city and region that is benefitting from the ongoing spat between the United States and China. Multinationals from the United States and China have increased their manufacturing in Mexico, though for different reasons; China to avoid U.S. tariffs on a broad swath of imports from there and U.S. companies to diversify a supply chain hobbled in the early stages of the Covid-19 pandemic.

Port Laredo is doubling the number of lanes at the World Trade Bridge from eight to 16 and is contemplating adding another bridge while Kansas City Southern
KSU
is doubling the number of tracks it has crossing into Mexico at Laredo.

More than 97% of Port Laredo’s trade is with Mexico, not surprisingly, while both the Port of Los Angeles and O’Hare are heavily dependent on imports arriving from China and, to a far lesser extent, exports enroute to China.

Port Laredo trade through March rose 14.32% over its previous year total, to $77.96 billion. Trade through O’Hare is down 8.31% to $76.10 billion while the Port of Los Angeles saw its trade decline 15.64% to $65.65 billi0n.

U.S. trade with Mexico, the nation’s top trade partner in the first quarter for four of the previous five years, including this year, increased 7.96% to $196.66 billion. That’s the most trade ever by any U.S. trade partner in the first quarter.

U.S. trade with China, meanwhile, fell 20.34% to $138.56 billion. This is the fifth consecutive year that China has ranked third in the first quarter. U.S. trade with China tends to accelerate during the year; it finished as the top U.S. trade partner last year.

Mexico, second-ranked Canada and China accounted for 41.83% of U.S. trade in the first quarter, a fairly consistent percentage over the years.

U.S. trade with the world through March totaled $1.26 trillion. down every so slightly from the record pace of 2022, 0.01%. Exports increased 6.58% to $508.89 billion, the first time the value of outbound shipments topped $500 billion in the first quarter. Imports fell 4.06% to $747.89 billion, the second-highest total on record.

The nation’s trade deficit fell back below $300 billion for the quarter to $239.01 billion, the second-highest total on record. The percentage of U.S. trade that is an export topped 40% for the first time since 2020.

U.S. trade with Mexico is slightly more balanced, at 41%. U.S. trade with China is now at a record 28% U.S. exports, a jump from 21% just one year ago.

Historically, Mexico’s deficit with the United States has been a less than half that of China’s. It was less than a third as recently as 2021 and less than a quarter in 2018 and less than 2o% in 2017.

This year, it is slightly more than half as big as China’s, which is shrinking while Mexico’s is increasing. The U.S. deficit fell from a record $101.04 billion in the first quarter of 2022 while the U.S. deficit with Mexico increased to a record $34.33 billion.