Mexico has surpassed China as the number one source of goods imported by the United States. The sharpening tensions between Washington and Beijing, as well as the drive by capitalist bosses to tap sources of goods closer to their main market as a hedge against supply-chain disruptions and to lower shipping costs, have helped boost production in Mexico.
The value of goods imported from Mexico rose nearly 5% in 2023, to more than $475 billion. In comparison, the value of Chinese imports dropped 20%, to $427 billion.
Mexican government officials report that in late 2022 more than 400 companies expressed interest in relocating to Mexico from Asia. Since the 1990s Mexico has become a key manufacturing hub for U.S. bosses. Billions of dollars in U.S. and other foreign investment has poured into the northern Mexican border states, building industrial parks catering to the U.S. market.
Scores of Chinese companies are moving to Mexico, seeking to avoid growing U.S. tariffs and sanctions and taking advantage of favored treatment under the U.S.-Mexico-Canada Agreement on trade.
As part of the growing rivalry between Washington and Beijing, the Donald Trump administration slapped steep tariffs on hundreds of billions of dollars in Chinese imports in 2018. Last year, President Joseph Biden added a ban on new U.S. investments in Chinese companies making semiconductors and microelectronics, quantum information technologies and “artificial intelligence” systems. They are all areas in which Washington wants to maintain domination. The U.S. rulers view developing these supply chains as vital to U.S. industry and to their military.
Destabilizing world events like COVID pandemic-related shutdowns, Moscow’s war against the people of Ukraine, and the war in the Middle East following Hamas’ murderous pogrom in Israel have pushed U.S. companies to insist suppliers set up plants closer to home. One example is Lizhong, a Chinese manufacturer of automobile wheels. Ford and General Motors, its largest customers, pressed it to open a factory in North America.
Washington’s tariffs and sanctions against its rivals, and pressures on suppliers to relocate, are not aimed at protecting “American jobs” or “our economy,” as capitalist politicians in the U.S. claim. Nor does “nearshoring” factories and production mean U.S. capitalists have renounced efforts to exploit cheaper labor. These measures have only one purpose — to come out ahead in the dog-eat-dog competition against their rivals. At the same time, they use the competition to press U.S. workers for lower wages and more unsustainable, dangerous schedules and working conditions.
Debt bondage, stirrings of resistance
Mexico is the 12th largest economy in the world — the second largest in Latin America — and a leading exporter in the region. But just like Brazil, Argentina, Colombia and Chile — the other four countries with the largest gross domestic product in the region — Mexico is an oppressed nation. All of these countries are held in debt bondage to banks and bondholders, first and foremost in the U.S.
Newly elected president of Mexico and former mayor of Mexico City Claudia Sheinbaum is the chosen successor to the current president, Andrés Manuel López Obrador. They have built up a populist image by allocating some state resources to infrastructure spending and social programs. That is what drove his popularity and her electoral victory.
But this also helped drive Mexico’s debt to over $100 billion, the highest in over three decades. Sheinbaum will be hard pressed to continue this course.
She will also inherit a $101 billion debt accumulated by the state-owned oil and natural gas company, Pemex. It has been grappling with yearslong production declines that have turned Mexico into a net energy importer from the United States. Mexico’s natural gas production is just 70% of what it was in 2010, covering about one-third of the country’s demand. The rest is gas bought from companies in Texas, a dependence that Mexico can’t change anytime soon.
As part of her presidential campaign Sheinbaum announced plans to create an “industrial southern border” next to Guatemala in Tapachula, Chiapas state. Ten “development hubs” will be built, she said, in which half the jobs will be for migrant workers transiting through Mexico and the other half for local workers.
For years, Mexican bosses have used hundreds of thousands of migrant workers from neighboring Guatemala who cross into Mexico legally and illegally each year to work in coffee, banana, and sugarcane plantations, as well as in fruit and vegetable farms. The Mexican government has sought to expand temporary work programs to hire migrants from Central America.
The capitalist rulers’ calculations in the organization of production, however, never include workers fighting back against exploitation. Some 3,500 steelworkers at ArcelorMittal Mexico in Michoacán state went of strike May 24. The mill supplies 30% of the national production of steel used in vehicles, household appliances and in the construction industry.
In response, the company has fired over 1,200 workers and asked a federal judge to declare the union contract void.