Top US Shippers: US electronics importers turn to Mexico
Date: Thursday, May 14, 2020
Source: Journal of Commerce
A doubling of US electronics imports from Mexico last year bodes well for growing investment in cross-border production of laptop computers, television sets, and servers as the industry responds to tariffs on imports from China and the impact of the COVID-19 crisis.
US imports of electronics from China dropped 4.5 percent year over year in 2019, while imports from Mexico surged 112 percent, according to PIERS, a sister product of JOC.com within IHS Markit.
Southeast Asia continues to be the primary location for electronics production that is leaving China after four rounds of US import tariffs on Chinese-made goods implemented over the past two years. US electronics imports from North Asia dropped 3.3 percent last year, while imports from Southeast Asia jumped 68.8 percent, according to PIERS.
The production of smaller items, including many wireless products, moved mostly to Southeast Asia, led by Vietnam, while larger items such as desktop computers and televisions are increasingly being assembled in Mexico, according to Jack Chang, managing director of JUSDA Supply Chain Management, a non-vessel operating common carrier (NVO) specializing in electronics transportation and warehousing.
“Vietnam took the wireless products from China. It was an easy move,” said Chang. Linking the components' manufacturers within Asia was easier than moving production of those products overseas, he said. As a result, US electronics imports from Vietnam surged 157.8 percent year over year in 2019, while imports from Malaysia and Thailand increased 59.1 percent and 32.4 percent, respectively.
There is an established and growing network in North America for the production of desktops and televisions, so Mexico’s proximity to those suppliers and to the US market makes assembly of those items in the region a logical move. “You can just truck it in,” said Paul Bingham, director of transportation consulting at IHS Markit.
Bingham also noted that Mexico has free trade agreements with a number of countries and regions, including Latin America, Europe, and Pacific Rim nations, so finished products exported from Mexico have the competitive advantage of low tariffs. “It’s a hidden part of the story: risk management as regards tariffs,” he said.