Concerns Arise Over Potential Chinese Auto Plant in Mexico and Trade Agreement Implications

Mexico‘s President reportedly acknowledged on Thursday that Canada has expressed concerns regarding reports of a Chinese company‘s plans to establish an auto plant in Mexico. However, she clarified that such a plant does not currently exist. According to the president, she had a conversation with Canadian Prime Minister Justin Trudeau, who assured her that he does not support excluding Mexico from the U.S.-Mexico-Canada trade agreement, also known as the USMCA.

«The prime minister does not agree with taking Mexico out of the treaty, he told me so clearly,» the president stated following a bilateral meeting with Trudeau. However, Trudeau indicated that while he prefers a trilateral trade agreement, «pending decisions and choices that Mexico has made, we may have to look at other options.» This suggests that there is room for consideration of alternatives depending on Mexico’s actions regarding trade and investment decisions.

Trudeau remarked that «real and genuine concerns have been raised about Chinese investment in Mexico,» alluding to the potential implications of Chinese carmaker BYD setting up operations there. BYD had previously made proposals about establishing a plant but has not realized them as of yet.

Politicians in both the United States and Canada have voiced concerns that under the terms of the USMCA, Chinese companies could manufacture vehicles in Mexico and then export them to the north, bypassing tariffs. Recently, Doug Ford, Premier of Ontario, Canada’s most populous province, chaired a call with 13 provincial and territorial premiers, advocating for a bilateral trade agreement with the U.S. «We want fair trade,» Ford stated after the call, suggesting that Mexico imports cheap Chinese parts and labels them as made in Mexico, which can harm American and Canadian jobs.

The Mexican president dismissed these claims as electioneering by Canadian politicians. «They use these issues as part of an electoral campaign,» she remarked. There is currently a Chinese plant in Mexico operated by Giant Motors, which assembles vehicles but there is no significant evidence that it exports to the United States or Canada.

On Tuesday, Chrystia Freeland, Canada’s Deputy Prime Minister, expressed concerns regarding Mexico potentially serving as a conduit for Chinese goods to enter the North American market at reduced costs. This issue was brought up in anticipation of the 2026 review of the USMCA.

Freeland noted that both current U.S. officials from President Joe Biden‘s administration and advisers to President-elect Donald Trump have shared «very grave» concerns about the issue, reflecting shared apprehensions between Canada and the U.S. about the impact of such practices on the North American market.