TAIPEI, Taiwan — The last time Donald Trump was president, he imposed a series of tariffs on China that upended global trade. He threatens to do it again.
The first round inadvertently brought China and Mexico closer together in trade and foreign investment, as China sought new trading partners and a detour for its exports to reach the United States
This time, Trump has targeted not only China, but also Mexico and other Latin American countries.
The Times spoke with John Polga-Hecimovich, an associate professor of political science at the US Naval Academy, who argues that the new Trump administration could shift the balance of power between China, the US and Latin America.
How have relations between Latin America, China and the USA changed? above the last two decades?
Latin American governments are beginning to view China as a truly viable economic alternative to the United States.
In the early 2000s, a series of left-wing governments came to power in the so-called “pink tide.” China has sought out these governments, and these governments have sought out China. Then the governments of the center and the right recognized the success of these left-wing governments and also turned to China.
The US response to this was, to put it mildly, unfocused. China's economic rise was fueled by its interest in resource security during the raw materials boom. And given its global geopolitical ambitions, it certainly makes sense for China to pursue a long-term strategy in the region. While US strategy has changed from (President) Obama to Trump and Biden to this (new) Trump administration.
For much of the post-independence period, the United States was the undisputed economic hegemon in Latin America. But over the past two decades, China has effectively displaced the United States as the region's top trading partner. Mexico is the big regional exception.
What impact did Trump's first term have on this dynamic?
Since 2016, bilateral trade between China and Mexico has increased tremendously. China is now Mexico's second largest trading partner after the USA.
Part of the story is that China is cleverly using Mexico as a jumping off point to get its goods into the United States virtually duty-free. The majority of Mexico's industrial activity is located in the northern part of the country: Baja California, Tijuana, Chihuahua State, Monterrey. They have these robust logistics networks and these large manufacturing centers. Chinese companies have settled there.
The Chinese have taken advantage of the post-COVID environment to essentially relocate their businesses to a country “close to the coast” of the United States. This allows Chinese companies and US consumers to save on shipping costs and duties. The end products produced are considered completely “Mexican”.
Chinese Foreign Minister Wang Yi speaks during a meeting with Mexican Foreign Minister Marcelo Ebrard at the Diaoyutai State Guesthouse in Beijing in July 2019.
(Mark Schiefelbein/Associated Press)
So the question is: How will the Trump administration respond? Will it seek to renegotiate elements of the United States-Mexico-Canada agreement? Trump has said he wants to impose a 25% tariff on all goods from Mexico and Canada. That would ruin the US economy. I don't know if the bluster is for negotiation purposes or if he is willfully ignorant or both.
How has Biden handled the growing China-Mexico relationship?
Biden has not removed tariffs against China imposed by Trump. I believe that the Biden administration has taken a carrot approach rather than a stick approach to Mexico and the U.S. goals of cooperation on migration and security issues, drug trafficking and particularly fentanyl. So I think trade is much lower on the list for the Biden administration than it was for the Trump administration.
Will that change under Trump?
Now, it is not enough for Latin American countries, especially Mexico, to be pro-American, they must also be actively anti-China.
Certainly the (Claudia) Sheinbaum government in Mexico will be under enormous pressure to please both Trump and its own electorate. You will have to play a really very delicate game. I see this as a coercion-first strategy by Trump. His comments about (the desire to take control of the Panama Canal) – which he describes as a counterpoint to China – have dominated the news. So I think Sheinbaum needs to be vocal against China. I don't know if words have to be followed by actions. That's the question everyone asks themselves.
What about other Latin American countries?
Mexico is the key country. China is the largest trading partner of Brazil and a number of other large South American countries. But the United States has no interest in nearshoring in Brazil. It focuses primarily on the places that make up the backyard of the United States: Mexico, Central America, and the Caribbean. And to a much lesser extent, countries like Peru, which have sought mega investments from China. But I think Mexico is the United States' biggest concern, at least economically and in terms of China.
Does it still make sense for China to invest in Mexico if Trump increases tariffs on Mexican goods?
Absolutely. Mexico is the 13th largest economy in the world. It makes sense that China would want access. And it also likes to absorb raw materials from Mexico. But certainly it makes a lot of sense for Chinese industry to have access to a growing middle class in a country of hundreds of millions of people. So I think that's a good opportunity for China, other than the possibility of using Mexico to bring things into the United States.
Are there other benefits for Mexico to have closer ties with China?
China has two major advantages for Mexico, and the first is that it is not the United States. China is across the ocean and the United States is right next to Mexico. So, for better or worse, the United States and Mexico will always have some kind of relationship, be it friendly or rivalrous. China can avoid this because it doesn't have a 200-year history with Mexico.
Second, China doesn't care what kind of government is in power.
The United States under Biden has issued statements expressing concern about human rights, civil liberties and judicial elections, essentially commenting on the erosion of democracy in Mexico. You know who doesn't comment on the erosion of democracy in Mexico? China. This is seen as a really big plus by a number of Latin American leaders, particularly authoritarian leaders.
Are there concerns among Latin American countries about greater dependence on China?
Trade and investment from China has not led to wholesale change as these places expected.
Latin Americans are experiencing a bit of buyer's remorse right now. These countries find that Chinese companies have not cared about the environment. They didn't necessarily employ Latin Americans, but rather Chinese workers. The supposed benefits have not materialized as they expected or promised, and they see that replacing one hegemon with another may not necessarily make life better for everyone.