On July 1 local time, U.S. Trade Representative Jaimee Sherman announced that the United States does not agree to renew the US-Mexico-Canada Agreement in its current form. Almost at the same time, a U.S. manufacturing lobby group used China as an argument, claiming that China is using investments in the Mexican automotive industry to 'influence' the U.S. market through the US-Mexico-Canada Agreement.
According to the South China Morning Post on the 2nd, the American manufacturing lobbying group ‘American Manufacturing Alliance’ (AAM), based in Washington, urged the Trump administration not to renew the US-Mexico-Canada agreement according to the current version. Supported by domestic manufacturers and the American Iron Workers Federation, AAM stated that “the United States has a critical opportunity to renegotiate this agreement and defend its workers.” The group claimed that “although China is not a partner of this trade agreement, its automobile manufacturers are trying to use it to penetrate the U.S. market,” and advocated for “closing this loophole.”
At a dealer in Mexico, workers are preparing a MG 3 hatchback. Visual China
According to the US-Mexico-Canada Agreement, the three countries launched their first mandatory joint review in July this year. There were three options: renewing the agreement for 16 more years, withdrawing from it, or postponing renewal. In an interview, Grيل openly blamed trade deficits and shifted the blame onto Canada and Mexico, complaining that “while claiming to help the United States with reindustrialization, they open the door to Chinese investment.” He also expressed his dissatisfaction by wanting stricter controls to prevent Chinese components from entering the U.S. market through these two neighboring countries.
In recent years, the United States has continuously adjusted trade rules under the pretext of "supply chain security" and "economic security". This includes imposing additional tariffs, expanding investment scrutiny, and promoting supply chain restructuring, thereby intensifying restrictions on China's industrial chains. However, analysts have poured cold water on Washington. Given that North America still relies on Chinese-made auto parts, and Mexico has a mature export manufacturing base along with logistical advantages near the US border, it remains difficult to completely "detach" from the Chinese automotive industry.
Ankula consulted with Montuafa-Elu, the CEO of the company. He stated that one of the main criticisms of the North American Free Trade Agreement by the United States, and a key motivator for renegotiating the US-Mexico-Canada Agreement, is that Mexico has been used as a “back door” to enter the US market. Moreover, an increasing number of Chinese companies are using this channel to enter the US market, which harms the interests of American industries and workers. He pointed out that in recent years, a large amount of Chinese investment has flowed into Mexico, and multinational production has also shifted to Mexico, driving strong growth in Mexico’s exports to the US. Therefore, the Trump administration hopes to tighten this agreement. However, he added that even if stricter rules of origin are introduced and Chinese companies are successfully prevented from using Mexico as a springboard to enter the US market, many Mexican production activities will still need to rely on inputs that can only be obtained and produced in the Chinese market. Montuafa-Elu believes that stricter rules of origin may not mean that Chinese companies will withdraw from Mexico. Instead, they may encourage companies to expand their local manufacturing capabilities, increase local procurement, and engage in technology cooperation to meet the requirements of the new rules.
Hong Kong University's Professor of Finance, Chen Zhiwu, pointed out more bluntly: 'The United States still needs to import goods anyway. If it wants to rebuild its manufacturing base, it will take many years, and during that time, it cannot do without imports from other countries.'
