China's economic activity in Mexico could harm renewal of trade agreement with the United States and Canada | Economy and business

The sovereignty proclaimed by Mexico and the boasts inspired by Donald Trump's autarky already clash with a world where geopolitics leads to a strong overlap of economies. In the competitiveness sought by North America, there is no room to flirt with China, another of the major poles of the world market. And this is why Canada has turned against Mexico, which it accuses of allowing the Asian giant to slip through its borders by circumventing the trilateral treaty, the USMCA. Assembling cars with Chinese-made auto parts has not only reignited the threat of tariffs from Trump, who is preparing to move back into the White House; it also caused Canadian liberals to raise their voices in a game that experts say is opportunistic, given that Canadian elections are scheduled for next year and the rise in conservative views suggests the need for tougher messages. Mexico remains the weakest partner in the alliance and, according to international affairs experts, it cannot get out of the way: its domestic well-being depends, more than anyone, on its northern neighbors.

Mexico is in fact triangulating Chinese exports to the United States and Canada, estimates Estefana Cruz of the UNAM North America Research Center. And the biggest alarm concerns automobile manufacturing, a key part of domestic and foreign economies. The United States, and now also Canada, will not tolerate products manufactured by China entering their territory via Mexico, where these vehicles are assembled. And they will not accept the assertion that the Chinese factories planned in Mexico are exclusively intended to supply the Latin American market and not to export to the United States, as the Asian electric car manufacturer BYD has pointed out. China presents itself as a hegemonic power that wants to be present in the Latin American market, but Mexico cannot be a tool for this, believes Pa Taracena, of the Iberoamerican University. Maybe Brazil or Argentina could do it for them, she suggests. Mexico already has most of its eggs in the northern region's basket, and breaking them would be very expensive, she notes.

The review of the USMCA is scheduled for 2026, always with the threat of renegotiation in the background. The trade agreement is the tool with which the three North American countries protect themselves as a globally competitive bloc and repel China's advance. It's not in the interest of any of the three countries to break the deal, Taracena says, but Mexico stands to lose the most, so bilateral deals and continuing to flirt with China are not a good idea. not in her interest, she said. From [former Mexican president] Porfirio Daz (1876-1911), we are talking about diversifying the economy, but China poses problems, the national interest belongs to North America, she adds.

Mexico depends on cheap Chinese manufactured goods for its appliances, cell phones, pharmaceutical ingredients and fertilizers, but it will need to ensure that this trade is not triangulated with the United States, but rather remains domestic, Cruz said. This expert suggests that Mexico would do well to delay treaty negotiations until late 2026, when the United States must hold midterm elections that could change the composition of Congress, where the treaty revision must be ratified.

Elections are always a key factor in interpreting international messages, and Canada will elect its new prime minister in 2025. The country is losing its indigenous population, young people are looking for well-paid jobs elsewhere, Cruz says, and conservatives, by example, now gaining ground in the polls. It is therefore not surprising that the message from the Liberals, led by Prime Minister Justin Trudeau, adopts a conservative connotation. Canada is aligning itself with the United States, in a position that is not temporary, but consistent since the United States declared a trade war on China during Trump's first term, Cruz explains. But in addition, the Canadian Prime Minister is trying to avoid pressure from his country's conservatives, angry with Mexico. Mining appears to be one of the battlegrounds here. Mexico has changed the rules of the game with judicial and energy reform, and this response from Canada is linked to pressures from its mining sector, which also experiences high levels of insecurity in Mexico, says Taracena. Mexico must push to show that things are not like that [industrial] say the groups, says the expert.

Claudia Sheinbaum's new government team in Mexico, with Marcelo Ebrard at the head of the Economy and Juan Ramn de la Fuente at the Ministry of Foreign Affairs, will have to be extremely careful in relations with China and demonstrate how far investments go of the Asian country and what are their effects. they will, experts say. It's a sensitive issue, Taracena said.

Canada and Mexico are both concerned about U.S. companies relocating to their territories in a widely publicized trend called nearshoring, but they are not competing for the same sectors; Canada is more interested in nanochips and Mexico in commonly used semiconductors, Cruz says. Canada also hopes to welcome biomedical and technology companies, which is why Trudeau is in the right place, alongside Trump. Rather than fearing an internal electoral setback, he is being opportunistic, Cruz says. Regardless, relations between Mexico and Canada have also been smooth under conservative governments, she notes. There is no reason for Canada to try to keep Mexico out of the regional agreement that the three countries currently maintain.

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