On November 22, the Mexican government announced that it is taking proactive measures to encourage domestic companies to replace Chinese imports with North American-made components, in an effort to ease pressure from the United States and Canada. This initiative comes in response to concerns that Mexico has been acting as a "transshipment hub" for Chinese products and parts entering the North American market, which has raised alarms about the implementation of the United States-Mexico-Canada Agreement (USMCA). Mexican President Claudia Sheinbaum emphasized that the country will prioritize local and North American parts production, particularly in the semiconductor industry, in an effort to reduce over-reliance on China and ensure the smooth execution of the agreement.
Mexico's trade relationship with the United States and Canada is heavily influenced by the USMCA. Since its implementation in 2020, the trade deal has provided Mexico with significant job opportunities, particularly in key sectors such as automobile manufacturing. However, the issue of Chinese parts entering North America via Mexico has become a focal point in U.S. political circles. Some American lawmakers have called for stricter regulatory measures in Mexico, even threatening to exclude the country from future reviews. In response, the Mexican government has begun collaborating with private enterprises to shift more production lines to Mexico, aiming to reduce external pressure.
Since the global supply chain crisis in 2021, Mexico has been working to boost its domestic parts production capacity, especially in the semiconductor sector, although this transformation is not expected to happen overnight. Mexican Economy Minister Marcelo Ebrard stated that while the initial chips produced may not match the most advanced technologies, Mexico plans to begin pilot production of microchips next year.
EqualOcean believes that while Mexico may not be able to quickly eliminate its dependence on Chinese imports, this move will help alleviate potential trade tensions in the future. Although the USMCA review process may bring new pressures in 2026, it is expected that Mexico will continue to implement reforms and legal adjustments to ensure the continuity of the agreement and avoid being excluded.
Picture Source: Raquel Cunha / Reuters