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Xeneta: Importers Ship Through Mexico to Avoid US Tariffs on Chinese Goods

Mexico container terminal
APM runs the terminal in Mexico’s deepest water port at Lázaro Cárdenas (APM)

Published Mar 15, 2024 7:47 PM by The Maritime Executive

A massive increase in the number of containers imported from China to Mexico may be a sign that businesses are avoiding the Trump-era tariffs on Chinese imports according to a new analysis by Xeneta, the market analytics and benchmarking company for the logistics industry. They point to the strong growth in imports during 2023 and a very strong start to 2024 speculating it is “probably the fastest growing trade” of all the global routes.

During the then administration of President Trump, the U.S. launched a trade war with China imposing nearly $300 billion in tariffs on a wide range of products, which President Joe Biden has left in place. Xeneta highlights the strength of the growth, which appears far beyond Mexico’s domestic economy, noting that importing into Mexico’s West Coast ports from China is seen as a viable alternative to goods arriving directly into the U.S. West Coast.

“A sizeable proportion of the goods arriving in Mexico by ocean will likely be trucked into the U.S.,” says Peter Sand, Xeneta Chief Analyst, which he says, “gives rise to the suspicion that the increase in trade we are witnessing is due to importers trying to circumvent U.S. tariffs. In a purely hypothetical scenario, if this growth rate continues, by the year 2031 there will be more containers imported from China into Mexico than the U.S. West Coast.

Xeneta’s data illustrates the growth showing a 60 percent increase in January 2024 versus the prior year, to a total of 117,000 TEU versus 73,000 TEU in January 2023. This increase comes after import volumes were up nearly 35 percent in 2023 after just a 3.5 percent increase in 2022.

“The strength in trade between China and Mexico was building during 2023 but the latest data of January 2024 reveals a massive increase,” said Sand. 

He also points to the opening of a new cargo-only airport in Mexico City in 2023 as a sign that imports continue to scale up. 

“I doubt this is happening due to increased demand in Mexico only, but more likely because it is a back door into the U.S.”

While there was a rate advantage a year ago when freight rates between China and Mexico fell below the rates to the U.S., Xeneta highlights rates are now largely comparable on the two routes. They note the cost advantage moved back and forth between the two routes several times but as of this month is within $5 per FEU traveling to Mexico versus to the U.S. West Coast.