MEXICO CITY—In 2026, the United States has been raising the stakes in its strategic rivalry with China in Latin America. The Trump administration’s recent decision to revoke the visas of Chilean officials who apparently supported the construction of an undersea internet cable to China seems intended to draw a clear red line on investments in sensitive areas throughout the region. A report published last month by the U.S. Congress sounding the alarm on Chinese space-related infrastructure in Latin America also reinforced rising concern in Washington that pressure has so far been insufficient to stop Beijing’s advances.
In that context, Mexico is—once again—uniquely exposed. It is the U.S.’s largest trading partner, a corridor for migration and fentanyl, and—crucially—a potential gateway for Chinese goods, capital, and technology into the U.S. market. From Washington’s perspective, no other country concentrates as many strategic concerns in one place.
While Canada is hedging, diversifying its trade ties beyond the U.S. and cautiously warming relations with China, Mexico has opted for a different approach: making concessions in the hope that bilateral irritants will dissipate. President Claudia Sheinbaum has raised tariffs on imports into Mexico from countries with which it has no trade agreements.
Authorities have cracked down on companies suspected of using Mexico to circumvent U.S. tariffs, including probes into hundreds of firms importing Asian steel through programs like IMMEX, part of an effort to prevent “triangulation” of Chinese products into the U.S. market. And economy ministry officials have also quietly pressured state governments to stall Chinese automakers’ direct manufacturing investments in Mexico—including bids by BYD and Geely to acquire a Nissan-Mercedes plant in Aguascalientes—pending the outcome of ongoing U.S. trade negotiations.
Nevertheless, these moves reflect less a coherent industrial policy shift than a calculated gesture of alignment in light of this year’s review of the U.S.-Mexico-Canada-Agreement, or USMCA. Overall, Mexico’s response to China remains partial and reactive, when a coherent strategy is needed.
While recent trade measures address visible flows, they leave deeper vulnerabilities untouched: China’s expanding footprint in strategic infrastructure, digital networks, and security-sensitive technologies.
Hutchison Ports—part of the Hong Kong–based conglomerate CK Hutchison Holdings, whose subsidiary recently lost control of port terminals at both ends of the Panama Canal after the U.S. voiced security concerns—remains the private operator with the largest presence in Mexico’s port system. Since arriving in 1999 at the port of Manzanillo, the company has expanded its network to seven terminals across five strategic ports—Ensenada, Manzanillo, Lázaro Cárdenas, Veracruz, and Altamira—handling roughly 35% to 40% of the country’s containerized cargo and a significant share of national container traffic through its Lázaro Cárdenas Terminal (LCT).
Recent investments reflect a long-term commitment. Last November, Hutchison committed $189 million for the second phase of LCT’s expansion—about 40% of all private investment planned for that port through 2028—while in Ensenada, it invested $125 million to extend the dock and increase refrigerated container connections from 288 to 720 units.
With a concession in Veracruz running through 2041 and operations in 24 countries managing 87.5 million TEU globally in 2024, Hutchison Ports has consolidated its position as the most consequential private actor in the trans-Pacific maritime corridor linking Asia and Mexico.
Another difficult truth is that Mexico still lacks a consolidated and transparent picture of China’s footprint in its economy—where capital is embedded, through what ownership and financing structures, and with what implications for data governance, logistics corridors, energy systems, and industrial resilience. Official figures on Chinese investment diverge substantially from independent estimates, and part of that capital enters through offshore vehicles.
The opacity even extends to basic market data: In Mexico’s automotive sector, only 11 of the 28 light-vehicle brands operating in the country report sales figures to the national statistics agency (INEGI), despite the legal requirement. Given that Mexico is now the most important market for Chinese vehicles, surpassing Russia, the lack of information highlights the issue’s significance. Without a comprehensive overview of Chinese companies’ presence, policy responses may remain reactive instead of strategic.
Technology is part of the solution
The most structurally important step would be the creation of the national equivalent of the Committee on Foreign Investment in the United States (CFIUS), to develop a foreign investment screening regime. In December 2023, the U.S. and Mexico signed a Memorandum of Intent establishing a bilateral working group to create such a regime. The process is already underway and is advancing, albeit slowly.
The urgency is clear: without such a regulatory body, foreign entities—including Chinese firms—can buy stakes in Mexican companies operating in strategic sectors like ports, energy, telecommunications, or critical minerals with no mandatory national-security review, no disclosure requirements, and no formal process to raise concerns before the investment is finalized.
