Mexico became the 6th largest trading partner and 5th main destination for Brazilian exports; on a trip to the country, Lula seeks to expand relations
Exports from Brazil to Mexico grew 140% in the last 10 years. The volume exported went from US$3.6 billion in 2013 to US$8.6 billion in 2023, reaching an all-time record. As a result, the country became the 5th largest destination for Brazilian products and Brazil’s 6th main commercial partner.
The president Luiz Inácio Lula da Silva (PT) is on an official trip to Mexico City. This Tuesday (October 1, 2024), he will participate in the inauguration of president-elect Claudia Sheinbaum, from Morena (Movimentação Regeneração Nacional, center-left). There are also meetings with the aim of expanding the commercial relationship between the 2 countries, especially in agriculture and industry.
In 2024, Brazil and Mexico celebrate 190 years of diplomatic relations. The 2 countries are the two largest populations and economies in Latin America, representing around 65% of Latin American GDP (Gross Domestic Product). The Brazilian government sees potential to increase business with Mexico.
A free trade agreement is on the discussion table and should be presented by Lula to the new Mexican president. The idea is to intensify discussions on the terms throughout this year, but there is no forecast of when it will take effect.
According to data from the MDIC (Ministry of Development, Industry, Commerce and Services), the balance of trade between Brazil and Mexico was US$ 3 billion in 2023. In 2024, until August, the difference between exports and imports is in US $ 1.4 billion, heading towards the 4th consecutive year of surplus in the balance with the country.
The level reached by Mexico in 2023 elevated the country to the position of Brazil’s 6th largest trading partner. The trade flow between the 2 countries was US$ 14.1 billion last year, adding the values of exports and imports.
The ranking is led by China alone, with a trade flow of US$ 157.5 billion with Brazil. Before Mexico, the United States, Argentina, Germany and the Netherlands (Netherlands) also appear.
Vehicles and soy lead exports
The automotive sector is the main target for business between Brazil and Mexico, both in exports and imports. In 2023, automobiles led Brazilian sales to the country, with transactions totaling US$1.09 and representing 13% of the export basket between the 2 countries.
On the other hand, what Brazil bought most from Mexico were vehicle parts and accessories (13% of imports). The finished cars came in 2nd place. In other words, the Brazilian market both sells and consumes cars made in Mexico.
Soy was the 2nd most exported product to Mexico. Other agribusiness products in the top 10 were poultry meat (in 5th) and corn (6th).
The free trade agreement that Brazil is trying to establish with Mexico has 2 axes focused on industry. The 1st aims to eliminate or reduce more than 800 import tariffs, by granting reciprocal preference margins between Brazil and Mexico.
The 2nd intends to establish free trade between the 2 countries for light commercial vehicles, chassis with engine, cabin and bodies for these vehicles, trucks, agricultural tractors, harvesters, self-propelled agricultural machines, road machines and auto parts.
In relation to agribusiness, the goal is to increase exports of animal protein to Mexico, especially chicken meat and eggs. The idea is to take advantage of the space opened up by President López Obrador, who zeroed import duties on products from the Mexican basic basket. The measure was adopted at the end of 2023 to contain inflation at that time.
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