A CNBC analysis of recent trade data shows an increase in the flows between China and Mexico of assembled products, and materials and components used in Chinese manufacturing.
"The key sectors have always been automobiles and textiles in terms of determining origin," said Mary Lovely, Anthony Solomon senior fellow at the Peterson Institute for International Economics."To have a product that's labeled Mexican as opposed to Chinese in origin, you have to substantially transform the product, which means it has to become a different product. So if I get a whole set of wooden boards, and it is manufactured into a desk.
Secret Service blames poor planning, ‘complacency' for its failure to stop Trump assassination attempt Mexico's free trade agreements and economic alliances make the country an attractive location for setting up manufacturing operations. Mexico has 13 free trade agreements spanning 50 countries, including the USMCA, and free trade agreements with the European Union, the European Free Trade Area, Japan, Israel, 10 countries in Latin America, and the 11-country Trans-Pacific Partnership. Mexico is also a member of the Pacific Alliance, a trade bloc formed by Mexico, Chile, Colombia, and Peru.
On the campaign trail,"Both candidates are speaking about introducing more trade barriers, not fewer," Piatek said. A recent report on nearshoring by Moody's identified a number of announcements by auto companies, including foreign OEMs, regarding plans to invest in Mexico."The automotive sector is a key player in expressions of interest to expand in Mexico by companies such as
In March, Maersk announced its new Tijuana, Mexico, facility that would optimize the growing volume of cross-border trade. The new warehouse is targeting the transport of items in the technology, automotive, retail, and lifestyle sectors. The company announced in September the opening of a 402,000-square-foot facility in El Paso, Texas, to support the growing logistics services demand at the border.
The top ten commodities from Mexico exported to the United States include vehicles, computer-related machinery equipment, and parts.Companies using the China-Mexico-U.S trade route are able to achieve lower freight costs when the avoided tariffs are factored into the equation, according to a CNBC breakdown of the costs utilizing August freight rates from various logistics providers. That's despite stronger pricing on the route due to its recent popularity.
According to Freightos, the price of ocean freight from China to the U.S. West Coast is $6,459.20, while China to the U.S. East Coast is $9,480.20, and China to the Gulf Coast is $9,475. "At the average import price of $400 a unit, a U.S. importer would owe somewhere between $1,500 and $1,800 in trade war taxes on a 20-foot container of washing machines," said Erica York, senior economist at the Tax Foundation."Bilateral tariffs should be expected to lead to trade diversion, and that's exactly what happened in the aftermath of the trade war.
"I am afraid that Mexico is getting a bad rap because 301 duties can be avoided in manufacturing in any country around the world. It does appear that China is finding Mexico to be a good platform, though, for their products . I would think that this will be a topic of discussion in the 6-year review," said Evelyn Suarez, founder of the Suarez Firm, which consults with corporations on customs and international trade law and policy.
Paul Brashier, vice president of global supply chain at ITS Logistics, said since 2018 the company has seen a steady increase in demand for capacity out of Mexico to Texas markets including Laredo, San Antonio, Austin, and Dallas/Ft. Worth.