China keeps shipping goods to the United States through third-party countries, thus evading the strong tariffs imposed by the Trump administration and maintained by Biden.
For the first time in more than two decades, according to data published by the United States Department of Commerce, in 2023 Mexico had surpassed China as the main source of goods imported from the USA.
This shift is indicative of two important trends:
1) Washington has accelerated efforts to import from friendlier countries closer to its borders;
2) China, at the same time, is shipping more goods to the United States through the aforementioned Mexico (and other countries), thus evading the steep tariffs imposed by the Trump administration and maintained by Joe Biden. In other words, the “Mexico factor” is increasingly relevant in the economic tug-of-war between the two global superpowers.
Let’s start with the first trend. The value of goods imported into the United States from Mexico increased by nearly 5% from 2022 to 2023, exceeding $475 billion. At the same time, the value of Chinese imports plummeted by 20% to $427 billion. The last time Mexican goods imported from the US exceeded the value of Chinese imports was in 2002, which is a geological era ago.
The Mexico Factor
Since then, relations between Beijing and Washington have changed. The Trump administration began imposing tariffs on Chinese imports in 2018, arguing that Beijing’s trade practices violated global trade rules. Biden kept the tariffs in place after taking office in 2021.
As an alternative to the relocation of production to China, which has long been practiced by US multinationals, the administration led by Biden himself has urged companies to look for suppliers in allied countries or to bring production back to the United States. Well, Mexico has been among the beneficiaries of the growing shift away from dependence on Chinese factories. But the picture is more complex than it might appear.
As the Associated Press has highlighted, some Chinese manufacturers have established factories in Mexico to take advantage of the three-year-old US-Mexico-Canada Trade Agreement, which allows trade duty-free in North America for many products. Mexican President Andrés Manuel López Obrador said that trade status gives Mexico new leverage with Washington, and explained that it would be difficult for the United States to close the border between the two countries to limit immigration. Some industries, particularly the automotive industry, have created factories on both sides of the border that are mutually dependent on each other to ensure a constant supply of components.
China’s move
Data Container Trades Statistics analyzed by the Financial Times, highlight the difficulties facing the Biden administration as it seeks to curb US dependence on global supply chains dominated by China.
Shipments arriving in the US directly from beyond the Wall now represent less than 15% of US imports. However, some Chinese goods that would have been shipped directly to the United States continue to reach the country through Mexico, without facing the same taxes.
However, Mexico is not the only beneficiary of China’s move towards the export of goods that could then end up in the United States transiting through a Third country. Beijing is recording trade surpluses with nations such as Vietnam, Singapore and Philippines, which in turn are recording growing surpluses with Washington, suggesting that Chinese producers are continuing to benefit from US consumer demand for their goods. Duties or no duties.
The most emblematic case concerns the automotive sector. Data from INA, the Mexican trade body for auto parts suppliers, shows that 33 Chinese-owned companies with Mexican operations sent 1.1 billion worth of components to the United States dollars in 2023, compared to $711 million in 2021. In 2023, however, Mexico instead imported nearly $9 billion in vehicle parts from China.
There is a significant detail to consider: Automobiles imported into the United States from Mexico are subject to a 2.5% US levy, while parts assembled in Mexico are subject to a tariff of between 0% and 6%. %. In contrast, cars and parts imported directly from China face an additional 25% tax.
Original article published on Money.it Italy 2024-03-15 07:07:00. Original title: La mossa della Cina per esportare negli Usa eludendo i dazi
