China, the white elephant in US–Mexico trade negotiations

Commercial integration between Mexico and the United States, under the protection of the USMCA trade agreement, will first have to navigate a complicated customs issue: China. On the eve of the fourth round of talks, scheduled in theory for October, the economic rules that the Mexican government will impose on Chinese goods, investment and technology are of particular interest to the White House.

The matter is not trivial, given the recent winds blowing through Washington–Beijing relations after the meeting between President Xi Jinping and Donald Trump this week. In a cordial tone, the leaders met to address topics ranging from trade to artificial intelligence.

The meeting of the world superpowers led the United States to postpone the fourth round of bilateral USMCA negotiations with Mexico. The session was to take place next week; Washington cited “logistical reasons” to delay the meeting because of Xi Jinping’s visit and an upcoming G20 ministerial meeting. Although Mexican authorities expect to reschedule for October, there is no specific date yet.

Luis Rosendo Gutiérrez, deputy undersecretary for Foreign Trade at the Economy Secretariat, said that despite the change of dates, bilateral technical work continues. “We continue to work, practically, on a daily basis with USTR, the United States Department of Commerce, defending our sovereignty and seeing what coordination options we have with the United States so our region can do better,” the federal official said.

As the United States and China move their chess pieces and redesign their relationship, the Mexican government must calibrate its position vis-à-vis the superpowers and the country’s main trading partners. Claudia Sheinbaum’s government walks a fine line between the possibility of becoming a strategic ally of the United States in its commercial conflict with the rest of the world and becoming a target of its attacks.

Since he took office, Trump has insisted that Mexico has served as a springboard for imports from the Asian giant into the U.S. market without paying tariffs. Although Claudia Sheinbaum’s government has rejected those claims, it has deployed various measures to curb the trade deficit with the Asian country, ranging from increased customs oversight to higher tariffs and an import-substitution program under the Mexico Plan.

Despite those efforts, shipments of Chinese goods to Mexico continue to rise: in the first seven months of the year, Chinese imports exceeded $79.6 billion, while Mexican exports to that same country in the same period totaled just over $8.6 billion, according to Banco de México data. Reducing the trade imbalance has become a priority for the Sheinbaum government; however, the strategy to reduce dependence on Asian inputs is not yet visible in the statistics.

In this flow of goods, although Mexico now pays higher tariffs to Washington because of Trump’s tariff war, the relationship between the U.S. and Mexico has strengthened. From January to July this year, Mexican exports to the United States topped $358.7 billion. According to the Department of Commerce, the Latin American country is Washington’s top partner, accounting for 17% of US international purchases, surpassing Canada, Taiwan and China, which fell to fourth place with shipments to the American market of about $156 billion in the first seven months of 2026.

The strength of Mexican exports, despite Trump’s tariffs on cars, aluminum, copper and goods outside the USMCA, continues to hold, driven by shipments of computer equipment and other electronic components. On the other side, the United States is Mexico’s top importer with purchases of $156 billion from January to July, equivalent to 33% of Mexico’s total purchases, while China, with shipments of $79.6 billion, holds a 17% share of the pie.

With a shared border and a highly lucrative exchange of goods for both countries, Mexico and the United States will have to sit down to define a new commercial integration, whether or not under the USMCA. At the moment, the future of the agreement is in question after Washington refused last July to renew the USMCA for another 16 years and thereby triggered the ongoing annual reviews.

For the Trump administration, negotiations focus on reducing the trade deficit with Mexico, raising U.S. content in North American manufacturing and blocking Asian investment, especially in key sectors such as technology and critical minerals. On the Mexican side, the administration seeks better tariff treatment from Washington. The proposal is to reduce current sectoral tariffs under Section 232 that weigh on Mexico, lowering the steel tariff from 50% to 25% and the automobile tariff from 25% to 15%.

Mexico and the U.S. maintain an inescapable relationship because of their closely linked production chains and economic interests. However, Trump now wants to change that structure. “Mexico should have had an industrial development plan that would have allowed it to negotiate with both sides and partner with U.S. industrialization without breaking the link with China. They did not understand it in time and now they are at the mercy of the results of negotiations between China and the United States,” said a Mexican industrialist who asked to remain anonymous.

Víctor Gómez Ayala, director of Economic Analysis at Casa de Bolsa Finamex, acknowledges that at the next USMCA negotiation there is a risk that the United States will raise last-minute issues with Mexico, specifically on security. “I think the Mexican delegation is focused on doing whatever is necessary to achieve the goal of reducing sectoral tariffs,” he concluded.

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