China may have found a new way to skirt US import tariffs: Go through Mexico instead

• China's exports to Mexico surged nearly 60% in January year-over-year, according to Xeneta.
• This could be a strategy to circumvent US tariffs, as many of the goods are likely being trucked into the US.

China's exports to Mexico are booming.

In January, containers from China to Mexico surged nearly 60% from a year ago, freight platform Xeneta wrote in a blog post on Thursday, based on data from Container Trades Statistics.

"This is probably the strongest growing trade in the world right now," wrote Peter Sand, the chief analyst at Xeneta.

The strong growth in trade between the two countries followed a 35% on-year jump in container volumes from China to Mexico. In 2022, China's exports to Mexico grew just 3.5% on-year.

The surge in China's imports into Mexico is noteworthy because global trade has slowed since the fourth quarter of 2022. This suggests there's more going on than Mexican demand for Chinese goods.

"With a sizeable portion of these goods likely being trucked into the US, it gives rise to the possibility that China's increase in trade with Mexico is being used to circumvent tariffs placed on imports from China to the US as part of the ongoing trade war," wrote Xeneta's Sand.

Former President Donald Trump launched a trade war against China — the world's factory for the last four decades — around 2018, imposing elevated tariffs on a range of Chinese imports.

The Trump-era tariffs kickstarted changes in the dynamics of US-China trade, prompting companies to change up their supply chain strategies.

Last year, Mexico overtook China as America's top trade partner, according to data from the US Commerce Department.

As Business Insider reported in April, Mexico is shaping up to be a prime location for Chinese manufacturers to relocate — particularly since the US is a key consuming market.

For instance, Chinese auto-part makers have taken to setting up shop in Mexico to cater to Tesla's upcoming factory in the country, Bloomberg reported in February.