EP102: China’s Auto Expansion in Mexico: A Backdoor Threat to North American Trade

Summary:

In this episode, we detail the rapid growth of Chinese automotive imports into Mexico, raising concerns about the USMCA trade agreement. This influx of Chinese vehicles, particularly electric vehicles, threatens North American automakers due to competitive pricing (sometimes under cost in a case of dumping) and technological advancements. We explore potential loopholes in USMCA rules of origin, allowing Chinese manufacturers to circumvent tariffs, and discuss potential responses from the U.S., Canada, and Mexico, including stricter trade enforcement and regional collaboration. The overall concern is the erosion of North American automotive industries and increased dependence on Chinese supply chains.

Questions to consider as you read/listen:

1. How is China exploiting USMCA rules to expand its automotive presence in Mexico?

2. What economic and geopolitical risks does this expansion pose to the US and Canada?

3. How can USMCA members mitigate the threat and foster fair competition?