Free trade areas (such as NAFTA, now called USMCA) allow for free trade between member countries and impose separate external tariffs. Customs unions (such as the EU) have a common external tariff wall. Prior to the Trump administration, this distinction was less important because NAFTA members had relatively low external tariffs. Now it's a big problem.Here it is economist:
Mexico's official customs data shows no continued flow of goods from China. But some U.S. officials and businessmen believe the inflow from China is being underestimated, whether intentionally or not. There are suspicions that Mexico is turning a blind eye to imports from China and that they are being re-exported to the United States. . . . “What we saw is that the USMCA really we„The China-Mexico deal has China transshipping a lot of its products through Mexico,“ said Jeff Ferry of the Coalition for a Prosperous America, a group that represents manufacturers.
As the United States becomes more protectionist, the incentive to avoid tariffs increases. Just as it is no wonder that illegal drugs are sent to the United States through Mexico, it is no wonder that imported parts are shipped to Mexico with little paperwork. Bad regulation creates a black market.
The United States is one of the worst abusers of international trade rules. We routinely sign contracts and then ignore the clauses. During the Trump administration, we forced a more punitive trade regime on Mexico, and I predict we'll end up tearing up that agreement and imposing even more punitive rules on Mexico. are doing. It's easy to play the bully when you're the biggest kid on the block.
USMCA Regulations against unfair subsidies and market practices common to Chinese companies. But in many cases, it does not violate any laws or regulations. Mexico offers Chinese automakers a way around the tariff wall because the USMCA's rules of origin include: we Officials say there is a „loophole“ that allows for the integration of Chinese-made components. Importers can obscure China's involvement by assembling Chinese parts in Mexico and labeling Mexico as the country of origin. „New tools may be needed,“ the official said. . . . Robert Lighthizer, a top trade negotiator under President Donald Trump, said the first step is to strip China of most-favored-nation status. If that happens, tariffs on Chinese products will be automatically raised across the board. Enrique Dussel of the University of Mexico City, UNAM, says this will disrupt the global trading system. „The United States will say, 'Adopt my rules or you're against me,'“ he said.
Nationalism is on the rise almost everywhere around the world. Such periods usually do not end well.