Why Made in Mexico Might Be the New Made in China

By: Anneken Tappe · April 30, 2024 · Reading Time: 3 minutes

We’re all used to seeing “made in China” on our product labels. But “made in Mexico” may not be far behind.

In 2023, Mexico officially overtook China as America’s top trade partner in terms of imported goods, as many American companies sought to decrease their reliance on China due to the on-going trade war between Beijing and Washington. So far so good, but now U.S. lawmakers are worried China may use a Mexican pitstop to get around trade tariffs.

Made in Mexico

Let’s take a step back: There are several reasons why U.S. companies may be choosing to manufacture goods in Mexico over China.

First, pandemic-era supply chain woes exposed the risks of over-relying on one manufacturer, or even one country or origin for a part or product. Manufacturers increasingly voiced their plans for localized supply chains, such as manufacturing goods for the North American market in the Americas rather than in Asia to be closer to the intended end market.

Another added benefit: Trade between the U.S. and Mexico is governed by the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) in 2020. The agreement means there are zero tariff policies on certain products, making trade cheaper and more efficient.

Is China Dodging Tariffs?

However, U.S. companies aren’t the only ones ramping up manufacturing in Mexico. China has been following suit. In January 2024, shipping container traffic between China to Mexico was up 60% year-over-year, according to ocean freight rate analytics platform Xeneta.

This has led to concern that Chinese manufacturers could circumvent the juicy import tariffs on goods from China, by simply making them in Mexico. The Biden administration said it is working with Mexico to prevent countries from evading trade tariffs on certain goods.

Read more reporting here .

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