China to Mexico freight surges in Trump, Biden tariff era as companies find ways through the U.S. trade war

Recent data shows a significant increase in trade between China and Mexico, with Chinese companies setting up manufacturing facilities in Mexico to take advantage of the USMCA agreement. By importing components and raw materials from China and completing the manufacturing process in Mexico, these companies can label their products as “Made in Mexico” instead of “Made in China.” This shift in manufacturing is also attracting European companies to move their operations to Mexico. The surge in trade comes amidst political tensions and potential trade barriers, with the US government closely monitoring violations of trade policy. Additionally, there has been a rise in cross-border trucking from Mexico to the US, making Mexico the top importer to the US. The automotive sector is booming in Mexico, with companies like Tesla, BMW, Ford, GM, BYD, and Kia expressing interest in expanding there. Despite Trump’s threats of imposing tariffs on Mexican-made vehicles, foreign direct investment in Mexico has been increasing significantly. Tesla CEO Elon Musk announced a pause on a gigafactory in Monterrey due to tariff uncertainty, while Volvo plans to build a truck manufacturing plant in Monterrey. Mexico has become a crucial trade conduit for China, with companies using the Mexico-U.S. route to avoid tariffs and safeguard their supply chains. The cost of transporting goods through Mexico can be cheaper than directly from China to the U.S., benefiting companies financially. businesses, this shift in trade flows and supply chain dynamics presents both challenges and opportunities. While the tariffs have led to higher costs and disruptions, companies are now exploring nearshoring opportunities in Mexico due to cost benefits in ocean freight and trucking. The USMCA trade deal is under scrutiny, with questions about Asian goods moving through Mexico. Logistics companies are expanding their footprint to capture the growing freight opportunities in and out of Mexico. The Biden administration’s tariff increases on Chinese exports are further fueling trade flows, and experts predict Mexico could become the top importer to the US until at least 2030. This shift could lead to the development of more manufacturing and assembly plants in Mexico, driving continued growth in the sector. Mexico’s trade liberalization efforts have made its market one of the most open and competitive in the world, according to Christine McDaniel of the Mercatus Center. The recent scrutiny of de minimis parcels by the Biden administration, in relation to Asian-based online retailers, shows that consumers are always looking for the lowest prices, leading to a flow of trade like water. Tariffs and restrictions like the 301 may be pushing China to find alternative routes to the U.S. market through Mexico. When tariffs are high, manufacturers will naturally seek strategies to avoid them, which is what is happening now. Mexico has been a platform for meeting U.S. consumer demand and attracting foreign direct investment, going back to the original impetus for NAFTA.