Why Is America’s Industrial Renewal Tied to a Stronger Mexico?
America’s industrial renewal is impossible without strengthening Mexico as a strategic partner in North American supply chains, and Washington should target competition with China rather than weaken regional integration.
According to Ambassador Arjan, National Interest published a note and claimed: For decades, American policy makers considered trade with Mexico as a tool to strengthen the country's economy and create job opportunities for Mexicans within their borders. But that era is over. Also, the United States cannot rebuild its industrial power by simply looking at Mexico as a competitor. Mexico should and can be seen as a partner in America's economic security and in the path of restoring the country's industrial power.
As Washington seeks to bring manufacturing back home, ensure the security of critical supply chains, and achieve energy superiority to protect its national security, Mexico could be part of the plan. A stronger industrial base in America will benefit from a stronger industrial base across North America; Which means more than ever the role of Mexico.
The tariffs of Donald Trump, the president of the United States of America, have placed the reconstruction of domestic industries at the center of Washington's trade policy and have been implemented with the aim of strengthening the production of steel and automobiles inside the United States. However, this approach could be strengthened by distinguishing between integrated North American production and imports from outside the region; So that the main focus is on the real source of unfair trade: non-market producers like China.
The risk of weakening North American steel
Section 232 tariffs on Mexican steel are a clear example of the importance of this distinction. The purpose of these tariffs was to restore US steel production capacity and protect an industry that is vital to national security. But the imposition of tariffs on Mexican steel has not only reduced the competitive position of Asian suppliers, but also carries the risk of weakening the unified North American steel market.
Between the first half of 2024 and 2026, Mexico's share of US steel imports fell from 11 percent to 9 percent, while the share of Asian countries increased significantly.
Most importantly, Mexico is the largest US steel export market and Washington has a trade surplus with Mexico. Steel crosses the border of the two countries and supports the energy, infrastructure, defense industries and advanced manufacturing sectors of the United States in the form of integrated supply chains.
Therefore, the main strategic challenge is not the steel trade between the United States and Mexico, but the competition with producers who have extensive subsidies and operate in non-competitive conditions and outside the market rules.
The industrial convergence of America and Mexico in the automobile industry
The automobile industry is another example of industrial convergence between America and Mexico. Unlike many foreign suppliers, vehicles produced under the USMCA must meet strict regional value share, labor, steel, aluminum and wage requirements; An issue that stabilizes the presence of American workers, raw materials and suppliers throughout the North American production chain.
However, between the first half of 2024 and 2026, Asia's share of U.S. passenger car and light truck imports increased by vehicle count; While the share of the USMCA region decreased.
Recent agreements that reduce Section 232 tariffs on imported cars from regional countries to 15 percent risk limiting the competitive advantage of North American manufacturing; And in the circumstances that these imports do not face the same requirements for American content.
Industrial integration between the US and Mexico also has an important energy dimension. The Trump administration's "Energy Dominance" agenda hinges on a large and affordable supply of steel for drilling rigs, pipelines, liquefied natural gas (LNG) infrastructure, power transmission grids and other critical energy assets.
Reducing the cost of these inputs can increase America's ability to expand domestic energy production, modernize the power grid, strengthen critical infrastructure and compete in global energy markets. The same will apply to Mexico; Especially in the field of developing new oil and gas discoveries.
This is precisely the kind of industrial integration that American policy should encourage: North American supply chains that support domestic production, investment, and energy development, not chains that replace or undermine them.
America uses steel produced in Mexico to make equipment with higher added value; Equipment that supports America's energy sector, infrastructure and advanced industries.
Of course, this does not mean granting unconditional concessions to Mexico. The deepening of economic cooperation should be accompanied by stricter rules on the origin of goods, customs supervision, investigation of investments and protection mechanisms against the entry of non-regional goods, circumvention of regulations, non-transparent transfer of goods through third countries and unfair trade; Of course, considering a reasonable transition period.
Mexico has already taken steps in this direction; Including through Plan Mexico, strengthening the enforcement of trade regulations and policies designed to strengthen regional supply chains.
Mexico's cooperation with Washington on difficult bilateral issues also shows the country's readiness to respond to America's concerns. In fact, Mexico has shown more attention to US concerns in this area than some other former and close partners of Washington.
The revision of the US-Mexico-Canada Trade Agreement (USMCA) provides an opportunity to strike the right balance.
In the area of steel, US policy should strengthen rather than weaken a unified industry in North America and employ its strongest tools of trade defense against the non-competitive and non-market competition that threatens this industry.
In the auto industry, Washington should recognize the role of American workers, raw materials, and investments already in place in USMCA-based manufacturing, and ensure that North America remains an inappropriate destination for Chinese car suppliers aiming to take over the market.
In the field of energy, the United States should prevent the unnecessary increase in the cost of industrial inputs needed to develop domestic production and at the same time help strengthen Mexico's energy production capacity.
The common message from all three areas is clear: Tariffs aimed at rebuilding American industry must not inadvertently undermine North American supply chains that underpin a revitalized manufacturing and energy-based economy.
A modernized U.S.-Mexico partnership, hopefully based on a “Fortress American” USMCA agreement, should reward genuine regional production, while strengthening rules of origin and defending North American industries against non-market competitors.