This article uses both new and published data on Mexico's foreign trade to measure terms of trade and to investigate the relationship between trade and the early growth of domestic industry. This analysis yields five conclusions: (1) Mexican terms of trade declined, largely due to the dramatic fall in the price of silver; (2) the growing diversity of Mexican exports significantly cushioned the short-term impact of silver depreciation; (3) declining terms of trade did not characterise the entire era, but instead were concentrated in two periods: 1891–97 and 1912–21; (4) although net barter terms of trade declined, Mexico's capacity to import – measured by the income terms of trade – improved markedly, and (5) this proved absolutely crucial in financing the concurrent process of incipient import-substituting industrialisation. In other words, the Porfiriato witnessed a development process in which trade growth and the spread of domestic manufacturing were highly complementary. Without the former, industrialisation would have been severely handicapped.