Bilateral trade between Mexico and the United States grew 6.8% to US$147.3 billion in the first two months of 2026, as Mexico’s share of total US imports rose from 13.8% to 16.9%. Overall US global trade contracted 4.5% and US-China trade hit its lowest level since the 2009 recession. The US goods deficit with Mexico narrowed 8% to US$26.3 billion in the period, the first such decline since 2021, though the annual 2025 deficit reached a record US$196.9 billion. Mexico’s competitive position is being reinforced by USMCA utilization rates that jumped from 44.8% to 88.7% in 2025, as supply chain restructuring and tariff exemptions position the country as a primary beneficiary of US trade decoupling from China and Canada.
Bilateral trade between Mexico and the United States grew 6.8% in the first two months of 2026 to US$147.3 billion, even as overall US trade with the rest of the world contracted 4.5% to US$895.5 billion, according to US Census Bureau data published. The figures mark a deepening of economic integration between the two countries at a moment when the United States is simultaneously decoupling from China and experiencing friction with Canada.
Mexican exports to the United States rose 4.2% to US$86.8 billion during the period, while US exports to Mexico increased 10.6% to US$60.5 billion. Mexico’s share of total US imports climbed from 13.8% to 16.9%, and its share of aggregate bilateral trade rose from 14.7% to 16.4%, compared with the same period in 2025. As a destination for US exports, Mexico’s share declined slightly from 16.5% to 15.9%, though aggregate market share continued to rise.
The figures contrast sharply with trends across other major trading relationships. US-Canada trade fell 14.4% to US$110.3 billion, driven by a 21.5% drop in Canadian exports to US$57.5 billion and a 5% decline in US exports to Canada to US$52.8 billion, a deterioration that coincides with a series of diplomatic and commercial disputes between the two countries over the past year.
US-China trade fell 39.9% to US$56.3 billion, the lowest level for a first two-month period since 2009, when trade between the two economies stood at US$52.4 billion during the Great Recession. Chinese exports to the United States dropped 45.4% to US$40 billion, while US exports to China declined 20.1% to US$16.3 billion.
The decoupling of the United States and Chinese economies has reshuffled global trade patterns and created openings for alternative suppliers across multiple regions. Taiwan posted the most notable gain among US trading partners, with bilateral trade surging 80.4% to US$51.8 billion, driven by a 97.7% jump in imports to US$42.8 billion and a 27.5% rise in US exports to US$9 billion. At this pace, Taiwan is on track to surpass China as the third-largest US trading partner in 2026. Vietnam and South Korea also gained, with trade volumes rising 41.3% and 11.7% respectively, as manufacturers continued shifting production away from China.
Among the losers, Japan declined 7.5% to US$33.6 billion, Germany fell 14% to US$33 billion and Switzerland dropped 51.6% to US$23 billion. The Swiss decline was particularly sharp in December 2025, when the US surplus with Switzerland fell by US$8 billion to US$100 million, driven by a steep export decline and slightly higher imports, a move that contributed to the broader widening of the US goods deficit that month.
Mexico’s Trade Position
The US goods deficit with Mexico narrowed 8% to US$26.3 billion in the first two months of 2026, the first comparable decline since 2021. The shift reflects both the growth in US exports to Mexico and a relative moderation in Mexican export volumes to the United States during the period.
On an annual basis, however, the structural imbalance remains pronounced. The US goods deficit with Mexico reached a record US$196.9 billion in 2025, up 14.6% year-over-year and nearly triple the 2017 level that Trump cited as a reference point when pushing for the renegotiation of NAFTA. The US Trade Representative flagged the deficit in its 2026 Trade Policy Agenda, stating: “The United States not only continues to have large trade deficits with Mexico and Canada, but those deficits have also increased since USMCA entered into force.”
Despite the deficit concern, Mexico’s competitive position within the US market has strengthened as tariff differentials widen between USMCA members and non-members. The share of Mexican exports utilizing USMCA preferences reportedly jumped from 44.8% to 88.7% in 2025, as companies restructured supply chains to avoid tariff exposure and qualify for preferential market access. While Mexico was subject to US tariff measures last year, it benefited from broader exemptions that left it in a more favorable position than other major trading partners, including China.
For full-year 2025, the US goods and services deficit totaled US$901.5 billion, slightly below 2024, with exports at US$3.43 trillion and imports at US$4.33 trillion. The largest US goods deficits by country were with the European Union at US$218.8 billion, China at US$202.1 billion and Mexico at US$196.9 billion, followed by Vietnam at US$178.2 billion and Taiwan at US$146.8 billion.
In December 2025, the US goods deficit with Mexico narrowed by US$3.3 billion to US$14.5 billion, as US exports to Mexico rose US$2 billion to US$30.6 billion and imports from Mexico fell US$1.3 billion to US$45.1 billion. The overall US goods and services deficit widened to US$70.3 billion in December, up from US$53 billion in November, driven by a goods deficit of US$99.3 billion and a services surplus of US$29 billion.
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