Mexico is in a uniquely vulnerable position. It is the largest U.S. trading partner, a corridor for migration and fentanyl, and a potential gateway for Chinese goods, capital and technology to the U.S. market.

Brenda Estefan, Professor of the IPADE School of Business in Mexico City, columnist of the leading Mexican newspaper Reforma
Jose Carlos Rodriguez Pueblita, Professor of Business Economics at the IPADE School of Business in Mexico City

Source: Source: americasquarterly.org

In 2026, the United States raised rates in its strategic rivalry with China in Latin America. The Trump administration’s recent decision to revoke visas for Chilean officials who appear to have backed the construction of an underwater internet cable to China appears to be aimed at making clear «The red line» investment in sensitive areas throughout the region. A U.S. Congress report released last month sounding alarm about Chinese space infrastructure in Latin America also heightened growing concern in Washington that pressure so far has not been enough to stop Beijing's advance.

In this context, Mexico — Once again, — It is in a uniquely vulnerable position. It is the largest trading partner of the United States, a corridor for migration and fentanyl. — What is critical — potential gateways for Chinese goods, capital and technology to the US market. From Washington’s point of view, no other country has so many strategic problems at once.

While Canada is trying to diversify its trade ties beyond the US and cautiously improve relations with China, Mexico has chosen a different approach: concessions in the hope that bilateral stimuli will disappear by themselves. President Claudia Sheinbaum has raised import duties to Mexico from countries with which it has no trade agreements.

Authorities have launched a crackdown on companies suspected of using Mexico to circumvent U.S. tariffs, including checking hundreds of firms importing Asian steel through programs such as IMMEX, as part of a prevention effort. «The triangular» trade (re-export) of Chinese products to the US market. And economic ministry officials have also privately pressured state authorities to suspend Chinese automakers’ direct manufacturing investment in Mexico. — including attempts by BYD and Geely to acquire Nissan-Mercedes plant in Aguascalentes — until the completion of the current trade negotiations with the United States.

However, these steps reflect not so much a consistent shift in industrial policy as a calculated gesture of solidarity in light of the upcoming US-Mexico-Canada (USMCA) review this year. Overall, Mexico's response to China remains partial and reactive, while a coherent strategy is needed.

While recent trade measures affect visible flows, they leave deeper vulnerabilities intact: China's expanding presence in strategic infrastructure, digital networks and security-sensitive technologies.

Hutchison Ports — part of Hong Kong conglomerate CK Hutchison Holdings, whose subsidiary recently lost control of port terminals at both ends of the Panama Canal after the U.S. raised concerns about security. — It remains a private operator with the largest presence in the Mexican port system. Since arriving in 1999, the company has expanded its network to seven terminals in five strategic ports. — Ensenada, Mansanillo, Lasaro-Cardenas, Veracruz and Altamira — It handles approximately 35-40% of the country's container cargo and a significant share of national container traffic through its terminal in Lasaro Cardenas (LCT).

Recent investments reflect long-term commitments. Last November, Hutchison allocated $189 million for the second phase of the LCT expansion. — About 40% of all private investment planned for this port until 2028 — In Ensenade, the company invested $125 million to extend the berth and increase the number of connections for refrigerated containers from 288 to 720 units.

With a concession in Veracruz until 2041 and managing operations in 24 countries, handling 87.5 million TEUs worldwide in 2024, Hutchison Ports strengthened its position as the most influential private player on the trans-Pacific maritime corridor linking Asia and Mexico.

Another uncomfortable truth is that Mexico still lacks a consolidated and transparent understanding of China’s footprint in its economy. — where capital is built, through what ownership and financing structures, and what are the implications for data management, logistics corridors, energy systems, and industrial sustainability. Official Chinese investment figures differ significantly from independent estimates, with some of that capital flowing through offshore structures.

The opacity extends even to basic market data: in Mexico's automotive sector, only 11 of the country's 28 passenger car brands report sales data to the national statistical agency (INEGI), despite a statutory requirement. Given that Mexico is now the most important market for Chinese cars, overtaking Russia, the lack of information underscores the importance of the problem. Without a comprehensive review of the presence of Chinese companies, policy measures can remain reactive rather than strategic.

