In 2023, Mexico, which has recently become the United States’ top trading partner, surpassing China, made a significant move in its trade policy by increasing tariffs on a range of Chinese imports. This decision comes at a time when Mexico’s economic ties with both the U.S. and China are deepening, with China emerging as one of Mexico’s fastest-growing foreign investors. Following the COVID-19 pandemic and the U.S.-China trade war initiated under President Donald Trump, Chinese foreign direct investment in Mexico notably increased.
In the state of Nuevo León, a key economic region, Chinese corporations accounted for 30% of foreign investment in 2021. This investment surge has been beneficial for Mexico, leading to job creation and bolstering the country’s geopolitical significance. Samuel García, the governor of Nuevo León, acknowledged this impact, highlighting the region’s growing international economic relations. In response to these developments, and amidst evolving trade relations with the U.S., Mexico implemented temporary tariffs ranging from 5 to 25 percent on 392 products from countries with which it does not have a free trade agreement, including China.
These tariffs, effective from August 16, 2023, to July 2025, affect about 90 percent of Chinese exports to Mexico. China’s reaction to this policy shift was negative, with He Yadong, a spokesman for China’s Ministry of Commerce, expressing hope for Mexico to maintain free-trade principles. He also noted concerns about the impact of these tariffs on investor confidence. This move by Mexico raises questions about its rationale. One possible explanation is U.S. pressure. As Mexico balances its relationship with the U.S. and China, the tariff increase might be seen as an effort to align more closely with U.S. trade preferences and address concerns about China’s growing economic influence in the region.
Another reason could be Mexico’s need to increase state revenue. Facing a high deficit and needing funds for social programs and development projects, the tariffs on Chinese imports could provide a significant revenue source. Mexico’s primary exports to China include steel, aluminum, auto parts, and chemicals, and these tariffs could generate substantial state income. A third consideration might be nudging China towards negotiating a free trade agreement. The tariffs specifically target nations without such agreements with Mexico.
This strategy could be part of a larger plan to balance Mexico’s trade relationship with China, which is currently heavily skewed towards imports. The meeting between Mexican President Andrés Manuel López Obrador and Chinese President Xi Jinping at the APEC Summit in San Francisco indicated a continuing commitment to trade and cooperation. This context suggests that Mexico is maneuvering its trade policies to balance its economic interests between the U.S. and China while pursuing its broader trade and economic goals.
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