Mexico has recently come under fire for allegedly serving as a conduit for Chinese parts and products to North America, and officials here fear that a re-elected Donald Trump or a politically embattled Canadian prime minister, Justin Trudeau, will try to leave their country out of the market. Free trade agreement between the United States, Mexico and Canada.

Mexico’s ruling Morena party is so afraid of losing the trade deal that President Claudia Sheinbaum said Friday the government had launched a campaign to get companies to replace Chinese parts with locally made ones.

“We have a plan to replace those imports that come from China and produce the majority of them in Mexico, either with Mexican companies or with primarily North American companies,” Sheinbaum said.

While Sheinbaum says Mexico has been working on this effort since the global supply chain crisis of 2021 – when factories around the world were stranded by a lack of spare parts and particularly computer chips from Asia – this seems like an uphill battle. Even the United States has faced great difficulty repatriating its chip production, despite billions in subsidies and incentives.

Mexico gained tens of thousands of jobs when U.S. and foreign automakers moved their factories to Mexico under the free trade agreement to take advantage of much lower wages. But the idea that Chinese parts — or even entire cars — could rely on this arrangement to further weaken the U.S. auto industry has angered some people north of the border.

So Mexico is scrambling with private companies to get them to move production of parts here.

“Next year, God willing, we will start manufacturing electronic chips in Mexico,” Mexican Economy Secretary Marcelo Ebrard said Thursday. “Of course, these are not the most advanced chips yet, but we will start producing them here.”

Mexico’s ruling nationalist party, which is normally very reluctant to appear to be bowing to US demands, is also struggling in other ways.

The ruling party is abolishing half a dozen independent regulatory and oversight agencies created by former presidents. This includes anti-monopoly, transparency and energy regulatory bodies. Combined with reforms that will require all judges to stand for election in Mexico, the measure has raised concerns in the United States and Canada.

Under the agreement, countries are required to have independent agencies, in part to protect foreign investors. For example, they could prevent a government from approving a monopoly for a state-owned company, which could force its competitors out of the market.

So ruling party lawmakers are rewriting the proposed laws to exactly mimic the minimum requirements agreed to under the trade deal.

“What is being done is creating reform that is almost exactly equal to what exists in the United States, so we can clarify that,” Ebrard said.

It’s all part of a very legalistic defense of the trade deal, signed in 2018 and approved in 2019. Mexico hopes the deal’s rules will prevent the United States or Canada from simply walking away when the deal commercial will be revised in 2026. agreed, saying that a complete abandonment of the agreement is unlikely.

Gabriela Siller, director of economic analysis at financial group Banco Base, notes that if a country is unhappy with the trade agreement during periodic reviews, such as in 2026, there is a clause in the agreement that states that he can request a review each year. find a solution, and continue to do so for a decade while the agreement remains in force.

“That is, they won’t be able to come out until 2036,” Siller said. “I think they will play hardball with Mexico in the 2026 review.”

Like any marriage, when the pact no longer works for one party, it can still last for years, but it is death by a thousand cuts.

CJ Mahoney. who served as deputy U.S. trade representative in the first Trump administration, said in September at a conference at the Texas-based Baker Institute that the U.S. would likely not end the trade deal. But with growing criticism of the pact, its renewal could be delayed for years.

“The costs of not renewing immediately are actually relatively small,” Mahoney said. “I think the trend to just take a look at the road will be quite strong.”

Since many companies will not make large investments in production facilities without certainty, this could deal a serious, if not fatal, blow to the pact.

How much does Mexico actually buy from China? Mexican officials say they import fewer Chinese parts and products than the United States. But given the huge difference in size between the two countries’ economies, this argument is true, but weak.

In July, the United States imposed tariffs on steel and aluminum shipped from Mexico and manufactured elsewhere, in an effort to prevent China from avoiding import taxes by moving its goods through Mexico. It includes a 25% tariff on steel not melted or cast in Mexico and a 10% tariff on aluminum.

Senator Sherrod Brown, Democrat of Ohio, called for a halt to Mexican steel imports, saying that “the alarming increase in Chinese steel and aluminum entering the country through Mexico…is unsustainable and poses a threat to American jobs, as well as our domestic economy and policies. security.”

Ultimately, Mexico may be forced to crack down on Chinese imports, but it won’t be easy.

“Reducing dependence on Chinese imports will not be feasible in the short or medium term,” said José María Ramos, professor of public administration at Colegio de la Frontera Norte in Tijuana.