Mexican President Claudia Sheinbaum introduced an economic plan on Monday that was seemingly tailored to avoid U.S. President-elect Donald Trump’s threatened tariffs by reducing imports from China.
She also touted the USMCA trade agreement between the U.S., Mexico, and Canada as the best way to handle competition from China.
Trump said during his campaign that he would impose 25 percent tariffs on goods from Canada and Mexico if they did not take certain steps to improve the physical and economic security of their borders with the United States.
In addition to concerns about illegal migrants and drugs flowing across the northern and southern borders, Trump wants to crack down on the abuse of “near-shoring,” which broadly means moving off-shored manufacturing closer to the physical territory of a nation. In practice, this mostly involves moving factories from China to Mexico.
The problem is that near-shoring can help China evade tariffs and trade barriers by manufacturing products in the much more trade-friendly environment of Mexico, which is linked to the U.S. and Canadian economies in a massive continental trade agreement called USMCA. This agreement was implemented by the first Trump administration in July 2020 to replace the North American Free Trade Agreement (NAFTA), which was criticized for being disadvantageous to American workers and industries.
Canadian officials have also expressed concerns with Mexico becoming a “back door” for Chinese goods flooding North America. Studies showed Chinese container shipments to Mexico surging over the past few years, with an astounding increase of 60 percent in 2023 alone, along with skyrocketing Chinese investments in Mexico.
The number of Chinese companies in Mexican industrial parks has doubled since 2021, with much of the growth clearly coming from industries that were strongly affected by U.S. and Canadian tariffs, such as automobiles and electronics.
Much of the U.S. media establishment scoffed at Trump’s tariff threats and predicted he would only drive Mexico deeper into China’s waiting arms, but President Sheinbaum’s remarks on Monday suggested Trump’s message was received in Mexico City.
Sheinbaum pledged to reduce the tidal wave of imports from China, stressed her administration’s support for the USMCA, and announced pro-growth policies intended to make Mexico more attractive to North American investors. Among the items on her agenda was protecting Mexico’s steel and textile industries from Chinese product dumping.
“Our objective is to expand to the entire American Continent, which is the vision we want to have in order to be the region with the greatest potential and development in the world,” she said.
Manufacturing groups in both the U.S. and Mexico applauded Sheinbaum for imposing new tariffs that target cut-rate Chinese companies like Shein and Temu. Both American and Mexican officials are looking for ways to block China’s abuse of the “de minimis” provision in laws like America’s Uyghur Forced Labor Prevention Act (UFLPA), which exempts small parcels from certain forms of customs scrutiny.
“Despite the legal efforts of Mexico and the United States to prevent the importation of goods that are undervalued, made with forced labor or with tariff or regulatory restrictions, we have seen firsthand how the Asian market has gained an unfair advantage through predatory trade practices, displacing companies and workers in the USMCA industries and undermining our critical co-production chain,” textile industry groups said in a letter to Sheinbaum on Monday.
Kim Glas, president and CEO of the National Council of Textile Organization (NCTO), said Mexico’s textile industry has suffered “astronomical” job losses from unfair Chinese competition, while the U.S. has shuttered 25 textile plants over the past 18 months.
“The distress that the Mexican industry is feeling is being felt throughout the hemisphere, including here in the United States,” she said, citing China’s exploitation of de minimis shipping exemptions, and the Chinese government’s heavy subsidies for certain products, as major issues.
“We have been facing eight consecutive quarters with a decline every single quarter; for eight quarters, we have been losing jobs and losing share,” added Rafael Zaga Saba, chair of the National Chamber of the Textile Industry of Mexico (CANAINTEX).
“At the end of the day, what we seek is to defend employment, defend local industry, and seek a counterweight to the uneven floor that exists from unfair imports,” said Fernando Padilla, president of the Association of Industrial Suppliers Companies of Mexico (APIMEX).
The New York Times (NYT) in early January quoted some Mexican manufacturers who thought Trump was bluffing with his tariff threats and anticipated more goods and investment from China as it abused near-shoring to evade punitive measures. Two weeks later, the number of prominent Mexican voices who think Trump is bluffing appears to be considerably smaller.
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