An employee working at a Ciudad Juarez factory that exports its automotive products to the United States
An employee working at a Ciudad Juarez factory that exports its automotive products to the United States

In actuality, China may be able to reach new markets and dodge US tariffs thanks to the US drive to distance itself from the Chinese economy.

Mexico exports a lot of cars, which largely represent the country’s current state of affairs.

Mexico serves as a global center for auto manufacturing, including facilities from well-known US corporations such as Ford, Stellantis, General Motors, and about a dozen more.

Due to the fact that Mexican auto parts can be purchased for far less money than those made in the US, almost all US auto manufacturers rely on them to assemble their vehicles.

According to Xeneta’s analysis of Container Trade Statistics, shipping containers sent from China to Mexico increased by about 60% in January of this year over the same month the previous year.

The principal analyst at Xeneta, Peter Sand, noted in a research report dated March 15 that the spike in exports from China to Mexico raises the potential “that the increase in trade we are witnessing is due to importers trying to circumvent US tariffs.”

Although Mexico has expanded its manufacturing output, commodities made outside of the nation may be boosting production, according to a Moody’s Analytics analysis from April.

According to Xeneta’s analysis of Container Trade Statistics, shipping containers sent from China to Mexico increased by about 60% in January of this year over the same month the previous year.

The principal analyst at Xeneta, Peter Sand, noted in a research report dated March 15 that the spike in exports from China to Mexico raises the potential “that the increase in trade we are witnessing is due to importers trying to circumvent US tariffs.”

Although Mexico has expanded its manufacturing output, commodities made outside of the nation may be boosting production, according to a Moody’s Analytics analysis from April.

The surge in Mexican imports from China has “been roughly matched by simultaneous and closely correlated growth in Mexican exports to the US,” according to nation risk analysts Jose Enrique Sevilla-Macip and John Raines of S&P Global Market Intelligence.

According to Goldman’s Ramos, there is a financial incentive to shift production to Mexico in order to get around tariffs. It’s a means of getting around the legislative goals that drove the imposition of tariffs.

Lawmakers on Capitol Hill are paying attention to the potential that Chinese steel companies are evading US tariffs. The Biden administration declared that it is collaborating with the Mexican government to stop China and other nations from using US imports from Mexico to avoid US steel and aluminum tariffs.