China uses Mexico as a key route to reach the United States

Know how China is establishing a route that traverses Mexico to reach the United States market in order to evade tariffs.

The exponential growth of trade between China and Mexico is generating significant changes in global trade routes, turning Mexico into a key player in the exchange of goods.

This phenomenon, driven by the search for alternatives to bypass tariffs and trade restrictions imposed by the United States, has led to a 60% increase in container shipments from China to Mexico in January 2024, according to data from the firm Xeneta.

The Xeneta report reveals that the flow of containers from China to Mexico has experienced an unprecedented increase, reaching an exponential rise compared to the same period of the previous year.

This growth adds to a 35% increase recorded in 2023, consolidating Mexico as one of the main trade routes in the world for China.

The commercial triangulation strategy

This sustained growth in trade between China and Mexico is not only evident in shipment figures but also in the annual increase of 34.8% in containers through the West Coast during 2023.

This increase has led Mexico to surpass China as the United States’ top trading partner in imports in the same year.

However, experts like Peter Sand, Chief Shipping Analyst at Xeneta, warn about the possibility that this triangulation is being used to evade the tariffs imposed by the United States on Chinese imports, as part of the ongoing trade war between these two economic powers.

China avoids tariffs and trade restrictions

The strategy behind this increase in trade is related to China’s desire to avoid the tariffs and trade restrictions imposed by the United States on Chinese imports.

Mexico emerges as an attractive destination due to its geographical location, its membership in the United States-Mexico-Canada Agreement (USMCA), as well as its ability to pay wages comparable to those in China.

This makes Mexico a backdoor for Chinese exports to the US market, especially through land routes.

Opportunities and challenges for Mexico

The growth of trade between China and Mexico presents both opportunities and challenges for the Latin American country.

On one hand, there is an increase in economic activity and the movement of goods in key ports like Manzanillo, reflecting Mexico’s importance as a logistics hub in North America.

However, this outlook also poses significant challenges in terms of infrastructure and logistics, as well as in negotiating trade agreements in an international context marked by uncertainty and trade tensions.

The need to comply with rules of origin and protect the domestic industry against Chinese competition are aspects that require attention from Mexican authorities.

Response from the United States

In the face of this situation, the United States faces the task of responding strategically and diplomatically.

While some sectors push for additional punitive measures, a smarter response could focus on promoting innovation and domestic competitiveness, as well as reassessing its approach to global trade.

Experts from Xeneta consider that investing in technology, infrastructure, and education could be a more fruitful long-term response, allowing the United States to strengthen its economic position and maintain its competitiveness on the international stage.

Ultimately, the current situation presents an opportunity to redefine trade relations and promote a more equitable and sustainable economic system for all parties involved.

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Sources: El Financiero, El Economista, El País