A recent headline took just about everyone by surprise: Mexico’s export revenue in July of this year hit US $81 billion, up 44%. Think about that for a moment — an annualized run rate of nearly $1 trillion of export revenue for the country. Last year, exports hit a record $665 billion on 7.6% growth, up from $417 billion in 2020. So far this year through July, exports are up an impressive 27.7%. As a result, Mexico is now firmly the largest exporter to the United States, far surpassing No. 2 Canada and No. 3 China. China had been the leader for years until Mexico overtook it in the years following the COVID pandemic.

One would think that a 44% growth in exports would be exceptional for Mexico and its economy … but is it really as good as it sounds? Let’s dig a bit deeper into the numbers for a better understanding:

1. Most of the growth has come from the category of electrical and electronic equipment and appliances, which increased by a massive 134% in July. For the first time in that month, Mexico’s exports in that category exceeded the category of auto and auto parts. That category had previously led Mexico’s export revenue figures for decades. I recently wrote about that development here: The hottest product on the planet is increasingly made in Mexico: A perspective from our CEO. Automotive exports have been roughly flat year-to-date, and oil exports are actually down. In other words, the vast majority of the export growth is not coming from a diverse set of industries but rather this one segment.

The hottest product on the planet is increasingly made in Mexico: A perspective from our CEO

2. Import growth is also booming. Year-to-date, imports are up 25.6%, and in the month of July, imports exceeded exports. Mexico actually had a rare trade deficit in July as imports grew by 45.7%.

3. Mexico has begun to import a massive amount of products from Taiwan, growing by over 200% so far this year and hitting nearly US $40 billion in the first half of the year. For some perspective, Mexico only imported $14 billion from Taiwan in the same period last year. Mexican imports of Taiwanese products increased by only $2 billion in the first six months of 2025, compared to 2024.

4. The massive year-to-date import and export growth numbers are not resulting in an economy that is growing as much as would be expected or hoped. One would think that such a huge increase in exports would dramatically increase production capacity investment and domestic consumption. But neither is happening. Estimates vary, but Mexican GDP is generally only expected to grow in the 1.2%-1.5% range — only half of what is expected in the United States this year.

So what is going on here?

It’s important to look deeper into what is actually happening to these imports and exports, specifically analyzing two measures related to value added:

  1. Domestic value added embodied in the exports (How much Mexican labor is going into the exports?)
  2. Mexican-origin content (How much Mexican product is going into the exports?)

What we see is that the rapidly growing electronics category is extremely low in both measures. Said differently, given the high value of the products, the actual amount of Mexican labor and Mexican-origin content going into them is minimal. It is estimated that less than 3% of the exported value of products in this category is Mexican added value — just 3 cents on the dollar! A cynic might say that Mexico is doing little more than receiving the product from Taiwan, adding a “Made in Mexico” sticker and then exporting it — and that cynic wouldn’t be too far from the current reality!

For some perspective, that is barely a tenth of the value that Mexico adds to products in the vehicle segment. Engineering, design, parts manufacturing and assembly in Mexico are all common in that industry. And here is where the real opportunity for Mexico comes in. If Mexico could capture more of the added value in the massive, fast-growing electronics category, it would be hugely impactful on employment in the country. So how can that happen?

Enter the USMCA negotiations. Mexico and the United States have had many rounds of discussions on the updated trade agreement, and despite clear disagreement in certain areas (I’m looking at you, Mexican tomatoes!), increased local content or value added requirements in areas like electronics seems to be an area of agreement and alignment. It is in both countries’ interests to shorten the supply chain and further “de-risk” from China and Taiwan. And it is in both countries’ interests to have more control of the production and supply of such a critical product line.

So will it happen? I am optimistic for a positive outcome given that both countries have similarly aligned interests. Stay tuned to MND as we bring you the developments in this critically strategic area.

Travis Bembenek is the CEO of Mexico News Daily and has been living, working or playing in Mexico for nearly 30 years.

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