The Mexican government recently announced imposing tariffs as high as 50% on goods from China and other countries. In response, China promptly initiated retaliatory measures by investigating Mexican tariffs on Chinese goods and launching an anti-dumping investigation on nuts traded between the US and Mexico. Experts believe that this trade friction highlights Mexico’s clear alignment with the United States in the US-China trade war, assisting the US in building a “North American fortress” to block Chinese goods from entering, indicating an escalating struggle between the US and China in traditional manufacturing industries.
Mexico’s government declared on September 10th that it would levy import tariffs ranging from 10% to 50% on goods from non-FTA partners, affecting various product categories like automobiles and parts, motorcycles, textiles, clothing, appliances, furniture, and steel.
The draft legislation submitted to the Mexican Congress includes a tariff list of about 1,400 products, impacting imports worth $52 billion. Notably, the list covers countries other than China as well, primarily to prevent China from circumventing tariffs by transshipping through third countries.
This policy is expected to significantly impact Chinese exports, particularly in the automotive sector. According to data from the China Association of Automobile Manufacturers, in the first half of this year, Mexico became the top destination for Chinese automobile exports, reaching 234,500 vehicles, a 30.7% year-on-year increase.
In response to Mexico’s tariff measures, the Chinese Ministry of Commerce announced on September 25th the initiation of a trade investment barrier investigation on Mexico’s restrictions related to China. Additionally, China also initiated an anti-dumping investigation on pistachios originating from Mexico and the US.
A spokesperson for the Chinese Ministry of Commerce stated that Mexico’s unilateral taxation measures, even if compliant with the WTO framework, would harm various parties’ interests, including China’s, amid increased tariffs by the US.
Professor Sun Guoxiang from the Department of International Affairs and Business at South China University of Technology analyzed that Mexico’s tariff hikes on 1,400 products from China and other Asian countries reflect a dual consideration of responding to US pressure and protecting domestic employment.
Mexico proposed the “North American Fortress” concept in March of this year, intending to subject Chinese goods to the same tariffs as the US and urging Canada to take similar measures to restrict Chinese goods from entering the North American market through Mexico and Canada.
Furthermore, Sun Guoxiang further analyzed, stating, “Mexico is a pivotal hub in the US nearshore outsourcing and USMCA production network. The US is concerned about China entering the North American market through investment or transshipment in Mexico, leading to continued pressure on Mexico to strengthen origin rules and control points. Recent indications show that Mexico is more inclined to adjust its policies to accommodate North American supply chains and US security concerns.”
The Financial Times published an article stating that China’s comprehensive investigation into the increased tariffs on Chinese products by Mexico and other trade restrictions is a significant move by Beijing to counter third-country cooperation with the US to restrain trade with China.
American economist Davy J. Wong expressed to the Epoch Times that China’s counter-investigation is essentially a systemic retaliation against Mexico’s recent taxation of Chinese goods while sending a clear signal to other countries that siding with the US comes with consequences.
Wong further highlighted, “Beijing’s discontent with Mexico stems primarily from economic and strategic considerations: Mexico has long benefited from Chinese investment and trade, and now ‘betraying’ the CCP under the US pressure prompts Beijing to take retaliatory action.”
Regarding the ongoing US-China dynamics, Wong believes that despite temporary agreements in areas like TikTok and technology, conflicts persist in traditional manufacturing, subsidies, and tariffs, particularly in the Mexican context within the nearshore manufacturing, goods transit, and chemical supply chain complexities.
Looking ahead, Sun Guoxiang predicts three possible scenarios: China maintains pressure through barrier investigations and selective countermeasures to secure technical exemptions or threshold adjustments; Mexico solidifies tariff frameworks in Congress and budget processes while retaining implementation flexibility; and the US and China manage cases like TikTok independently but continue high probability scenarios of escalation in trade disputes in areas like automobiles, electric vehicles, and key materials.
The new tariff plan requires approval from the Mexican Congress, but with the ruling party and its allies holding a two-thirds majority in both houses, significant obstacles are not expected. Concurrently, the USMCA is set for its first review in 2026, and Mexico’s actions are seen as an early move to secure leverage for this review.
In the current landscape, competition between the US and China in traditional manufacturing sectors like automobiles is evolving into a “differentiated issue with simultaneous intensification” where supply chain reconstruction risks are worsening, testing Mexico’s role as a pivot hub for nearshore outsourcing.
Wong notes that Mexico is both an essential trade partner for China in Latin America and a potential transit point for Chinese goods into the North American market, as seen by the US, raising concerns as a source of the drug crisis. The US may seek to restrict Chinese goods flowing through Mexico using the USMCA or other measures or economically incentivize Mexico.
On the day China announced the investigation into Mexico’s increased tariffs, President Trump declared that starting October 1st, a 100% tariff would be imposed on imported drugs, 50% on kitchen and bathroom cabinets, and 30% and 25% on upholstered furniture and heavy-duty trucks. He added that companies already constructing pharmaceutical factories in the US could receive exemptions.
White House trade adviser Peter Navarro stated on September 26th that the new tariffs aim to reduce US reliance on China, promote reshoring of supply chains, and safeguard national security through tough trade policies, citing an example of a Chinese company receiving FDA approval for antibiotics, injecting capital into an Indian company, forging contracts with the Department of Veterans Affairs, thus squeezing out US manufacturers. “This is a typical issue we must address. Tariffs are crucial.”