How China Uses Mexico To Avoid U.S. Tariffs

Investment Analysis Clubs Macro Economic Trends and Risks
1

intercst

1 Like
2

Hence the move to outright bans on ChiCom technology, be it telcom network hardware, or “connected car” in-dash video games.

Steve

3

The above action will block Chinese EVs manufactured in Mexico.
US corporate interests must be protected from low cost quality products unless those products are manufactured in their China factories.
So far the EU has not institute such prohibitions. BYD is building a EV manufacturing factory in Hungary to bypass EU tariffs. This summer a BYD Thailand EV factory opened. BYD has begun construction of a EV factory in Brazil.
Chinese may have to eschew the US market for the time being. Now jobs trump low cost goods. The reverse was true 20 years ago. Could a return to globalization return? People have short term memories.
.

4

Oh, don’t go radical on us. :slight_smile:

USians are cheap plicks, completely without morals. “Jobs” for other USians are only a political talking point. Cheaper sources of good will be found. Keep in mind, Ford Motor is reopening a factory in India that it closed two years ago. Indian autoworker pay makes Mexicans look rich.

Steve

2 Likes
5

Bloomberg’s new Wall Street Week also had a segment on Mexico this week. China and others have used this route since the beginning of Nafta.

For commodities like steel, its easy to ship Mexican steel to the US duty free and then ship Chinese steel to Mexico. Etc etc. Has been going on for years. Reshoring after Covid raises the numbers.

Assembly in Mexico from parts made in China (or even Europe) is also nothing new.

Mexico per program is aware of the situation and notes they need to co-ordinate tariffs with those of the US.

Kansas City Southern RR has long had route from Kansas City deep into Mexico even to west coast ports in Mexico. Merger with Canadian Pacific creates main line to Chicago and Canada.

Drug cartels and crime murder, extortion, and kidnapping are major problems in Mexico.

6

Would China do anything about the above? Ignore it? Or “play the game” and “pay to play”? Or would the Chinese govt send people to kill those attempting to extort/blackmail them?