China’s Expanding Reach: Why America Must Watch Mexico Closely
By Alliance For America’s Success
China continues to press forward with its ambitions to become the world’s dominant economic power, and it’s doing so by rewriting the rules of global competition. Backed by state-controlled enterprises and a tightly managed industrial strategy, Chinese companies increasingly operate on a playing field tilted sharply in their favor. The consequences are being felt not just in Asia, but in America’s own backyard — Mexico.
China’s Trade Playbook: Unfair Advantage by Design
Unlike American or European firms that compete under strict market regulations and transparency, Chinese companies often benefit from heavy government subsidies, soft loans from state-owned banks, and policies that protect them from market forces. This gives them an edge, one that allows them to undercut U.S. producers both at home and abroad.
Many trade experts argue that Beijing has mastered the art of exploiting loopholes in global trade frameworks, outmaneuvering even the strongest U.S. policies designed to level the playing field. As a result, Chinese companies are expanding their influence not just through direct exports, but also through complex supply chains and shadow investments.
China in Mexico: A Growing Concern
U.S. trade officials are increasingly alarmed by the surge in Chinese investment in Mexico, particularly as United States–Mexico–Canada Agreement (USMCA) renegotiations begin. Reports suggest that some Chinese firms may be using Mexico as a base to illegally transship goods, routing Chinese-made products through Mexican ports to bypass U.S. tariffs.
At the same time, the working relationship between President Trump and Mexican President Sheinbaum has so far been marked by mutual respect and constructive dialogue. Cross-border cooperation has helped reduce illegal immigration and drug trafficking, strengthening both nations’ security and prosperity. However, China’s growing presence in Mexico could complicate this delicate balance.
Is China Using Mexico to Skirt U.S. Trade Rules?
Evidence is mounting that certain Chinese firms exploit the U.S.-Mexico trade corridor to gain unfair access to American markets. Through tactics like mislabeling, transshipping, and exploiting local partnerships, these companies may be undermining the spirit, if not the letter, of U.S. trade law.
The question isn’t just about legality; it’s about economic integrity. As the U.S. revisits the terms of USMCA, it must ensure that Mexico isn’t being used as a backdoor for Chinese industrial advantage. Allowing that would erode confidence in North American trade and further weaken American manufacturing competitiveness.
The EV Factor: China’s Investments Raise Red Flags
Perhaps nowhere is Chinese investment in Mexico more visible than in the electric vehicle (EV) sector. Chinese automakers and battery producers are pouring billions into new facilities south of the border. U.S. policymakers worry that these investments could be Trojan horses, designed to give China access to U.S. consumers through preferential North American trade status.
This fixation is justified. If left unchecked, these ventures could undermine America’s efforts to rebuild domestic EV production and supply chains, industries that are critical not only for economic growth but also for national security.
The Bigger Problem: China Is Already Here
Even beyond Mexico, Chinese companies are making deep inroads inside the United States itself. From buying up farmland near military installations to acquiring legacy American brands, Beijing’s economic footprint continues to grow. Others go a step further, routing their products through third countries like Thailand or Vietnam to disguise their origin and evade U.S. tariffs, all while continuing to benefit from Chinese subsidies and funnel profits back to Beijing.
Take Sunsong, for example. The company embedded itself within American manufacturing, establishing a U.S. presence in Ohio while continuing to produce most of its components in China. Polling by the Trade Alliance to Promote Prosperity in 2025 found that a majority of Americans believe the U.S. government should provide tariff relief to U.S. companies being undercut by Chinese competitors. These firms often reroute goods through third countries like Thailand or Vietnam to disguise their true origin, bypassing U.S. tariffs while maintaining access to American markets and undercutting domestic companies.
Putting America First — Fairly
The Alliance for America’s Success believes strongly that American manufacturers and workers must come first. We recognize that not every product can or should be made entirely in the United States, an appliance isn’t a nuclear submarine, but the distinction between national security industries and consumer goods should guide our trade priorities.
Strong, globally competitive U.S.-headquartered companies with American workers and facilities are essential to the nation’s economic strength. When these companies thrive, they reinvest in communities, expand production, and create more high-quality American jobs.
A Call for Action: Tariff Flexibility and Fair Play
To counter China’s unfair tactics, we urge policymakers to take immediate steps, starting with China 301 tariff flexibility for U.S.-based firms struggling under the weight of China’s subsidized competition.
Moreover, Congress and the Administration must investigate the full extent of Chinese investments — both in the U.S. and in Mexico, that threaten American competitiveness in strategic and non-strategic sectors alike.
Trade should reward innovation, productivity, and fairness, not manipulation, deception, or exploitation.
Conclusion: America Must Stay Vigilant
As the U.S. enters a new phase of trade negotiations under the USMCA, we must keep our eyes open to how China manipulates economic systems to its advantage. Whether through Mexico or within our own borders, Chinese state-backed enterprises are rewriting the rules of engagement.
If America is to lead the world in innovation, prosperity, and freedom, it must defend its economic sovereignty, ensuring that trade serves the American worker, the American company, and the American dream.