Will China drive its electric cars in from Mexico?
Live MintOutside this city, 150 miles south of the Texas border and in the shadow of the Sierra de Santa Catarina, is a cactus-dotted field. Thanks to the Trump administration, the USMCA carries important protections against China’s unfair economic practices, including an opt-out clause if any party concludes a trade agreement with a “nonmarket economy," as well as regional content rules requiring that a car and its components come substantially from USMCA member countries. If a Chinese automaker brought enough of its supply chain to Mexico—including battery production—its cars could even meet regional content requirements and avoid American tariffs altogether. Several major Chinese auto-parts suppliers have already set up shop, and the Chinese Communist Party’s Global Times has touted Mexico as a “hot spot" for Chinese EV investment. Not only would it damage the most important U.S. trade relationship; it would also undermine efforts to address Mexico’s continuing unilateral violations of the agreement in the energy and agriculture sectors.