A second priority should be the adoption of a North American Digital Product Passport system, designed to certify the true origin of goods exported to the U.S. under the USMCA using blockchain- or AI-verified supply chain data. The idea has already entered the policy debate.
For Mexico, adopting such a system proactively would send a powerful signal that the country is a credible partner in North American supply-chain security. To be clear, China does not exert as much influence over critical sectors in Mexico as it does in parts of South America. However, it has built significant footholds in areas such as telecom equipment, energy partnerships, ports, and surveillance platforms. This presence does not automatically create strategic dependency, but it does demand clarity, oversight, and safeguards.
Strategic calibration: Decoupling and alignment
The automotive sector illustrates the nuance of the debate. Mexico has become a major market for China’s vehicles. In January of this year, 65.7% of vehicles sold were imported; of those, 22.3% were manufactured in China, yet Chinese brands represented 11.4% of total sales. This gap highlights an often-overlooked reality: A substantial share of cars imported from China are produced there by Western automakers rather than by Chinese brands. In fact, more than half of Mexico’s vehicle imports from China come from U.S. manufacturers.
General Motors provides the clearest example. In 2005, the company imported just 82 vehicles from China into Mexico; by 2025, that number had risen to 126,946 units. The pattern is also visible in company-level data. Last year, 64.1% of the vehicles GM sold in Mexico were imported from China, compared with 7.8% from the U.S., 11.3% manufactured in Mexico, 15.6% imported from Brazil, and 1.3% from other countries.
In other words, while Mexico does import a growing number of vehicles manufactured in China, a significant portion of those vehicles are produced by U.S. firms operating Chinese plants. This complicates simplistic narratives about Chinese market penetration and calls for decoupling. Washington cannot credibly demand from Mexico a level of disengagement that its own firms have not fully embraced.
All of this underscores a deeper institutional gap. For years, Mexico operated without a clearly articulated China policy. Strategic ambiguity offered flexibility and minimized friction with both Washington and Beijing. That approach was politically convenient. But the space for that ambiguity has narrowed dramatically.
Economic security now shapes U.S. trade policy. Tariffs, export controls, investment screening and market access are increasingly deployed to reinforce strategic objectives, and China’s role in third countries is assessed through that lens. For Mexico, broadly excluding China is neither realistic nor sufficient, and carries a risk of overcorrection: aligning so completely that Mexico undermines its own competitiveness and policy autonomy.
An early sign of that risk has already appeared. Mexico’s tariffs of up to 50% on imports from countries with which it lacks trade agreements were largely understood as targeting China, but its broad design has also created friction where none previously existed. While Washington reduced purchases from China in 2025, it increased sourcing from ASEAN’s manufacturing hubs. Mexico, by contrast, has imposed tariffs on imports from both China and much of ASEAN in an effort to align with the United States—but it appears to have overcorrected.
Mexico effectively placed duties on nine of ASEAN’s 11 members, with Singapore and Malaysia the only exceptions. South Korea—whose companies operate major automotive plants in Mexico—was also directly targeted. Even Japan, though not directly affected by the new wave of Mexican duties, is indirectly impacted because some Japanese automakers export vehicles to Mexico from third countries such as Indonesia, Thailand, or India, all of which are subject to the tariffs. As a result, the measure casts a wider net and complicates relations with other strategic partners.
The sustainable alternative is strategic alignment without subordination—grounded in transparency, selectivity, and state capacity. Alignment with the U.S. is a structural reality of Mexico’s geography and economic integration. But alignment is not the same as automatic compliance. It requires clarity about national interests, disciplined screening in sensitive sectors, and credible domestic governance in areas that intersect with security.
ABOUT THE AUTHORS
Brenda Estefan
Reading Time: 5 minutesEstefan is a professor at IPADE Business School in Mexico City and a columnist at Reforma, Mexico’s leading newspaper.
José Carlos Rodríguez Pueblita
Reading Time: 5 minutesRodríguez Pueblita is Professor of Business Economics at IPADE Business School in Mexico City and Co-Founder of Quantor Advisors, a financial advisory firm. He holds a PhD in Economics for the University of Pennsylvania.
The Implications of Mexico’s Stubborn U.S. Trade Surplus
Upcoming trade negotiations could be affected by Mexico’s widening trade surplus with the U.S., an economist writes.
Washington’s Sharpening Stance on Mexico
As the U.S. reclassifies Mexican cartels as a national security threat, pressure on Mexico is intensifying—and the margin for miscalculation is narrowing.
