Mexico is taking significant steps to preserve the integrity of its trade relationship with the United States and Canada under the USMCA (United States-Mexico-Canada Agreement).
This comes in the wake of mounting pressure from former U.S. President Donald Trump, who had threatened punitive tariffs on Mexico unless the country took stronger measures to address drug trafficking and migration.
In response to Trump’s earlier ultimatum, Mexico has ramped up its efforts to combat illicit activities, such as drug trafficking and unauthorized migration. The country’s crackdown on contraband goods from Asia has been particularly notable, with authorities seizing record amounts of fentanyl.
Mexican law enforcement has also detained thousands of migrants attempting to travel northward toward the U.S. border.
These measures have not gone unnoticed. U.S. President Joe Biden recently expressed gratitude to Mexican President Claudia Sheinbaum, as well as the country’s military and law enforcement agencies, for their decisive actions.
The seizure of over 20 million doses of illicit fentanyl has been a significant achievement, demonstrating Mexico’s resolve to address these challenges head-on.
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While tackling these internal issues, Mexico has also been proactive in addressing concerns raised by the U.S. regarding trade. Trump and certain U.S. industry leaders have accused Mexico of serving as a gateway for Chinese goods and investments, allegations that Mexican officials have firmly denied.
However, Deputy Economy Minister Luis Rosendo Gutiérrez acknowledged that Mexico is taking cues from U.S. policies, particularly in scrutinizing foreign investments.
Mexico is exploring the creation of a mechanism similar to the U.S. Committee on Foreign Investment (CFIUS) to ensure greater oversight of inbound investments. This approach aims to reassure its trade partners that Mexico is aligned with regional standards and practices.
When asked about Chinese automaker BYD’s plans to build a factory in Mexico, Gutiérrez clarified that the plant’s focus would be on serving the local market, not exporting to the United States. This clarification came after Trump threatened a 100% tariff on all cars crossing the Mexican border in response to BYD’s investment.
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To strengthen its position as a key player in regional manufacturing, Mexico is considering offering incentives to attract investments in critical industries, such as battery production. With the U.S. placing a premium on regionally produced batteries, Mexico aims to position itself as a competitive supplier within North America.
Meanwhile, Mexico is awaiting the outcome of a dispute panel under the USMCA regarding its restrictions on genetically modified (GM) corn imports. The government has signaled its willingness to comply with the panel’s ruling, even if it is unfavorable.
Depending on the decision, Mexico may need to revisit its proposed constitutional reform that would prohibit the use of GM corn for human consumption.
Mexico’s efforts to balance domestic priorities with the demands of its trade partners underscore its determination to safeguard regional trade agreements. By addressing issues like illicit trafficking, migration, and foreign investment oversight, Mexico is striving to demonstrate its commitment to being a reliable partner within the USMCA framework.
As Mexico continues to engage with its neighbors, its focus on fostering stability and mutual trust will be critical. Whether it’s navigating sensitive trade disputes or creating opportunities for regional manufacturing, Mexico is intent on maintaining its role as a vital player in North American commerce. The coming months will likely reveal the full impact of these efforts on the nation’s economic and diplomatic standing.