The Effect of COVID on Importing From Mexico To The US

COVID has brought the world to a halt. The events that happened from January of 2020 has put the world of trade in a tough spot. International trade is the lifeblood that keeps millions of businesses afloat. We saw a downward trend all across the board.

In the case of the US, we suffered a low rate of imports, especially from our major trade partners like Mexico, China, and India.

COVID impact: The extent of damage

From January to June 2020, the US exports were down by 25%. In May of 2020, the US saw its exports down by a whopping $50 billion in comparison with the data from the previous month. Restrictions to international travel were put in place and there was much confusion about how trade would work.

The unemployment rate doubled compared to 2019. And special monetary policies were put in place to support the unemployed. Petroleum is one of the most profitable exports of the USA, however, the pandemic caused a scenario where the need for petroleum around the world was reduced. When we look at the year on year metrics, we can understand the products that were worst hit by the pandemic.

Civilian aircraft exports took the major loss at around 16 billion USD. The second product that suffered a huge loss was parts and accessories of vehicles. The third is aircraft engines for civilian transport.

How COVID affected Imports into the US

From January to June 2020, we saw US imports fall by 17%. The pandemic created a shortage of supplies in most countries. When counties suddenly see a sharp increase in products within the country, it creates a scenario where the country won’t have enough goods to export.

We saw this happen with medical supplies like masks, medicines, gloves, etc. The demand was so high in many countries that they were not able to export to other countries. In 2018, the US imported 1/4th of the world’s essential medical goods, however, the global stock of medical supplies were scarce in 2020. This lead to widespread shortages of medical supplies in the US.

Importing from Mexico: Handling the COVID crisis

In 2019, we saw Mexico rise the top trading partner of the United States, surpassing China. So when the pandemic hit, this relation was under constant pressure. The Mexican government showed concern in the US travel ban, and how it would affect businesses, which need frequent travel between the two countries. In 2019, the US imported goods worth of $358 billion from Mexico,

The top imports from Mexico to the US include transportation equipment and Computer and electronic parts.

With the onset of COVID, the Mexican government was forced to close many of Mexico’s manufacturing plants. Naturally, this causes a dip in production, which directly affects Mexico’s capability to export goods to the US.

Amongst the pandemic, certain laws made by the US government can also affect imports from Mexico. For example, the Donald Trump Administration made a certain series of regulations that would reduce steel imports from Mexico and Brazil.

This decision was made to strengthen the US steel industries. Mexico has agreed to keep tight monitoring over steel exports to the US from import surges. The monitoring is aimed at stopping the transshipment of the steel and semi-finished steel goods from different counties like china through Mexico. The new steps taken by the administration may require imports to get a government permit for imports.

What the future looks like importing goods from Mexico

With COVID being as unpredictable as it is, countries around the world are moving towards stabling trade within the guidelines of COVID protocols. If you are planning to import from Mexico to the US, you need to consult the customs department to know the latest rules and regulations.

For a new trader, this turbulent time can deter their motivations and may give a feeling that trade is something way too complex. However, all this goes away when you have experienced counsel for advice.

This is why you should hire certified customhouse brokers. Customhouse brokers will do all the work for you. At Pedraza, we work with clients who are active in international trade. Our services are aimed at facilitating trade and making things easier for our clients. If you struggling with importing from Mexico or international trade in general, we can help. Contact us at (915) 791-5500, or you can request a quote and we will get back to you. Meanwhile, Stay safe.

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Pedraza Content Team

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