Mexico Faces US Pressure to Exit Trans-Pacific Partnership

The United States is pressuring Mexico to withdraw from the Trans-Pacific Partnership (TPP), an Asian free trade agreement, through the imposition of tariffs and trade threats, according to sources familiar with the negotiations.

Mexico joined the TPP in 2018 to strengthen its trade relationships with Asia-Pacific economies by eliminating tariffs and expanding market access. However, the trade balance has disproportionately favored Asian countries, particularly those with strong economic ties to China.

As a result, industry experts and steel sector leaders back the US stance on Mexico’s withdrawal from the agreement, arguing that the TPP has provided minimal benefits for Mexico’s steel and aluminum exports while disproportionately favoring Asian producers. "Withdrawing from this agreement would not pose a significant challenge and would provide greater certainty to US producers that Chinese steel is not being rerouted through Mexico," stated Jorge Guajardo, International Trade Consultant, in a Reforma article.

Máximo Vedoya, CEO, Ternium, criticized certain TPP member states for acting as conduits for Chinese goods, enabling them to bypass trade regulations through subsidies. "Mexico should prioritize strengthening economic integration within North America, then expand its engagement with the broader Americas, and ultimately align with what I call the Atlantic Group—a coalition of nations that share common values and strategic interests."

Guajardo echoed this viewpoint, stressing that limiting imports from Asia, including Chinese-manufactured vehicles, or even withdrawing from the TPP, could serve as a powerful leverage point in negotiations with the United States. This strategy aims to secure exemptions from the proposed 25% tariffs on steel and aluminum, which are set to take effect on March 12.

US Accusations of China Using Mexico for Trade Triangulation

For months, US authorities have expressed concern over China's growing economic influence in Mexico, its largest export market. Allegations have surfaced that Chinese goods are being funneled into Mexico through South American companies to circumvent trade restrictions. However, Mexican Economy Minister Marcelo Ebrard has firmly denied these claims, emphasizing that while Mexico is China’s second-largest trading partner in Latin America, it captures only 0.4% of Chinese investment in North America.

According to Banxico, China's share of Mexico's exports was 1.7% in 2023, amounting to US$10.058 billion, while its share of Mexico's imports was at 19.1%, totaling US$114.190 billion. This imbalance resulted in a trade deficit of US$104.132 billion for Mexico. Rogelio Ramírez de la O, Minister of Finance, highlighted the lack of reciprocity in the trade relationship, "China sells, but does not buy .This situation has led to a growing sentiment in both the United States and Mexico to protect our domestic industries," Ramírez de la O emphasized.