Chinese EV issue part of U.S. trade talks, Mexico foreign secretary says

Mexican Foreign Affairs Secretary Roberto Velasco Alvarez confirmed during a press briefing in Ottawa on Friday that the issue of Chinese electric vehicles (EVs) entering the North American market is among the topics under discussion during ongoing trade talks with the United States. The comments came as part of a broader conversation about the future of the United States-Mexico-Canada Agreement (USMCA), commonly referred to as CUSMA in Canada. Alvarez was in Ottawa for a bilateral meeting with Canada’s Foreign Affairs Minister Anita Anand, during which he emphasized the importance of addressing trade barriers while maintaining the integrity of the trilateral agreement. The U.S. Trade Representative, Jamieson Greer, announced on July 1 that the Biden administration would not renew CUSMA in its current form. However, the agreement will remain active and subject to annual reviews for up to a decade, after which it could expire unless renewed. This decision has intensified scrutiny over the role of Chinese EV imports in shaping trade dynamics across North America. The U.S. government has expressed particular concern over the growing presence of Chinese-made EVs in Mexican markets, which currently account for approximately 20 percent of Mexico’s automotive industry. In January, Canada approved a policy allowing up to 49,000 Chinese EVs annually into the country at a reduced tariff rate of 6.1 percent, classified as a “most favored nation” rate. While this measure represents a small fraction, less than three percent, of the overall Canadian auto market, it has drawn criticism from some quarters of the Trump administration. Former President Donald Trump once threatened additional tariffs and warned against allowing Canada to function as a “drop-off port” for Chinese vehicles seeking entry into the U.S. Despite these concerns, Canadian officials have maintained that the policy aligns with broader efforts to sustain the deeply integrated North American trade relationship. Mexico’s importation of Chinese EVs is described by Alvarez as primarily focused on the “lowest cost vehicle sector.” He noted that the country does not currently host a significant number of Chinese manufacturers, with only one such entity operating in Mexico. According to his remarks, the influx of Chinese EVs into Mexico serves economic interests tied to affordability rather than displacement of local production. Meanwhile, the U.S. has yet to formally raise the issue of Chinese EVs as a direct trade irritant, according to U.S. Trade Representative LeBlanc, who responded to a recent controversy involving a heated exchange with British diplomat James Carney. Alvarez was also pressed on whether Mexico might pursue a separate bilateral trade agreement with the U.S., bypassing the broader USMCA framework. He reiterated that the trilateral agreement remains essential, stating that all three nations, Mexico, the U.S., and Canada, agree on the structure of the trade arrangement. However, he acknowledged that individual bilateral challenges exist and must be addressed through direct dialogue. “Of course, when it’s appropriate, we have trilateral conversations,” he said, emphasizing the value of both formats in navigating complex trade negotiations. Anand echoed this sentiment, affirming that both bilateral and trilateral engagements are crucial for sustaining the robust trade and investment ties between Canada and its two neighbors. She stressed the commitment to protecting and reinforcing these relationships, highlighting their significance in the context of evolving global trade landscapes. As the U.S. moves forward with its annual review process, the question of how Chinese EVs fit into the broader picture of North American trade policy remains a central point of negotiation.