Chinese automotive suppliers establish plants in Mexico, aiming for US market

China-based car component suppliers are building production sites rapidly in the suburb of Monterrey, the northeast of Mexico. According to preliminary data from INA, the automotive parts industry association in Mexico, the value of Mexico-made Chinese components that were exported to the US reached US$1.1 billion in 2023. In 2023, 33 China-based automotive part companies registered in Mexico, with 18 exporting to the US. While US government officials have expressed concerns about Chinese automotive part suppliers entering Mexico, industry sources said it makes sense that Tesla and other carmakers want to take advantage of China's highly organized and efficient supply chains. Former US president Donald Trump ignited a trade war with China in 2018, causing China to increase investments in Mexico and other countries. As Mexico scales its manufacturing, China's exports to the US have decreased to the lowest point since 2010. The industry suspected these companies would start constructing plants in Mexico within four years and export vehicles to the US within six years. Implementing higher tariffs will likely be one of many measures the Biden administration plans to take to prevent Chinese manufacturers from importing cars and components to the US through Mexico or other third-party countries.