Relocation of Global Value Chains: The Role of Mexico

IMF Working Papers, September 12, 2025

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The paper documents recent changes in trade flow dynamics between Mexico, the U.S. and China, focusing on the period around 2017-2023.
Using product-level bilateral trade data, the paper studies recent trends in the composition of the origin of U.S. imports, notably that a reduction of imports from China has been accompanied by an increase in imports from Mexico and other trading partners in Asia.
The paper documents that while Mexican exports to the U.S. have significantly increased in recent years, Mexico is also importing more from the U.S. and various countries in Asia, consistent with Mexico’s deeper integration into global value chains.
The paper presents evidence that FDI flows to Mexico since 2017, predominantly originated from the U.S., have increased more in economic sectors affected by the U.S. tariffs on imports from China, and that they have been mainly directed to regions in the North with well-established manufacturing networks with the U.S.

Reduction of U.S. imports from China has been accompanied by an increase in U.S. imports from Mexico and other trading partners in Asia (period around 2017-2023).
Mexican exports to the U.S. have significantly increased in recent years (period around 2017-2023).
Mexico’s imports from the U.S. and various countries in Asia have increased, consistent with deeper integration into global value chains.

Since 2017, FDI flows to Mexico have increased, predominantly originating from the U.S.
Increases in FDI have been larger in economic sectors affected by the U.S. tariffs on imports from China.
FDI inflows have been mainly directed to regions in the North with well-established manufacturing networks with the U.S.

Subject: Balance of payments, Exports, Foreign direct investment, Global value chains, Globalization, Imports, International trade, Tariffs, Taxes
Keywords: Exports, Foreign direct investment, foreign direct investment dynamics, Geoeconomics, Global, Global value chains, Imports, imports from China, Mexico, Mexico's imports, role of Mexico, Tariffs, trade development, Trade diversion