For the first time in more than two decades, China has been knocked off the top spot when it comes to the source of goods imported to the United States. According to 2023 trade reports US imports from Mexico rose nearly 5% in 2023 to more than $475 billion, while imports from China fell 20% to $427 billion.
NC AHEAD OF THE TREND
North Carolina, accounting for 2.6% of total US imports in 2023, appears to have been ahead of the curve. Data from the Economic Development Partnership of North Carolina (EDPNC) from 2022, the latest annual report available, shows two years ago our state was already importing more goods from Mexico ($10.53B) than China ($9.37B).
To be sure, North Carolina’s trade with China is still quite significant. Exports to China from North Carolina grew more from Nov. 2022 to Nov. 2023 than any other country at 12.5%, according to the Observatory of Economic Complexity (OEC). Canada, too, is a top export destination for North Carolina products.
But it is the less emphasized imports that form the inputs to our economy and can further reveal the need for free trade or even opportunities for homegrown innovation. Here, the OEC data shows goods to North Carolina from origin nations like the Netherlands, Taiwan, and Indonesia fell by much larger percentages than imports from China over the same period. On the plus side of the ledger, the highest rate of import growth came from origin countries such as Sweden, Belgium, and Germany.
Still, Mexico tops the list.
The national lead change maybe indicative of larger trends working against Chinese imports to the United States, as well as factors advantaging imports from Mexico. Tariffs and geopolitical strife have weighed on US/China trade relations, and China’s economy is also strained with domestic issues such as slowing growth and crises in their real estate and finance sectors.
On the other hand, Mexico is three years into the Trump era U.S.-Mexico-Canada Trade Agreement (USMCTA). The North American trade deal allows for duty-free trade in many products leading manufacturers, including the Chinese, to take advantage by establishing factories in Mexico.
The cross-border supply chains are especially robust when it comes to heavy industry like auto manufacturing, an industry increasingly important to North Carolina. North Carolina imported $3.51 billion of Electric Machinery from Mexico in 2022 according to EDPNC. Incentive-laden auto investments in the state by the likes of Toyota and VinFast, as well as growth in aviation manufacturing such as Boom Supersonic’s planned “superfactory” in Guilford County, stand to make the North American supply chains even more relevant to our State’s economy.
Of course, with each and every new facility will come a need for many imported inputs to fuel their business.
NC Ports Authority
As North Carolina becomes more important to supply chains, its ports, in Wilmington and Morehead City, have been setting and breaking records for tonnage and revenue. The North Carolina State Ports Authority reported record operating revenue of $79.3 million in 2023, a 16.7% increase above the previous record of $68 million set in 2022. That revenue came along with a record volume of general cargo, totaling 4.6 million tons.
Some of the growth can be attributed to opportunism. When ports in California clogged up due to the domino effects of COVID-era supply chain disruptions running into restrictive regulations, ports in North Carolina picked up a lot of the slack.
The expanded capabilities of our port facilities (and the North Carolina Railroad) also factor into this performance in a big way.
The Port of Wilmington has in recent years established substantial and growing cold storage capacity that expands opportunities for North Carolina businesses to trade in refrigerated products. For all the agricultural production that emanates from North Carolina to other destinations (being a leader in pork, poultry, and sweet potatoes for example), plenty of agricultural inputs and products are imported for sale and distribution.
In December, the Port of Wilmington announced certified cold treatment facilities investments that enable the import of fresh produce like blueberries, grapes, apples, pears, and citrus year round. Many of these warm clime products may originate in Mexico. Up the coast in Morehead City, the growing capability to import bulk and breakbulk cargo such as steel and natural rubber for the automotive industry or fertilizer and feed for our farmers shows how imports are critical to facilitating production.
Free Trade Policies
As re-shoring and near-shoring realigns a substantial volume of trade North Carolina will continue to benefit to the degree state policies enable business executives and entrepreneurs to innovate and thrive. Shifting geopolitical sands create conditions North Carolina policymakers cannot control, which makes an enthusiastic focus on free market policies even more important. For the continued success of our state’s businesses, entrepreneurs, and workers, depends upon the right conditions to import the ingredients for value creation, from Mexico or most anywhere else.