On April 22, the Mexican government issued a decree increasing tariffs for 544 tariff items. These include products such as steel, aluminum, textiles, clothing, footwear, wood and plastics, among others. This increase mainly impacts products from countries with which Mexico does not have free trade agreements, notably focusing on China. With this measure, Mexico responds to the concerns of the United States, but at the same time, it offers alternatives to multinationals.
Although this decision surprised many, it should not be unexpected given the current economic and geopolitical situation. The United States has pressured Mexico to implement a common barrier against what it sees as China's overproduction, which threatens jobs in its trading partners. Recently, the depreciation of the yuan has caused greater alarm, as it makes Chinese exports cheaper and partially or completely mitigates tariffs imposed by the United States. The United States' stance toward Mexico has been clear: if a common barrier is not implemented, the United States could impose it directly on its trade with Mexico.
It is crucial to understand Mexico's position as a “third country” in trade between China and the United States. In this role, Mexico receives products and raw materials that it subsequently exports to the United States. Although in many cases customs laws are complied with, in others they are not. A recent Moody's report suggests that the increase in Mexican exports is not entirely justified by increases in productive capacity or productivity. This points to the possibility of illegal transshipment as one of the causes of the growth in exports, specifically through the export of Chinese goods that are declared as Mexican. Even when customs regulations are met, laws antidumping and compensatory fees are complex and have priority over other regulations, including those stipulated in the T-MEC.
Likewise, it is essential to understand a key clause of the USMCA that prohibits the exemption of customs duties under the condition that goods are exported to another member country. In practice, Mexico has mechanisms to avoid this mandate through programs such as PROSEC and Rule Eight, which reduce tariffs on products and inputs that are then re-exported, mainly to the United States. The justification for these programs is that they do not condition exports, that is, the products can also be marketed in the domestic market, but there is the question of the real nature of the use of said programs. For example, when applying the Eighth Rule request, which must be correctly based on the inability to find adequate national supplies among other aspects, “standard” justifications are often used to request tariff preferences. Although Mexico formally complies with the United States request, in practice it presents an alternative to this provision through the use of these programs. This raises questions about the true purpose of the tariff exemptions granted to some companies.
Finally, it is worth asking why the US government has not intervened in the face of this possible evasion of the treaty, which also seems contradictory to its own policies. Although the reason is uncertain, it is relevant to consider that a future administration under Trump's leadership, known for its aggressive trade policy, could introduce new perspectives. Furthermore, the scheduled review of the USMCA in 2026 offers an opportunity to formally address this issue.
President of Global Alliance, United States Customs Broker.
