Why Mexico Is the Big Winner from the U.S.-China Trade War

The U.S. trade deficit with China has fallen to its lowest level in close to 15 years. But it’s not necessarily because Americans are buying fewer Chinese goods. Many Chinese companies are moving operations to Mexico and shipping to the U.S. from there, taking advantage of the free trade agreement. This is bolstering Mexico’s economy and boosting its currency to the strongest its been against the dollar in nearly a decade. I’ll explain what’s happening.

Chapters:
0:00 U.S.-China trade war
0:40 The peso is soaring
1:08 Big flows of foreign money
2:00 Multinational companies
2:30 How this ties back to the trade war

I’m Dion Rabouin, a WSJ reporter covering markets and the economy. I’ll be diving into all things finance, from the popular and well-known — like crypto and stocks — to the complex and intricate — like leveraged loans, derivatives and private equity. Subscribe to join me as I take a deep dive into what’s making money move and why it matters.

#China #Mexico #DionRabouin

[Thecommentor]

I live in Mexico and I can tell you from experience that I have been seeing many Americans are migrating to Mexico for the economic opportunities and affordable housing and lands. I’m also happy to see fellow Mexicans who lived in the USA move back to their country to stay close to family and the rich culture here.🇲🇽🇺🇸❤️

[jefthe]

As a Middle class Mexican I can tell you, that this is the place to be . Mexico is affordable compare to many nations, it’s beautiful and the culture is just great. The one thing the government need to fix is Organized crime. Once that’s fix, Mexico will be the real heaven.

[sa]

100% correct. I travel Mexico quite frequently for business. the country is becoming wealthy and more Mexicans are reaping the benefits. I think 10 years from now Mexico will be amongst the wealthiest nations on earth

[mgnfcnt]

This was very interesting. Had to do a replay. Thank you Dion😊

[Smitty_Werbenjagermanjensen]

Not too bad, although you kind of miss where the people of Mexico fit into this picture, and what role or how this impacts their daily lives with the appreciating local currency. Also it’d be cool if you added the credits to the video description.

[AndrewBeane]

Great video. All the data needed to explain the point and less than 4 minutes!

[yakuza]

As a Mexican, I am thrilled this is happening BUT I know my people and we can get big headed and take our eye off the ball, not to mention that planning for the long term is not always something that comes naturally to us. One thing that we need to understand is that Mexico is not China. Not implying that we are less but different in our work culture, not to mention the more obvious factors such as size of the country and population, among many other things. As some people have pointed out here, the raw individual parts we don't make, our specialty is assembly. Another important factor is that we can't have this gold rush mentality, meaning just settle for anything and collect without a long term plan. The good times will end at some point (either the trade war ends, as unlikely as it seems now, or simply a cheaper or more enticing hub will emerge), and we just need to make sure that when it does, it's not a 20 meter fall but 2 or 3 meter one, which means that we might have to take a page or two from China's and Korea's playbooks. It's great to get money but it's even more important to get expertise and invest on our own development while the money is flowing. The trade war is giving us some uncommon degree of leverage now and therefore, we shouldn't just settle for any conditions and simply work for money. As happy as I am with this development, we need to make sure that all Mexican people benefit from this and not just the local corporations who are known to basically kiss up to the U.S. and agree to any conditions since they keep most of the money and leave breadcrumbs to the workers. I know, a bit idealistically and probably easier said than done but we at least need to put these on the table for the sake of Mexican people's awareness.

[nomadicmariner]

My man Dion! Excellent reporting as usual. Middleman Mexico is benefitting from this situation. Actions of the previous administration and this current administration have led China to 'decouple' from the U.S. in terms of trading. No wonder Treasury Secretary Janet Yellen has made a trip to China _twice_ to beg them not to decouple from the U.S..

[sufthegoat]

Good job you did well explainibg man ❤

[SpruceWood-NEG]

Mexico welcomes Chinese investment. Chinese friends, come and bring your funds, technology, and raw materials. We are responsible for providing land, policies, and workers. Let's happily earn American money together.🤣

[williamlloyd]

The stronger the Mexican economy is, the more jobs in Mexico. This will make it less likely that people will continue through Mexico to USA as people won’t have to migrate just to make a living. Not a total fix by any means but a help.

[oHoa]

Not just US-China trade war. You must count also the global supply chain disruption caused by Covid 19. Due to supply chain disruption companies must redesign their supply chain strategy. ie from single supply hub (China) to regional ones.

[Cheduepallottole]

Unbelievable how strange rules can produce unthinkable changes

[SilverScarletSpider]

I encourage all my Mexico 🇲🇽 brothers/sisters to learn more languages like coding, Japanese 🇯🇵, Korean 🇰🇷, English🇺🇸, Chinese 🇨🇳, and German 🇩🇪 Cultural exchange with international students from abroad is very important for universities and colleges if Mexico 🇲🇽 will grow with USA 🇺🇸 China 🇨🇳 and Japan 🇯🇵

[thegiggler]

According to a supply chain guy I know, a huge amount of assembly has already moved from China to Mex

[juventinorodriguez]

President AMLO separated the economic power from the political power, in other words his government does not allow lobbying from corporations. USA needs to do the same or it will go down the hill. Neoliberalism has failed.

[Nowhere-from]

Mexico should improve in the coming years, but nobody should count on it to come to replace China. Just to start, Mexico has always been right next to the USA, next to the opportunity. This is not just about low salaries as most people believe, even when China's have grown a lot.

One simple thing that can hold Mexico back is water scarcity, especially in northern Mexico where the actual hopes are betting on. Northern Mexico is plain desert, already industrialized, already holding a big population of millions, already facing big time trouble due to lack of water.

[carlosdj]

2:10 Hi Dion. Can you please elaborate on why the high interest rates make the country an attractive destination for foreign investors?

[Scottweeier]

I lost over $70k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Kathleen Chandler.

[Accnews_]

Es un Honor estar con Obrador
💚🤍❤️👍🏻✅