Brief: The US-Mexico-Arizona Relationship
Mexico and the US are strengthening their dynamic partnership through trade, investment, and collaboration, creating a shared economic powerhouse.
The views expressed are solely those of the writer and not those of PCFR, which takes no institutional position on policy.
Mexico, boasting the most extensive consular network of any foreign country in the USA with 53 consulates — is currently in a particularly dynamic phase of its bilateral relationship with the United States. This robust and evolving partnership is founded on mutual respect and cooperation. Central to this relationship are federal government agencies such as the International Boundary and Water Commission, responsible for applying and managing boundary and water treaties between the U.S. and Mexico. Furthermore, the North American Development Bank (NADBank) plays a significant role, focusing on financing essential border projects in areas like wastewater management and sustainable energy. These initiatives are key in strengthening and maintaining this long-standing bilateral relationship.
The recently negotiated United States-Mexico-Canada Agreement (USMCA) is also a pivotal element in this relationship, underscoring the economic ties between the countries. Furthermore, the relationship benefits from high-level mechanisms emphasizing security and economic dialogues, ensuring a comprehensive and multifaceted partnership.
North America is a significant economic powerhouse, generating nearly a third of the world's GDP. In 2022, Mexico's trade in goods and services with the U.S. reached an estimated $855 billion USD, making it the U.S.'s largest trading partner. In the first half of 2023, the U.S. emerged as Mexico's top investor, contributing approximately $12.4 billion. Notably, Mexico is the leading car exporter in Latin America and ranks fourth globally.
Mexico has recently emerged as a pivotal player in nearshoring, positioning itself to attract an estimated $50 billion in Foreign Direct Investment (FDI). This influx of capital is expected to boost Mexico's GDP by an additional 0.5% and could generate over a million new jobs. In 2022, Mexico secured $2.268 billion in nearshoring investments, with the automotive sector representing approximately 22% of this total.
This surge in investment has led to record-breaking figures in bilateral trade. Notably, trade with the U.S. soared to around $855 billion in 2022, a significant 34.1% increase from 2021. This remarkable growth highlights the increasingly interwoven economic relationship and mutual benefits shared between Mexico and the United States.
The economic partnership between Mexico and the U.S. is largely facilitated through the High-Level Economic Dialogue (HLED), reinitiated in 2021. This forum focuses on enhancing regional supply chains, promoting economic and social development, and improving workforce development.
Furthermore, the Mexican diaspora in the U.S., regardless of immigration status, has made substantial and positive contributions to the U.S. economy and cultural diversity. They have contributed approximately $9.8 billion USD in federal, state, and local taxes. Remarkably, about 87% of their income is spent locally, with the remainder sent as remittances. The Hispanic population in the U.S., in particular, has played a significant role in bolstering the economy.
Mexico is committed to ensuring the safety and welfare of migrants, focusing on the importance of orderly, safe, and regular migration. In light of the challenges presented by unprecedented migration flows, adopting a comprehensive and collaborative multilateral approach is crucial.
The economic relationship between Arizona and Mexico is highly significant, particularly in the realms of trade partnerships and tourism. Mexico is Arizona’s largest training partner. In 2022, the trade value amounted to approximately $19.6 billion USD. This figure underscores the deep economic interdependence between Arizona and Mexico, highlighting the crucial role that cross-border trade plays in Arizona's economy.
In terms of tourism, the impact of Mexican visitors on Arizona is substantial. Over 3.6 million people from Mexico visit Arizona annually, representing the largest portion of the state's international tourism and expenditure.
Sources: U.S Census Bureau, Mexican Consulate in Phoenix
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This is great! thanks for the information. Cheers for the partnership between Mexico-USA!