Technology technology — Part of the decision

The most structurally important step would be to create a national counterpart of the Committee on Foreign Investment in the United States (CFIUS) to develop a regime for verifying foreign investment. In December 2023, the United States and Mexico signed a Memorandum of Intent establishing a bilateral working group to create such a regime. The process is already progressing, albeit slowly.

The urgency is obvious: without such a regulatory body, foreign structures — including Chinese firms — They can buy stakes in Mexican companies operating in strategic sectors such as ports, energy, telecommunications or critical minerals, without mandatory national security checks, without disclosure requirements and without an official procedure to lodge objections before the investment is completed.

The second priority should be the adoption of the North American digital passport system of a product designed to certify the true origin of goods exported to the United States under the USMCA, using supply chain data tested using blockchain or AI. This idea has already entered the political debate.

For Mexico, adopting such a system on a proactive basis would be a powerful signal that the country is a reliable partner in securing North American supply chains. It should be clarified: China does not have as much influence on critical sectors in Mexico as in parts of South America. However, it has created significant bridgeheads in areas such as telecommunications equipment, energy partnerships, ports and surveillance platforms. This presence does not automatically create strategic dependency, but it requires clarity, oversight and protective measures.

Strategic calibration: decapling and convergence

The automotive sector illustrates the nuances of the debate. Mexico has become a major market for Chinese cars. In January of this year, 65.7% of the cars sold were imported, of which 22.3% were produced in China, but Chinese brands accounted for only 11.4% of total sales. This gap underscores the often overlooked reality: a significant proportion of cars imported from China are produced there by Western automakers, not Chinese brands. In fact, more than half of Mexican auto imports from China come from American manufacturers.

General Motors provides the most striking example. In 2005, the company imported only 82 cars from China to Mexico; by 2025, that number rose to 126,946 units. The same trend is seen in data at the company level. Last year, 64.1% of cars sold by GM in Mexico were imported from China, compared with 7.8% from the US, 11.3% produced in Mexico, 15.6% imported from Brazil and 1.3% from other countries.

In other words, while Mexico does import a growing number of cars produced in China, a significant portion of them are produced by American firms operating in Chinese factories. This complicates simplified narratives about China’s market penetration and calls for decapulation. Washington cannot conclusively demand a level of separation from Mexico that its own firms have not fully implemented.

All this highlights a deeper institutional gap. For years, Mexico has acted without a clearly articulated policy toward China. Strategic ambiguity provided flexibility and minimized friction with both Washington and Beijing. This approach was politically convenient. But the space for this ambiguity has narrowed dramatically.

Economic security now determines U.S. trade policy. Tariffs, export controls, investment verification and market access are increasingly being used to strengthen strategic objectives, and China’s role in third countries is being evaluated through this lens. For Mexico, China’s complete exclusion is neither realistic nor sufficient and carries the risk of over-correction: a rapprochement with the US so complete that Mexico would undermine its own competitiveness and political autonomy.

An early sign of this risk has already emerged. Mexican tariffs of up to 50% on imports from countries with which it does not have trade agreements were mostly perceived as targeting China, but their broad reach also created friction where they had not been before. While Washington cut purchases from China in 2025, it increased purchases from ASEAN manufacturing centers. Mexico, by contrast, has imposed import duties on both China and much of ASEAN in an attempt to get closer to the United States, but appears to have overdone.

Mexico effectively imposed duties on nine of the 11 ASEAN members, with Singapore and Malaysia being the only exceptions. South Korea, whose companies run major automobile plants in Mexico, has also come under direct action. Even Japan, though not directly affected by the new wave of Mexican duties, has indirectly suffered as some Japanese automakers export cars to Mexico from third countries such as Indonesia, Thailand or India, all of which are subject to duties. As a result, the measure covers a wider range and complicates relations with other strategic partners.

A sustainable alternative — It is a strategic rapprochement without subordination based on transparency, selectivity and state potential. Getting closer to the U.S. is a structural reality of Mexico's geography and economic integration. But the rapprochement — This is not the same as automatic submission. It requires clarity on national interests, disciplined verification in sensitive sectors and credible internal governance in security-related areas.