Introduction
Mexico has captured 24% of China’s losses in the US market from 2018 to 2024, thanks to its tariff advantage, according to Mexico’s Secretariat of Finance and Public Credit (SHCP).
China’s Market Decline
In 2024, China’s exports to the US amounted to $438,947 million, a decrease of 66,650 million from 2017, as reported by the US Department of Commerce.
Mexico’s Tariff Advantage
Mexico’s tariff advantage is expected to strengthen as it competes with its main rivals in the US market. In the Economic Policy Criteria, SHCP states that the current tariff magnitude in the US opens an even greater opportunity for expanding Mexican exports, production, and employment in the manufacturing sector.
Tariff Rates
In July 2025, Mexico’s effective tariff rate was 4.7%, one of the lowest among US partners, compared to the global average (9.7%), the European Union (9.1%), and China (40.4%).
Preferential Trade Agreement
Mexico’s tariff advantage is attributed to preferential tariffs from the US towards Mexico: 76% of Mexican exports entered the US tariff-free under the USMCA, and an additional 5% through other means, making 81% exempt from tariffs.
Impact and Future Prospects
SHCP considers that Mexico’s external sector has shown resilience in 2025 and is solidifying its role as a growth driver for the economy in the remainder of 2025 and 2026.
Competitive Advantage Factors
SHCP identifies four factors contributing to Mexico’s competitive advantage: low tariff rates, preferential access through USMCA, deep integration in regional value chains, and flexible currency regime allowing controlled adjustments while preserving competitiveness.
Key Questions and Answers
- What is the significance of Mexico capturing 24% of China’s US market loss? This demonstrates the impact of Mexico’s tariff advantage, which has allowed it to gain market share from China in the US.
- How has Mexico maintained its competitive edge? Mexico’s low tariff rates, preferential access through the USMCA, deep integration in regional value chains, and flexible currency regime have all contributed to its competitive advantage.
- What does the future hold for Mexico’s competitive position? The review of the USMCA in 2026 will be crucial for solidifying a more predictable regional trade framework and providing greater certainty to businesses, even in the face of potential changes in access rules and origin criteria.
