great power competition

Mexico is the second-largest economy in Latin America. It has a deep-rooted relationship with the United States through the T-MEC, now affected by the U.S. announcement of unilateral tariffs. It benefits from preferential access to the U.S. market, which has allowed it to export manufactured goods, automobiles, and agricultural products at the cost of importing all the inputs from China to export these products to the North. In the context of the trade war between Washington and the Red Dragon, the tariffs against Mexico prevent Chinese brand products manufactured in the country from entering its market without tariffs. The Aztec country has sought to diversify its relations by exploring trade agreements with other countries and strengthening Asian investment in strategic sectors for domestic purposes. Given the growing importance of the Asian giant in the country, Washington has pressured its southern neighbour to take measures against China, both in terms of tariffs and investment restrictions, considering them a possible risk to U.S. national security. Such policies limit Mexican growth and productive diversification. This article analyses the presence of the Asian giant in trade and investments in the Aztec country and the limits to this relationship due to its alignment with its northern neighbour.

The trade war between the great powers, the US and China, which began in 2016 under former President Trump and later under Biden, has exposed the loss of US competitiveness, especially in the transport industries, such as the automotive and aeronautics sectors. Chinese companies dominate new industries related to electric cars (EVs), while in conventional combustion cars (CA), the leaders are Asian (mostly Japanese) and German.

Evidence shows that the US needs to catch up with China regarding technology. A list by Professor Allison of Harvard University in a book published by the Aspen Institute in 2020 shows seven sectors lagging. In January 2024, the Australian Strategic Policy Institute published a report detailing the lag in 9 sectors and 64 sub-sectors. In response, President Trump's administration placed tariffs on products of Chinese origin starting from March 2018. President Biden extended it and designed an import substitution policy to catch up with the leader.