Phoenix, Arizona - As the United States and China continue to increase tariffs on one another, China has been dethroned by Mexico as the U.S.'s number one trading partner.

Our southern neighbor found its way to the top amid continued uncertainty about our trade policy with China. Trade-in goods with the Asian nation fell sharply in the first half of the year as U.S. imports from China decreased by 12 percent compared to a year earlier. Exports to China were also down by 18 percent, according to data released by the Commerce Department.

Mexico ranks first in terms of the total overall value of goods traded with the United States, with Canada coming in at number two and China in third. In recent months, President Trump has wanted to limit the trade deficit the US has with China. That deficit shrunk by about 10% to $180 billion from $200 billion.

The top imports from Mexico include computers, motor vehicle parts, commercial vehicles, oil, produce, and commuter vehicles. Mexico recorded $557 billion in trade with the U.S. in the latest annual figures.

Representatives from Washington and Shanghai went through another round of trade talks in July to no avail as President Trump said he would impose 10 percent tariffs on another $300 billion in Chinese imports starting on September 1. New talks are scheduled for September in Washington. Until then, Mexico will be sure to enjoy its reign as the biggest trading partner with the U.S.

"Businesses keep doing the right thing for the most part, and executives on both sides are looking more at the markets than the politicians for guidance. That said, politicians are both helping and hurting," Doug Bruhnke, CEO/founder of the Global Chamber said. We can withstand lots of hot air from the politicians, and we'll navigate the world because we have to. Eighty-five percent of new business is outside the U.S. in the next 5 years and so companies recognizing the opportunity are reaching new markets all over the world to capture opportunity."

The Trump administration added tariffs on $250 billion-worth of Chinese imports this year and in addition to the new tariffs set to begin September 1st. In response, China has placed tariffs on $110 billion-worth of U.S. goods.

"China will leverage some of the world against U.S. manufacturers, and so this is extremely troubling for the U.S. in the long term," Bruhnke said. "The pain has only just begun. U.S. exporters are already scrambling in agriculture and other industries to find alternative markets for export."

Mexico, on the other hand, has steadily increased trade with the United States. Trade with the U.S. rose to $257.72 billion through the first five months of this year, which represents 3.6 percent above its total trade during the same period last year. Exports from the U.S. to Mexico decreased by .42 percent while imports from Mexico ticked up 6.74 percent, according to data from the U.S. Census Bureau.

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