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Mexico Also Wants To Decouple From China
Milton EzratiSenior Contributor
Milton Ezrati writes on economics and finance.
As Mexico, Canada, and the United States prepare for the 2026 review of the successor to NAFTA, the U.S. Mexico Canada Agreement (USMCA), China seems likely to assume a prominent place on the agenda, at least as far as the Mexicans are concerned. Mexico’s new President Claudia Sheinbaum has made it clear through her Deputy Trade Minister Luis Rosendo Gutierrez that her nation’s top priority is to reduce its dependence on Chinese imports and attend to Mexico’s need to support its “own domestic supply chains.” That sort of language sounds very similar to what Washington is saying to describe U.S. needs. With this, Mexico could not more clearly signal that it is ready to join the United States and Canada to limit Chinese trade access to North America.
Two issues dominate Mexico’s China problem. One is how the quantity and growing sophistication of Chinese imports has rendered Mexico increasingly dependent on China. The other is the appearance that Chinese business is avoiding U.S. tariffs on Chinese product by using Mexico as a conduit for its goods. Gutierrez has denied that Mexico is a “springboard from Asia to the U.S.,” but neither can he deny that his country hosts a great many Chinese operations or that the growth of Mexican sales in the United States includes a lot of product from Chinese owned and sometimes operated plants in Mexico and that also contains inputs from China. The government in Mexico City has made it clear that it would dearly love to replace these Chinese facilities with the operations of U.S.-based firms, though it has to date struggled to make good on this effort.
Even abstracting from the question of tariff avoidance, there is no denying the unsettling Mexican dependence on China trade. According to Mexican government statistics, Mexican imports from China have grown by the dollar equivalent $45 billion since 2015, while Mexican exports to China have increased a mere $5 billion. Mexico’s trade deficit with China has almost doubled during this time, expanding from the equivalent of $65 billion in 2015 to over $110 billion at the start of this year. Chinese product alone commands one fifth of all Mexican imports, and some 70 percent of those goods go to only 50 firms operating in Mexico, almost half China based.
Mexico Also Wants To Decouple From China
Mexico seems ready to line up with efforts by the United States and Canada to limit Chinese imports and influence in North America.
www.forbes.com
