Sheinbaum faces challenges on multiple fronts. Migration, drug trafficking, and judicial reforms will be at the forefront of her administration, as highlighted in a recent Congressional Research Service report. She has vowed to continue López Obrador’s policies, such as minimum wage increases, cash transfer programs, and infrastructure projects. However, her relationship with the U.S. may become more strained over time if she diverges from U.S. priorities, especially in areas like trade and border security.
“U.S.-Mexican relations have grown tense during the López Obrador administration on issues related to U.S. anti drug operations in Mexico,” report authors wrote.
Some analysts predict relations may be smoother under President-elect Sheinbaum, who has said that her government’s relationship with the United States will be one of friendship, mutual respect, and equality. In mid-June 2024, Harris met with newly elected Sheinbaum and reportedly discussed migration, and strengthening trade ties.
Harris said she would use her past life as a prosecutor to be tougher on the border, and would hire more police and Customs officers to stop the flow of fentanyl. In the past, Trump said he would take a war on terrorism-style approach in combating the drug cartels in Mexico.
The U.S.-Mexico relationship on migration and security, in particular, will remain critical. Sheinbaum has expressed a commitment to maintaining friendly ties with the U.S., but her response to the ongoing fentanyl crisis and border issues will be closely scrutinized, especially by U.S. lawmakers. The Bicentennial Framework, developed in 2021, governs U.S.-Mexico security cooperation, focusing on combating transborder crime and drug trafficking. The extent to which Sheinbaum will collaborate on these issues remains to be seen.
On migration, the Congressional Research Service said Congress can impose conditions or restrictions on U.S. foreign assistance to Mexico; enact additional measures to combat the smuggling of fentanyl from Mexico; and monitor Mexico’s migration control efforts as a tool for trade talks.
Some experts predict the Sheinbaum administration will maintain the same approach to migration as López Obrador, or seek extra cash from Washington in order to “address the root causes of migration from southern Mexico and Central America” – which amounts to a kind of ransom: send me money and maybe I’ll help you.
The root causes have been a topic of discussion for generations. It’s crime and poverty, and for the entrepreneurs who are neither impacted by crime or poverty, a chance to earn more money in a bigger economy and send it back home. Some analysts also suggest Sheinbaum will follow Washington’s lead on migration policies.
What to Expect From U.S.-Mexico Relations Under New President Sheinbaum
Claudia Sheinbaum, who won Mexico’s June presidential election with 59% of the vote, will take office in October 2024. She succeeds President Andrés Manuel López Obrador (AMLO) and shares his political affiliation as a member of the National Regeneration Movement (MORENA). Sheinbaum, the former mayor of Mexico City (2018-2023), will be navigating a complex relationship with the U.S., especially as both countries face shared challenges like immigration, the fentanyl crisis, and China’s rising influence.
This year, Mexico surpassed China as the U.S.’s top source of imports, with $290.98 billion of goods coming from Mexico by July, compared to $239.24 billion from China. The U.S. is also Mexico’s largest trading partner, accounting for 80% of Mexican exports and 37.8% of its foreign direct investment in 2023. Washington’s leverage over Mexico has primarily been exercised through diplomatic pressure on issues like immigration control, but Sheinbaum’s presidency might lead to changes in how the U.S. approaches these challenges.
For his part, Trump has said he would impose high tariffs (over 100%) on China car companies manufacturing in Mexico. The Biden administration has already imposed high tariffs on China, but only on China-made EVs. It would not be a surprise if China EVs were flooding in from Mexico that a Harris administration would take similar measures in order to protect American auto workers.
The Impact of Chinese Investments in Mexico
One of the biggest potential flashpoints in U.S.-Mexico relations will be China’s growing economic presence in Mexico. Chinese firms, particularly in the auto industry, have significantly increased investments in Mexico in recent years. Between 2000 and 2017, 8 Chinese auto parts manufacturers started making goods for global car manufacturers in Mexico. That’s 8 over 18 years.
But between 2019 and 2023, the number increased by 12 due to Section 301 tariffs. It’s nearly doubled in five years. For instance, the desert region near Monterrey, in Nuevo Leon, has seen a surge in industrial parks integrated into the U.S. supply chain or serving as export bases.
This shift has raised concerns in Washington. The upcoming 2026 review of the USMCA (United States-Mexico-Canada Agreement) is expected to feature debates over China’s increasing role in Mexico’s automotive industry, which could see the U.S. pushing for countervailing duties or trade remedies if Chinese companies gain too strong a foothold in the North American market. There is a chance that in order to stem the future flow of China cars into the U.S. from Mexico, Washington might try to make the case that the car makers’ parent companies receive unfair subsidies at home, using countervailing duties as a potential trade remedy.
