Mexico ditches Chinese products amid fears of exclusion from US-Canada trade pact

Mexico has been taking a bashing lately for allegedly serving as a conduit for Chinese parts and products into North America, and officials here are afraid a re-elected Donald Trump or politically struggling Canadian Prime Minister Justin Trudeau could try to leave their country out of the US-Mexico-Canada free trade agreement.

Mexico’s ruling Morena party is so afraid of losing the trade deal that President Claudia Sheinbaum said on Friday the government has gone on a campaign to get companies to replace Chinese parts with locally made ones.

“We have a plan with the aim of substituting these imports that come from China, and producing the majority of them in Mexico, either with Mexican companies or primarily North American companies,” Sheinbaum said.

While Sheinbaum claimed Mexico had been working on that effort since the 2021 global supply chain crisis – when factories around the world were stalled by a lack of parts and particularly computer chips from Asia – it appears to be an uphill battle. Even the United States has faced big challenges in moving chip production back home despite billions in subsidies and incentives.

Mexico gained tens of thousands of jobs when US and foreign carmakers moved their plants to Mexico under the free trade pact to take advantage of much lower wages. But the idea that Chinese parts – or even whole cars – could be piggybacking on that arrangement to further hollow out the US auto industry has enraged some people north of the border.

So Mexico is scrambling with private companies to get them to move parts production here.