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When economic historians look back on China’s aspiration to become the so-called factory to the world, mid-2018 might stand out as the high-water mark. After all, it was May of that year when then U.S. president Donald Trump followed through on his threats to punish China for its “theft of intellectual property and technology, and its other unfair trade practices,” and hit US$50 billion worth of Chinese goods with a 25% tariff, followed by tariffs on another US$200 billion of made-in-China stuff.

That was also roughly when China’s share of what the United States bought from the rest of the world topped out. The story since has been a question of which other countries could fill the gap. A lot of the attention has gone to Vietnam, as Western companies eye the country’s cheap labour and growing manufacturing capacity. America’s former military rival has seen its exports to the U.S. surge and become a lot more sophisticated—its top export to the U.S. two decades ago was shrimp; over the last 12 months, it’s computer equipment.

While no single country can hope to match China’s capacity to churn out factory goods, the biggest winner so far just marked an important milestone: As of July, Mexico is now the largest single exporter to the U.S. on an annual basis.

Mexico’s advantage over most other countries, aside from its own lower labour costs, is proximity. The pandemic, and the snarled supply chains that followed, have reinforced the value of having suppliers closer to home.

Like Mexico, Canada obviously has location going for it, too. Yet so far, that hasn’t translated into as impressive a market-share gain. Our largest export to the U.S. last year was crude oil, totalling US$113 billion. Cars and trucks were a distant second at US$26 billion. The rise in oil prices we’ve seen in recent months likely bodes well for Canada’s trade picture with our neighbours to the south. It’s just not clear whether that will be enough to put this country back on top as America’s largest import partner like it was two decades ago.

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