How China is setting up shop in Mexico

US companies such as General Motors are also some of the biggest importers of Chinese products to Mexico. One in five cars sold domestically is now made in China — such as GM’s popular Chevrolet Aveo.

But given the economic threat to the American auto industry and the potential security risk posed by connected vehicles from China, the big fear in the US is Chinese electric vehicle manufacturers like BYD and Chery setting up in Mexico and selling greater volumes or even trying to export. Though they have scouted states for sites, no factory has been announced yet.

“That’s why that got President Trump’s attention in the campaign,” Pfeiffer says.

The US could see the presence of the cars and other Chinese firms more broadly — including telecommunications operator Huawei — as an issue, he says.

“[If] you have a significant percentage of Mexicans or Americans living in Mexico driving connected Chinese cars, that eventually becomes a significant concern for the US,” he said.

“Many of the concerns that the US raised about Huawei would kind of go on steroids down the road if massive parts of the future tech economy in Mexico were dominated by connected Chinese devices.”

Mexico is gearing up for volatility as Trump’s second term approaches.

The US president-elect developed an unlikely bond with Sheinbaum’s populist predecessor President Andrés Manuel López Obrador, who shared his transactional approach to politics.

But an additional unexpected challenge has come from usually friendly Canada. Prime Minister Trudeau and other politicians indicated they were open to kicking Mexico out of USMCA over concerns about China.

Canada’s statements surprised the Mexicans, but Trudeau and his fellow leaders are also thinking of their own autoparts sector before an election in 2025.

Sheinbaum initially responded coldly to Trump’s tariffs threat. Since then, the two leaders have spoken and she has committed to continue policies that stop migrants reaching the border and discussed repairing damaged security co-operation.

She has been clear that the US is a priority but met both President Joe Biden and President Xi Jinping at the G20 this year, in a signal she wants to keep working with both.

Trump described his call with Sheinbaum as “wonderful”, but the president-elect is yet to call off his threat of 25 per cent tariffs and the 2026 review of USMCA is looming.

Mexico “is sending the right messages, I don’t know if that’s going to be enough for Donald Trump”, says Baker of Ansley Consultores. “We’re going to have to do this for a long time.”

Back in the semi-arid desert in Coahuila, thousands of workers on assembly lines continue to churn out vans and pick-up trucks for export to the US. But the uncertainty around the bilateral relationship is hanging over Alianza and other industrial spaces across Mexico.

“After the pandemic, with nearshoring, there was a big boom in visits, in clients looking to set up,” Alianza’s Cantú says. “Definitely today there is a calm, a pause in the market where lots of them are evaluating what will happen with the policies or the geopolitics of the US and Asia.”