The reprimarisation of North America vis-à-vis China

The reprimarisation of North America vis-à-vis China

Carlos Madrid[1] , OBELA[2]

Before the review of the USMCA in January 2026, the member countries of Mexico, the United States, and Canada had disagreements. The focus of the US renegotiation is steel and the automotive sector, under the argument of protecting local jobs and industry. Both the US and Canada have accused Mexico of being used by China to evade tariffs and send its products to these countries. The head of government of Ontario, Canada, Doug Ford, even stated at a press conference that the Latin American country was the "back door" for Chinese products. This article presents an analysis of the trade patterns of USMCA members and their relationship with China since 1995, suggesting that assembly companies play a significant role in determining them.  

North American exports and imports with China

As shown in Table 1, in 1995, Canada exported mainly raw materials to China, accounting for 53% of the total, divided into vegetables (49%) and minerals (4.13%). In 2023, raw materials accounted for 64% of the total, comprising minerals (31%), vegetables (19%), and precious metals (13%). For its part, the industrial sector was the second most important in 1995 and ceased to be among the top exported goods in 2023, while imports of equipment from China increased from 21% in 1995 to 39% of the total in the same period. In turn, Mexico exported mainly industrial products (82% of the total) to China in 1995, with textiles accounting for the largest share (43%). In contrast, in 2023, raw materials accounted for the majority, with minerals leading the way (40%) (see Table 2). The main imported product was machinery, which increased from 34% in 1995 to 56% of the total in 2023.

In the case of the United States, the main product traded in both 1995 and 2023 was machinery, although its share of total exports decreased (from 29% to 19%) and its share of imports increased (from 25% to 47%). In 2023, mineral products (16%) and vegetable products (13%) were the second and third most exported products, respectively. 

Looking at the data, it is clear that North American exports as a whole have been reprimarised. For its part, China is increasingly exporting higher-value and more complex products. The problem of increasing purchases of Asian products is not Mexico's, but rather that of the USMCA and the world at large. For China, North America accounts for 17.5% of its exports and 9% of its imports, making it a significant trading partner. The United States is its largest trading partner. China has a trade surplus with North American countries. (See Table 4)

July 12, 2025, President Trump announced that the tariff for Mexico would increase from 25% to 30%, although the US Government agreed to suspend this increase for 90 days. The existing 25% tariff was maintained for cars that do not comply with the USMCA rules of origin. If the regional content is less than 75% of the vehicle's value, 25% of the total value will be paid; if it complies, tariffs will only be paid on parts not originating in the USMCA.

According to data from the Mexican Automotive Industry Association (AMIA), from January to July 2024, 79.1% of light vehicles exported from Mexico were destined for the United States. Notable brands include General Motors, Stellantis, Ford, Nissan, and Volkswagen, with no Chinese brands. 8.2% of vehicles and 20.4% of auto parts exported from Mexico do not comply with the rule of origin. Thus, it is the automotive companies that purchase Chinese inputs, which allows them to improve their productivity and profitability.

Finally, on 10 September, Mexican President Sheinbaum announced a proposal to amend the General Import and Export Tax Law, increasing the tariff on 1,463 products to 50%, including textiles and automotive products, from countries with which Mexico does not have a free trade agreement. The most relevant countries are China, South Korea, Thailand, India, and Indonesia, which export vehicles and auto parts to Mexico; and the Philippines, which sells electronic products. The measure reflects an alignment with the U.S.. 

The main problem facing North America concerning China is that its exports have been reprimarised, leading Mexico, Canada, and the US to growing trade deficits with them. Thus, the argument that Mexico is the "back door" for Chinese companies lacks merit. It is US, European, and Japanese companies that buy inputs from China and Southeast Asia as  part of the global value chain, to manufacture products, which they then export to the US from Mexico. The divergence between the US diagnosis and reality masks its inability to assume its responsibility in the new world order created in 1990, when it declared China the world's factory and promoted the establishment of the WTO. North America has reprimarised its exports, but above all, it has failed to focus on the most dynamic global market.