Deputy PM Freeland says she shares American trade concerns about Mexico, China

Deputy Prime Minister and Finance Minister Chrystia Freeland has expressed shared concerns with Washington about Mexico’s alignment with Canada and the U.S. on trade policy, particularly regarding China. The issue at hand is the potential for China to access the North American electric vehicle (EV) market through Mexico, a member of the CUSMA trade agreement.

Canada and the U.S. have imposed tariffs on Chinese-made electric vehicles to protect the North American EV industry. However, there are worries that China could circumvent these tariffs by using Mexico as a gateway to the market. Freeland stated that she has heard these concerns from both the current U.S. administration and the incoming president-elect’s team.

The concern arises from the fact that Mexico has significantly increased its car manufacturing output in recent years, with a large portion of these vehicles being exported to the U.S. Chinese EV manufacturer BYD has been exploring options for establishing a factory in Mexico to supply the U.S. market.

Former U.S. President Donald Trump had previously threatened to impose substantial tariffs on Mexican vehicles, up to 200%, to deter automakers from building plants there. Likewise, Ontario Premier Doug Ford suggested the possibility of excluding Mexico from future trade agreements with Canada and the U.S. to address concerns about Chinese imports entering the North American market through Mexico.

However, former Mexican vice minister for trade, Juan Carlos Baker, refuted the notion that Mexico serves as a backdoor for Chinese goods, stating that Mexican exports comply with the rules of origin outlined in the trade agreement. He also highlighted Mexico’s efforts to increase tariffs on Chinese products in the past year.

Freeland did not explicitly endorse Ford’s proposal for a bilateral trade agreement with the U.S. but emphasized that Canada is in alignment with the U.S. on trade issues, particularly concerning China. She stressed the strength of the economic relationship between Canada and the U.S. and their shared stance on addressing trade challenges posed by China.

Overall, the concerns raised about Mexico’s trade practices with China underscore the complexities of the North American trade landscape and the need for ongoing dialogue and collaboration among all parties involved.