Mexico Tightens Tariffs on Chinese Imports as China Cements Its Trade Clout in Latin America

Latin America’s economic relationship with China has changed rapidly over the past two decades: the Asian country has gone from playing a marginal role to becoming a decisive trading partner for the region. In South America, in fact, China already ranks as the top trading partner, overtaking the United States in several categories. In parallel, Mexico—more tightly integrated with North America through the USMCA—faces a different dynamic: it is seeking to protect sensitive sectors with new tariffs and trade measures, while recognizing that many production chains already rely on Asian inputs and that the Chinese market matters for raw materials and some intermediate goods.

The growth in China–Latin America trade illustrates this shift in era. Between 2000 and 2020, exchange multiplied several times over, surpassing hundreds of billions of dollars, and by 2024 it is estimated to have reached roughly $518 billion. The trend is supported by a clear complementarity: the region mainly exports primary goods—minerals, oilseeds, and fuels—while China sells higher value-added manufactured products, from machinery and electrical equipment to vehicles, electronics, and auto parts. While this pattern can be profitable in the short run for commodity exporters, it also reopens the debate over “re-primarization” and the need to build local industrial capabilities in order to move up the value chain.

China’s advance is not driven by trade alone. Foreign direct investment and financing have become central tools. Latin America is one of the most important destinations for Chinese capital outside Asia, with a notable concentration in energy, mining, and infrastructure. In recent years, annual flows have fluctuated, but with broader geographic diversification: Brazil remains the leading recipient, while economies such as Peru, Mexico, Argentina, and Chile have gained momentum. For the region, the challenge is to maximize productive linkages and ensure real technology transfers, rather than limiting itself to standalone projects with little impact on productivity.

Critical minerals for the energy transition have been a key pillar of the strategy. Lithium—with significant investments in the so-called “Lithium Triangle” (Argentina, Bolivia, and Chile)—and copper—where Chile and Peru supply China to a large extent—show how the global energy reshuffle is translating into competition for strategic inputs. This trend is also putting pressure on regulatory frameworks, social license to operate, and environmental policy, at a time when global demand for batteries, power grids, and renewable energy will continue to rise.

Infrastructure is another structural component. With the Belt and Road Initiative expanding into Latin America, China has financed and participated in logistics projects (ports, highways, railroads) aimed at cutting transportation times and costs to Asia. Peru’s Chancay megaport—designed to open direct maritime routes—is emblematic for its implications: it reshapes trade flows, strengthens the export channel for minerals and agricultural products, and could intensify competition among Pacific port hubs. This is reinforced by the role of Chinese banks as lenders to governments and state-owned companies since the mid-2000s, with sizable cumulative amounts in the region, sometimes tied to energy projects.

In Mexico, the story is different given the weight of the United States as an export destination and source of investment. Still, China’s presence has become more visible, especially since the global reshuffling after the Washington–Beijing trade war, the redesign of supply chains, and the rise of nearshoring. Estimates cited by regional analyses and reports from the Federal Reserve Bank of Dallas suggest that Mexico received about $2.3 billion in net FDI from China between 2017 and 2024 (or about $3.2 billion including Hong Kong), though private-sector measurements often point to larger figures because some capital enters through subsidiaries in third countries and does not always show up as “Chinese” in official records.

The automotive and auto parts sector leads the industrial footprint: Chinese suppliers have moved into electrical systems, specialized components, and powertrain parts, leveraging Mexico’s export platform. While large-scale assembly plants for Chinese brands have not fully taken hold, there has been growth in component makers and light-manufacturing firms in northern Mexico, where industrial clusters are already established. There are also projects in electronics, home appliances, machinery, data centers, and renewable energy—areas where Mexico wants to attract investment, but where it also faces bottlenecks: power availability, transmission capacity, water, and regulatory certainty.

Against that backdrop, the decision to raise tariffs or tighten trade controls on Chinese-origin products fits into a broader debate over industrial competitiveness, USMCA rules of origin, and geopolitical pressure. For Mexico, the balancing act is delicate: on the one hand, protecting local industries that compete with low-cost imports; on the other, avoiding higher costs for critical inputs used by export-oriented manufacturing or triggering indirect retaliation. In addition, as the United States intensifies scrutiny of supply chains and content origin—particularly in sectors such as autos, steel, aluminum, semiconductors, and strategic technologies—Mexico may be pushed to strengthen verification, traceability, and compliance mechanisms to preserve its preferential access to the North American market.

The port dimension is also relevant for Mexico. Operators with Chinese participation have invested in terminals and expansions at strategic ports, strengthening logistics while also putting conversations about security, governance, and the resilience of critical infrastructure on the radar of governments and companies. In a country where foreign trade is a key growth engine—and where manufactured exports depend on just-in-time deliveries—port and rail modernization can boost competitiveness, though it will remain constrained by public investment, regulatory coordination, and customs capacity.

Looking ahead, China’s weight in Latin America appears difficult to reverse: its demand for minerals, food, and energy will continue to underpin trade, while its supply of manufactured goods and technology remains present in regional markets. For Mexico, the challenge will be to capitalize on nearshoring and the USMCA without getting trapped between dependence on Asian inputs and pressure from its main trading partner, the United States. Its room to maneuver will depend on strengthening power and logistics infrastructure, developing domestic supplier networks, and maintaining a regulatory framework that provides certainty—especially in energy and industry.

In broader perspective, the region is experiencing deeper integration with China through trade, investment, and infrastructure, while Mexico tries to fine-tune its trade policy to protect domestic sectors without undermining its export platform. The realignment of global supply chains, the energy transition, and the geopolitical environment will continue to shape these decisions, with direct impacts on investment, industrial employment, and competitiveness.