Trump paused US tariffs on Mexico – what does it mean for Chinese companies there?

With a sword of tariffs from the United States still hanging over Mexico, new investment from China to the Latin American country has been largely put on hold, though many existing Chinese-funded factories there have stayed steady in the ever-changing environment – based on their past experiences dealing with tariff threats from US President Donald Trump.

A Chinese mechanical-parts manufacturer running a production base in Monterrey – a major industrial hub in northern Mexico – has front-loaded three months of inventory to its US warehouse, according to a manager who spoke on condition of anonymity.

“We will observe the reaction of the market and customers,” the manager said on Monday. “I personally feel that the tariff would not last long and would be resolved through negotiation and other means.”

Hours later, Trump and Mexican President Claudia Sheinbaum announced on social media that the 25 per cent tariff proposed on all Mexican goods – which was planned to go into effect on Tuesday – would be paused for 30 days, after Sheinbaum agreed to send 10,000 National Guard troops to the country’s border with the US to stop the flow of drugs. A similar short-term deal was also achieved between the US and Canada, on which Trump had also announced a 25 per cent tariff hike.

Due to high tariffs on made-in-China goods imposed by Trump during his first term and maintained by the administration of Joe Biden, Mexico has been a major re-routing channel for Chinese products entering the US in recent years, while attracting Chinese manufacturers – whose products range from furniture to car parts – to build factories and produce locally.

  

​Read More