US Pressuring Mexico to Stop Giving Chinese EV Makers Sweet Deals

Mexico is reportedly putting meetings with Chinese carmakers on hold in an effort to avoid angering the United States, one of its major partners within the free trade zone outlined by the United States-Mexico-Canada Agreement (USMCA). The worry among American politicians is that China wants to circumvent high import tariffs by setting up shop in Mexico, thereby gaining cheap entry to the U.S. market. Due to this pressure from American officials who are suddenly worried about Chinese manufacturing in Mexico, ongoing talks of further investment have halted.

Back in January, Mexican government officials reportedly told personnel from Chinese EV manufacturing juggernaut BYD that it wouldn't be granting any further land or tax incentives to Chinese automakers, like it'd done in the past, and that future meetings with such firms were paused for the time being, according to sources in contact with Reuters.

The Office of the United States Trade Representative is reportedly behind Mexico's move to pause talks, and while the USTR refuses to confirm if the pressure on Mexico is coming from them, they tell Reuters that the USMCA is not supposed to «provide a back door to China and others who may be seeking to access our market without paying...tariffs» The Biden administration has also said it «will not let Chinese automakers flood the market with vehicles that pose a threat to national security.»

Mexico has long been a manufacturing hub for American automakers and suppliers, including GM, Ford and Stellantis. The list of assembly plants in the republica includes factories that belong to Japanese and German automakers as well, and now that Chinese carmakers are adding their names to the roster, the U.S. government is getting more involved. China had been making large investments into the automotive sector in Mexico leading up to this point, with an eye towards planting its flag in a country that neighbors the U.S. and, more importantly, plays such a vital role in supplying the U.S. car market.

It looks like the Biden administration is now attempting to influence Mexico's decision to foster a closer relationship with the Chinese. The United States could succeed in that