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How Mexico can become a global economic powerhouse by competing with China and counting on help from the US

Written by Rafaela Fabris
Published 18/01/2025 às 10:19
How Mexico can become a global economic powerhouse by competing with China and counting on help from the US
Mexico is investing heavily to strengthen its economy, reducing its dependence on China and focusing on "Made in Mexico". The idea is to attract investment from the US and become one of the 10 largest economies in the world.

With an ambitious plan to strengthen “Made in Mexico,” reduce dependence on Asian imports and attract U.S. investment, Mexico aims to enter the top 10 of the world's largest economies while facing challenges posed by China and Trump's tariffs.

In recent years, Mexico has been the scene of a significant economic transformation, trying to consolidate itself as one of the ten largest economies in the world. Intertwined with its largest trading partner, the United States, and facing an ambiguous relationship with China, the country finds itself at a crossroads that could define its economic future.

With a bold plan presented by President Claudia Sheinbaum, Mexico proposes to strengthen its local production and reduce dependence on Asian imports. But will this strategy be enough to overcome the challenges posed by global powers like China?

The current context: Mexico between the US and China

Mexico has a deep historical and economic relationship with the United States. Geographic proximity and the Treaty between Mexico, the United States and Canada (T-MEC) ensure robust trade, positioning the United States as the main destination for Mexican exports.

On the other hand, China plays a strategic role in Mexican trade. Since 2016, China has established itself as Mexico’s second largest trading partner, using the country as an entry point for Chinese products into the North American market. This dynamic, however, faces criticism and challenges, especially in the context of global trade tensions.

The impact of Trump's first term on global trade

During his first term, Donald Trump implemented strict tariffs on Chinese goods, significantly altering global trade. For China, this meant looking for alternatives, and Mexico became one of those strategic routes. Chinese companies took advantage of Mexican supply chains to circumvent the tariffs and access the U.S. market.

This situation, although beneficial for Mexico in terms of investment, has also drawn criticism from Trump, who has accused the country of being a “back door” for Chinese products. Now, with the possibility of a second term, new tariffs could hit not only China but also Mexico, putting even more pressure on the Mexican economy.

A strategic response to dependence on China

To address these challenges, Mexico has launched an ambitious plan to revitalize its local production. The strategy is clear: reduce Asian imports and strengthen domestic value chains.

The project includes the creation of 100 industrial parks in 12 strategic regions, known as “Well-being Hubs”. The government offers tax incentives, financing for small and medium-sized enterprises (SMEs) and support for adoption of advanced technologies. These efforts echo the strategy used by China in the 1990s and 2000s, when the country invested heavily in its supply chain to become a global giant.

Nearshoring and the strengthening of “Made in Mexico”

Another crucial point of the plan is nearshoring, a trend that takes advantage of Mexico’s geographic proximity to the United States to attract investment and reduce transportation costs. This strategy seeks to transform “Made in Mexico” into a seal of quality and competitiveness in the global market.

The textile, technology, footwear and furniture sectors are at the center of this transformation. The goal is to increase Mexico's share of international trade to 15%, consolidating the country as a major global player.

Mexico in global trade

Despite promising initiatives, Mexico still faces significant challenges. Trump’s second term could bring new tariffs and trade tensions, while China remains a powerful competitor in the global market.

However, with a clear strategy of economic self-sufficiency and regional integration, Mexico has the potential to position itself as an economic leader in North America. Time will tell whether the country can turn its ambition into reality and balance its relationship with the US and China.

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Marcelo Pereira de Souza
Marcelo Pereira de Souza
19/01/2025 10:17

In other words, they insist on continuing to live in dependence on the United States.

Roberto
Roberto
In reply to  Marcelo Pereira de Souza
19/01/2025 11:15

The world has to choose: CHINA or USA.

Rafaela Fabris

He talks about innovation, renewable energy, oil and gas. With over 1.200 articles published in the CPG, he updates daily on opportunities in the Brazilian job market. Suggestions for topics: rafafabris11@gmail.com

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