Mexico…our alternate to Chinese manufacturing

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Mexico...our alternate to Chinese manufacturing

A maquiladora in Mex­ico, where raw goods are processed tar­iff free. From Wikipedia.

When we think of Mex­ico, too often we think of ille­gal immi­gra­tion and “the wall.” In real­ity, Mex­ico should be con­sid­ered a much closer US ally than we give it credit. In all the dis­cus­sion about the USMCA, NAFTA, the wall and econ­omy, we are miss­ing a big point: Mex­ico is our best way to fight our reliance on Chi­nese goods.

Mex­ico ben­e­fited from NAFTA, and it stands to ben­e­fit from the new USMCA treaty, which is going through rat­i­fi­ca­tion now in the US, Canada and Mex­ico. The deal is good all around, giv­ing every coun­try a lit­tle bit while focus­ing on pro­tect­ing things like intel­lec­tual prop­erty rights and work­ers rights, which in the long term ben­e­fit employ­ees. Mex­ico can con­tinue its process of import­ing (tar­iff free) raw goods, pro­cess­ing them, and then export­ing to the US, which is its pri­mary destination.

Mex­ico can, and should, be our alter­nate to China. While China threat­ens us and our allies every­day, Mex­ico has stayed rel­a­tively friendly. Yes, there is an ille­gal immi­gra­tion prob­lem, but Mex­ico is increas­ingly hav­ing more peo­ple immi­grate into the coun­try than leav­ing the coun­try. The largest issue hurt­ing the econ­omy is the drug trade and vio­lence that comes with it, cost­ing the coun­try some­where in the $200300 bil­lion in losses.

If the US and Mex­ico could solve the bor­der issue and drug trade (per­haps through legal­iza­tion?), Mex­ico could become an easy weapon against cheap Chi­nese goods. Not only would it be cheaper to ship goods to the US due to dis­tance, but from a mil­i­tary per­spec­tive its an “inte­rior line,” mean­ing that it doesn’t cut across bound­aries that are sus­cep­ti­ble to attack. This makes the US less sus­cep­ti­ble to Chi­nese attempts to break the econ­omy. Con­trast this with the Chi­nese reliance on oil and other goods, most of which arrive via ship, and sud­denly China loses a lot of lever­age over the US.

This post rep­re­sents the views of the author and not those of the Depart­ment of Defense, Depart­ment of the Navy, or any other gov­ern­ment agency.

A maquiladora in Mexico, where raw goods are processed tariff free. From Wikipedia.

When we think of Mexico, too often we think of illegal immigration and “the wall.” In reality, Mexico should be considered a much closer US ally than we give it credit. In all the discussion about the USMCA, NAFTA, the wall and economy, we are missing a big point: Mexico is our best way to fight our reliance on Chinese goods.

Mexico benefited from NAFTA, and it stands to benefit from the new USMCA treaty, which is going through ratification now in the US, Canada and Mexico. The deal is good all around, giving every country a little bit while focusing on protecting things like intellectual property rights and workers rights, which in the long term benefit employees. Mexico can continue its process of importing (tariff free) raw goods, processing them, and then exporting to the US, which is its primary destination.

Mexico can, and should, be our alternate to China. While China threatens us and our allies everyday, Mexico has stayed relatively friendly. Yes, there is an illegal immigration problem, but Mexico is increasingly having more people immigrate into the country than leaving the country. The largest issue hurting the economy is the drug trade and violence that comes with it, costing the country somewhere in the $200-300 billion in losses.

If the US and Mexico could solve the border issue and drug trade (perhaps through legalization?), Mexico could become an easy weapon against cheap Chinese goods. Not only would it be cheaper to ship goods to the US due to distance, but from a military perspective its an “interior line,” meaning that it doesn’t cut across boundaries that are susceptible to attack. This makes the US less susceptible to Chinese attempts to break the economy. Contrast this with the Chinese reliance on oil and other goods, most of which arrive via ship, and suddenly China loses a lot of leverage over the US.

This post represents the views of the author and not those of the Department of Defense, Department of the Navy, or any other government agency.