When it comes to evaluating the global marketplace for exporting opportunities, the biggest potential markets for U.S businesses are those closest to home — Canada and Mexico.

These North American neighbors are also the biggest international trading partners for the United States. In 2022, Canada was the largest purchaser of U.S. goods at $356.5 billion, followed by Mexico with $324.3 billion in purchases, according to the Office of the U.S. Trade Representative.

In addition, the United States, Mexico, and Canada are parties to the United States–Mexico–Canada Agreement (USMCA), which took effect July 1, 2020, replacing the previous North American Free Trade Agreement (NAFTA). Free trade agreements such as the USMCA are designed to offer U.S. companies greater market access through reduced trade barriers.

Advantages of doing business nearby

That proximity has numerous benefits for companies looking to expand sales by selling to international customers:

Canada: Key market to the north

In most industry sectors, Canada is a highly receptive, open, and transparent market for U.S. companies, with Canadians spending more than 60 percent of their disposable income on U.S. goods and services.

Cabot Hosiery Mills, a small business textile manufacturer based in Northfield, Vermont, has found a steady market in Canada for its Darn Tough Vermont socks. The family-owned company made a strategic decision to expand and create a global brand outside the United States, relying on export credit insurance from the Export-Import Bank of the United States (EXIM) to reduce the inherent risks.

Partnership pays off

That allowed Darn Tough to expand its international sales from fewer than five countries to more than 25 countries worldwide — with nearly 60 percent of its portfolio shipping to Canada. With export credit insurance, the company has been able to offer credit terms rather than requiring customers to pay cash in advance, which allows it to focus on customer experience and sales strategy.

“Without EXIM Bank, I’m not sure that I’d be standing here right now because we would not feel comfortable sending our product around the world without its coverage. So it has really opened up the world for us,” said Joe Nocito, international sales manager for Darn Tough.

Mexico: Key market to the south

Given Mexico’s large and diversified market, most U.S. products and services have ample market opportunities.

That’s been the experience for Auburn Manufacturing Inc., a woman-owned company based in Mechanic Falls, Maine, that produces high performance textiles for extreme temperature protection. But the company needed invoice insurance before its lender would consider foreign accounts receivable as collateral, so it turned to EXIM’s export credit insurance for protection against nonpayment as well as an expanded borrowing base.

Strengthening customer relationships

Auburn has expanded its markets, shipping to more than 30 countries worldwide. Exports account for about 25 percent of sales — with nearly half its portfolio destined for Mexico.

“EXIM Bank has helped us build our export business by allowing good customers to buy on payment terms, just like our domestic customers,” said President & CEO Kathie Leonard. “Such customer service has helped us to develop long-lasting relationships with companies in all parts of the world.”

For nine decades, EXIM has played a pivotal role in creating economic opportunities for U.S. companies like Darn Tough and Auburn Manufacturing. Founded in 1934, the agency is celebrating its 90th anniversary this year.

To learn how U.S. companies have grown their business by expanding into global markets, check out EXIM’s Success Stories. To find out how EXIM can help your company become more profitable by selling worldwide, talk directly with a trade finance specialist.

As an independent federal government agency, the Export-Import Bank of the United States (EXIM) provides trade finance solutions to assist U.S. businesses as they compete for global sales. Celebrating its 90th anniversary in 2024, EXIM offers financial tools including export credit insurance, working capital guarantees, and loan guarantees that are designed to help U.S. companies mitigate risk and access working capital so they can confidently export their goods and services worldwide. These tools support companies of all sizes, including traditionally underserved businesses such as those owned by minorities, women, veterans, people with disabilities, the LGBTQ+ community along with startup businesses and those located in rural areas.

Source: https://www.bizjournals.com/bizjournals/news/2024/05/01/canada-and-mexico-represent-top-us-export-market.html