Key Issues for Sheinbaum’s Presidency
Sheinbaum faces challenges on multiple fronts. Migration, drug trafficking, and judicial reforms will be at the forefront of her administration, as highlighted in a recent Congressional Research Service report. She has vowed to continue López Obrador’s policies, such as minimum wage increases, cash transfer programs, and infrastructure projects. However, her relationship with the U.S. may become more strained over time if she diverges from U.S. priorities, especially in areas like trade and border security.
“U.S.-Mexican relations have grown tense during the López Obrador administration on issues related to U.S. anti drug operations in Mexico,” report authors wrote.
Some analysts predict relations may be smoother under President-elect Sheinbaum, who has said that her government’s relationship with the United States will be one of friendship, mutual respect, and equality. In mid-June 2024, Harris met with newly elected Sheinbaum and reportedly discussed migration, and strengthening trade ties.
Harris said she would use her past life as a prosecutor to be tougher on the border, and would hire more police and Customs officers to stop the flow of fentanyl. In the past, Trump said he would take a war on terrorism-style approach in combating the drug cartels in Mexico.
The U.S.-Mexico relationship on migration and security, in particular, will remain critical. Sheinbaum has expressed a commitment to maintaining friendly ties with the U.S., but her response to the ongoing fentanyl crisis and border issues will be closely scrutinized, especially by U.S. lawmakers. The Bicentennial Framework, developed in 2021, governs U.S.-Mexico security cooperation, focusing on combating transborder crime and drug trafficking. The extent to which Sheinbaum will collaborate on these issues remains to be seen.
On migration, the Congressional Research Service said Congress can impose conditions or restrictions on U.S. foreign assistance to Mexico; enact additional measures to combat the smuggling of fentanyl from Mexico; and monitor Mexico’s migration control efforts as a tool for trade talks.
Some experts predict the Sheinbaum administration will maintain the same approach to migration as López Obrador, or seek extra cash from Washington in order to “address the root causes of migration from southern Mexico and Central America” – which amounts to a kind of ransom: send me money and maybe I’ll help you.
The root causes have been a topic of discussion for generations. It’s crime and poverty, and for the entrepreneurs who are neither impacted by crime or poverty, a chance to earn more money in a bigger economy and send it back home. Some analysts also suggest Sheinbaum will follow Washington’s lead on migration policies.
Judicial Reforms and U.S. Concerns
On the domestic front, Sheinbaum’s judicial reforms, which include replacing thousands of judges with candidates elected by popular vote, have raised alarm among some U.S. business interests. Critics argue that MORENA could dominate the selection process, leading to a judiciary more loyal to the ruling party and undermining rule of law and investor confidence.
Outlook on U.S.-Mexico Trade and Geopolitics
As China continues to expand its influence in Mexico, the U.S. might seek to curb China’s presence, especially in industries benefiting from the CHIPS and Inflation Reduction Acts. These concerns will likely shape Washington’s approach to the 2026 USMCA review and future negotiations with Mexico.
Moreover, while most Chinese auto parts and solar products manufactured in Mexico are sold within the country, the potential for these goods to enter the U.S. market could create friction. Sheinbaum will need to carefully navigate Mexico’s economic relationship with China while balancing U.S. demands for trade enforcement and protections against deindustrialization.
Last December, the U.S. and Mexico signed a “Memorandum of Intent” on foreign investment, meaning the U.S. was going to look twice at China money coming into Mexico. That may threaten the auto industry. Not only is it a problem for the automotive industry supply chain, but sectors benefiting from CHIPS Act and Inflation Reduction Act incentives might easily be considered worthy of restriction. This is especially true for a Harris presidency, as those two keystone laws were enacted when she was Vice President.
Sheinbaum’s presidency will shape the future of U.S.-Mexico relations, particularly in trade, security, and China’s role in the region. How her administration addresses these challenges will have lasting impacts on both countries and the broader North American economy.
Geopolitical risks could turn China off to Mexico, or have them more focused on the Mexico market. Most of the cars sold in Mexico are imports and all of the Chinese car brands made in Mexico are sold in Mexico primarily. The same can be said about Trina Solar’s planned billion dollar investment. Sheinbaum wants to go green. Trina can supply Mexico with solar made in Nuevo Leon. The question will be whether those products focus their gaze on the U.S. When they do, Sheinbaum and her trade team will have to figure out ways to balance their new China relationship with the worries of deindustrialization and trade enforcement from Washington.
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