America moves to less reliance on China economically ….
Which alos has Foreign Affairs and National Security ramifications….
In the depths of the pandemic, as global supply chains buckled and the cost of shipping a container to China soared nearly twentyfold, Marco Villarreal spied an opportunity.
In 2021, Mr. Villarreal resigned as Caterpillar’s director general in Mexico and began nurturing ties with companies looking to shift manufacturing from China to Mexico. He found a client in Hisun, a Chinese producer of all-terrain vehicles, which hired Mr. Villarreal to establish a $152 million manufacturing site in Saltillo, an industrial hub in northern Mexico.
Mr. Villarreal said foreign companies, particularly those seeking to sell within North America, saw Mexico as a viable alternative to China for several reasons, including the simmering trade tensions between the United States and China.
“The stars are aligning for Mexico,” he said.
New data released on Wednesday showed that Mexico outpaced China to become America’s top source of official imports for the first time in 20 years — a significant shift that highlights how increased tensions between Washington and Beijing are altering trade flows.
The United States’ trade deficit with China narrowed significantly last year, with goods imports from the country dropping 20 percent to $427.2 billion, the data shows. American consumers and businesses turned to Mexico, Europe, South Korea, India, Canada and Vietnam for auto parts, shoes, toys and raw materials….
“The world couldn’t get access to enough Chinese goods in ’21, and it gorged on Chinese goods in ’22,” said Brad Setser, an economist and senior fellow at the Council on Foreign Relations. “Everything has been normalizing since then.”
But beyond the unusual swings in annual patterns in the last few years, trade data is beginning to provide compelling evidence that years of heightened tensions have significantly chipped away at America’s trading relationship with China.
In 2023, U.S. quarterly imports from China were at roughly the same level as they were 10 years ago, despite a decade of growth in the American economy and rising U.S. imports from elsewhere in the world.
“We are decoupling, and that’s weighing heavily on trade flows,” Mark Zandi, the chief economist of Moody’s Analytics, said of the United States and China….