North America trade round-up: Mexico replaces China, G20 and Canada takes on CPTPP presidency

Thu 14 Sept 2023
Posted by: Richard Cree
Trade News

NAFTA flags: US, Mexico, Canada

It’s inevitable that as the world’s largest economy, US trade will always be connected to geopolitics.

Right now, there’s only one story in town; the continued cooling of trade, diplomatic and political relations between the US and China.

On the up, down Mexico way

There was cause for celebration among US sinosceptics this week, as news broke that Mexico had replaced China as the US’s largest trade partner.

Bloomberg questioned how well Mexico would be able to seize the investment opportunities heading its way, largely due to what it called “the new Cold War.”

Mexico’s 15% share of US imports just pipped China’s 14.6% last month, and, perhaps says more about the decline in trade with China (down from 20% five years ago), than it does about Mexican trade growth, which was only marginally up over the same period.

The story is helped by the strength of the Peso, and a huge boom in Mexico’s foreign direct investment (FDI), which is up over 40% so far this year. Bloomberg’s key warning is that Mexico has a history of missing these vital “could have been” moments.

As far as indications of good times ahead, Mexico did get a name-check from Ursula von der Leyen in this week’s State of the EU address as a key target for a free trade agreement within the next year (Australia and the Mercosur bloc also got a mention).

G20 reverberations

It’s no secret that Joe Biden used the obvious opportunities presented by the recent G20 summit in India to play a few anti-China hands.

Biden followed his trip to India with a visit to Vietnam, where the FT reports he made a few choice announcements including agreeing billions of dollars of business deals, including in key technology areas of artificial intelligence (AI) and semiconductors. 

In a joint press conference with the leader of Vietnam’s ruling Communist Party, Biden said:

“We’re deepening our co-operation on critical and emerging technologies, particularly around building a more resilient semiconductor supply chain.”

At the G20 summit itself, Biden made much of deepening trade and diplomatic ties with India, which is seen as a natural global counterweight to China.

For CNBC, the announcements at the G20 were an attempt by Biden and Modi to present the US-India axis as “a viable alternative to China for the Global South at a time of shifting geopolitical alliances.”

The G20 was a less comfortable affair for Canadian leader Justin Trudeau, who was taken to task by Modi for what he called “anti-India activities of extremist elements in Canada.”

Trudeau’s government has paused talks on a proposed trade deal with India and has also received brickbats from provincial leaders back home amid accusations he is putting trade relations with India at risk.

CPTPP watch

Canada assumes presidency of CPTPP next year, which may not be good news for the UK. There are rumblings from across the Canadian farming community that it should use its role to block the UK’s accession to the bloc.

Canadian farmers are so unhappy about the UK’s ban on some Canadian meat products that they have launched a “Just Say No to Britain” campaign. It’s unclear what traction this will get. File it under one to watch.

An arms deal…

As North Korea’s leader jumped on a train to Vladivostok to meet Vladimir Putin and discuss various weapons and technology swaps, the US countered by announcing approval of the sale of 25 F-35 fighter jets to South Korea.

The Daily Tribune reports that the sale comes as North Korea carried out more missile tests.

…and an Arm deal

This is a big week for the US investment community, as it tests out the appetite for initial public offerings (IPOs).

The first is Softbank’s floating of some of its holding of Arm, the UK chip maker. It has been a very positive story for Softbank (which has had its share of recent disasters) with the IPO so over-subscribed that it rose to the top end of its price range.

That bodes well for other New York IPOs coming soon, including German sandal shifter Birkenstock and marketing automation firm Klaviyo.

Not the Apple of China’s eye

One major arena for the ongoing US-China diplomatic détente is the technology sector. This week the Chinese government made a big fuss about banning the use of Apple’s iPhones.

It had an instant impact on Apple’s share price, which is always sensitive to how many mobile units it might shift.

In better news for the US tech giant, its launch of new models of mobile devices was reasonably well received, as was news about its phones and watches becoming more environmentally conscious.

This focus on sustainability saw it announce its first carbon-neutral product: the latest Watch.