Why should we pay attention to the U.S. presidential election? Because its outcome is crucial for China’s tire industry.
On November 4th, U.S. presidential candidate Donald Trump delivered a speech in Raleigh, North Carolina. In his address, he called out the Mexican president and outlined his policy toward Mexico.
Trump stated that he would impose a 25% tariff on all Mexican goods imported into the U.S. If Mexico fails to stop drugs and illegal immigration, he said he would increase the tariffs to 50%, 75%, or even 100%.
These statements are undoubtedly unfavorable for Chinese companies setting up factories in Mexico, as well as for Mexico’s re-export trade.
In fact, Trump has long been critical of Chinese companies using Mexico as a "backdoor" to access the U.S. market. He previously warned the Mexican government that, should he be elected, he would reopen negotiations on the North American Free Trade Agreement (NAFTA), which now includes the U.S.-Mexico-Canada Agreement (USMCA).
The goal of these negotiations would be to limit the entry of Chinese-made products into the U.S., including cars and tires. Trump also indicated that he would not allow the importation of goods from Mexico that contain Chinese raw materials.
Currently, several Chinese tire companies have established or are planning factories in Mexico to be closer to the U.S. market. The outcome of this year’s U.S. election will have a direct impact on these companies’ future decisions.
