Trade through Nogales Port: Dreams and (Post-COVID-19) Reality

Not only is Nogales the major port for Arizona’s trade with Mexico, but also one of the major southern ports for trade between the rest of U.S. and Mexico as well as between Mexico and Canada

No matter how you refer to the economic interconnectedness of Arizona with the regions extending south to neighboring Sonora and the rest of Mexico – The Arizona-Sonora Region,[1] The Arizona Sun Corridor Mega Region,[2] The Transborder Mega Region,[3] The Arizona-Sonora Mega Region,[4] or The CANAMEX[5] if extending it on the other side north to Canada -- the Nogales port has been one of the most important assets. Not only is Nogales the major port for Arizona’s trade with Mexico, but also one of the major southern ports for trade between the rest of U.S. and Mexico as well as between Mexico and Canada.  

In the past, the Nogales port has had several of its “firsts,” among them the first railway crossing between the U.S. and Mexico, also the first to facilitate the shipping of components to and from the first maquila factories south of the border in Nogales, Sonora, and the first exclusive port for Mexican winter produce. In the course of time, many new developments boosted the growth of other ports along the U.S.-Mexican border. The expansion of the automotive industry in Mexico, together with a rise in green-house agriculture, favored the central and northeast regions of Mexico, and contributed to the exponential growth in trade through Texas’ ports, most notably of Laredo and Hidalgo. More recently, two new “competitors” have emerged in the western portion of the U.S.-Mexico border;   the Santa Teresa port in New Mexico and Calexico East in California. 

Nogales Port: U.S.-Mexico Trade In 2022 Surpassed 2019; Moved to Number Three Among Western Ports of Entry

Among the major western ports of entry (POE),[6] all ports except El Paso, TX, recorded increased dollar values of traded commodities shipped in both directions from January through September 2022 compared to the same period in the pre-pandemic year 2019, as shown in Figure 1. The Nogales port facilitated $21.6 billion in U.S.-Mexico trade in 2022 compared to $19.8 billion in 2019 (January-September). The highest increases were recorded at California’s ports of Otay Mesa (27.3%) and Calexico East (16.8%), while the Nogales port trailed behind with only a 9.3% increase. Yet, thanks to a drastic decline in trade through El Paso, the Nogales port was elevated to the number three position from its previous rank of fourth. However, there are differences between imports and exports.

Figure 1. U.S. Trade with Mexico via Western Ports of Entry, January-September 2022 vs. January-September 2019, Dollars

U.S. Exports to Mexico via Nogales Port Slower To Recover

Among the major western POE only Otay Mesa and Calexico East recorded increases in U.S. exports to Mexico from January through September 2022 over the same period in 2019 (27.0% and 15.5% respectively). At the Nogales port, the value of exported U.S. commodities to Mexico of $7.7 billion was just 1.5% short of the 2019 level of $7.8 billion (Figure 2).  Even if disappointing, Nogales’ figures were not as discouraging as those experienced at Santa Teresa port (- 12.8%) or at El Paso (-41.5%). However, in spite of much slower recovery at those two ports, the Nogales port has remained in the fourth position as in 2019.

Figure 2. U.S. Exports to Mexico via Western Ports of Entry, January-September 2022 vs. January-September 2019, Dollars

U.S. Imports From Mexico via Nogales Port Exceeded the 2019 Level

During the first nine months of 2022, the Nogales port facilitated $13.9 billion worth of imported commodities from Mexico, which was about $2 billion or 16.4% more than in the same period in 2019 (Figure 3). Except for the El Paso port, all other major western ports recorded higher increases than the Nogales port; the U.S. imports through the first- and second-positioned Otay Mesa and Santa Teresa grew 27.5% and 23.2%, respectively, while a 17.7% increase via Calexico East was just little above that at Nogales. However, the Nogales port has retained its third position among the major western ports.

Figure 3. U.S. Imports from Mexico via Western Ports of Entry, January-September 2022 vs. January-September 2019, Dollars

Nogales Port: Impact of Slow Recovery of Top U.S. Exports to Mexico

As shown in Table 1, the U.S. exports to Mexico via the Nogales port have been dominated by two commodity groups, electric machinery (HS 85) and ores, mainly copper ore (HS 26).[7]  These two commodity groups accounted for about 40% of the total value of exported goods during the observed period. Trailing behind are nuclear reactors (HS 84), and plastics (HS 39), while vehicles and parts (HS 87) lost its share of 7.6% in 2019 to 2.7% in 2022.

Table 1. Top U.S. Exports to Mexico via Nogales Port, January–September, Dollars

The pace of recovery of U.S. exports to Mexico via the Nogales port has been influenced largely by slow recovery in the exports of the electric machinery (HS 85), and vehicles and parts (HS 87). In 2022, exports of these commodities were still below 2019 levels by 11.3% and 64.9%, respectively. On the other side, as shown in Figure 4, several commodities surpassed the 2019 export levels, among them ores (HS 26), nuclear reactors and boilers (HS 84), and plastics (HS 39). The highest increase of 28.3% was recorded in HS23, an obscured category encompassing prepared animal food and other food industry residuals.

Figure 4. Top U.S. Exports to Mexico via Nogales Port of Entry, January-September 2022 vs. January-September 2019, Percent Change

Almost All Top U.S. Imports via Nogales on the Rise

Three broad commodity groups dominate the composition of U.S. imports from Mexico via the Nogales port: assembled cars (HS 87), electric machinery (HS 85), and fresh produce (combining HS 07 and HS 08). Together they accounted for two-thirds of all imported value in 2022, as shown in Table 2.

Table 2. Top U.S. Imports from Mexico via Nogales Port, January–September, Dollars

All ten top import commodities have surpassed the 2019 dollar value during the January-September period, as shown in Figure 5. Except for beverages and spirits (HS 22), the increases in 2022 over 2019 are very small, but still a positive sign of recovery. The top four imports – vehicles (HS 87), electric machinery (HS 85), fruits (HS 08) and vegetables (HS 07) -- have retained their top positions among U.S. imports via the Nogales port. Among the slower recovering imports were ores (HS 26), live animals (HS01) and HS71 encompassing natural pearls and precious stones, but together these commodity groups accounted for a small percentage of the overall imports.

Figure 5. Top U.S. Imports from Mexico via Nogales Port of Entry, January-September 2022 vs. January-September 2019, Percent Change

October Data: On the Rise Again

Compared to the previous month and more importantly, compared to the same month of the pre-COVID year, the latest data for October 2022 showed a positive trend for the total trade through Nogales port.  In imports from Mexico, the Nogales port topped all other major western POE with a 65.5% increase over the same month in 2019. In exports, with 13.9% increase, the Nogales port lagged behind California’s ports of Calexico East and Otay Mesa, but did much better than El Paso and Santa Teresa. Imports and exports of top trading commodities recorded increases above the 2019 levels as well. The largest recovery occurred in the shipments of transportation products: U.S. exports of vehicles and parts (HS87) were 170.9% above the October 2019 level, while the imports rose a staggering 572%.