The Mexican government is considering tax incentives for foreign companies to invest and produce in the country in the electric vehicles, semiconductors, rare minerals, batteries and electronics sectors, Foreign Trade Undersecretary Luis Rosendo Gutiérrez told Reuters.
The comments come as Claudia Sheinbaum’s government considers how to spur more investment as companies look to move supply chains closer to their main market while simultaneously navigating a turbulent and more protectionist period in the United States ahead of the presidential election.
“We are seriously analyzing the creation of tax incentive programs very similar to those of the United States and Canada (…) and we believe that this would allow us to attract many companies to Mexico,” the official declared on Friday.
He mentioned that the incentives would apply to companies from any country interested in investing in Mexico, including those from China, and stressed that Mexico would not be a “platform” for China to enter the United States.
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In search of reducing Asian imports
An internal government document seen by Reuters said Mexico had begun working with companies including Taiwanese electronics maker Foxconn, chipmaker Intel, U.S. automaker General Motors, logistics firm DHL and automaker Stellantis to identify products that can be manufactured in Mexico, rather than imported from Asia.
According to the document, Mexico is seeking to replace imports from China, Malaysia, Vietnam and Taiwan.
Gutiérrez declined to provide more details about the companies mentioned in the document.
The focus on Chinese automakers marks a possible change from the previous government of Andrés Manuel López Obrador. Reuters reported in April that officials said they would not give local incentives such as low-cost public land or tax cuts to Chinese automakers because of pressure from the United States.
A representative of the US embassy in Mexico declined to comment for the Reuters text.
Additionally, Claudia Sheinbaum’s administration is carefully considering Washington and Ottawa’s policies toward China to become more aligned in addressing potential unfair trade practices in that country ahead of a scheduled review of the USMCA.
“The pressure we have (…) the question is what are we going to do with China in the face of some practices that sometimes seem to be unfair,” said Gutiérrez.
“We are analyzing these practices to standardize what the United States and Canada are doing with Chinese investment or with Chinese imports,” he added.
Steel imports were one example, Gutiérrez said, referring to efforts by trading partners to combat evasion of U.S. steel tariffs by China and other countries that ship products through Mexico amid growing concerns about the surplus industrial capacity of China, which floods global markets with exports in the face of weak domestic demand.
Mexico would continue to prioritize the United States and Canada due to their strategic alliance through the USMCA, but that does not imply that Mexico would “break with China” or “deny them investments in Mexico,” said Gutiérrez.
Republican presidential candidate Donald Trump has warned that he would impose new tariffs to prevent Chinese automakers from building vehicles in Mexico and exporting them to the United States.
Polls show Trump and Democratic candidate Kamala Harris are in a tight race ahead of the Nov. 5 election, with the outcome expected to be decided by narrow margins in key states.
Mexico is prepared to work with either candidate and does not see a big difference in the trade relationship with Trump or Harris as president of the United States, Gutiérrez said.
“We understand that there is an issue of national security and the United States will have to understand that our discussions are also discussions about the maintenance of Mexican sovereignty,” he commented.
Sheinbaum and his new cabinet are working to reassure international investors, including at a high-level summit last week, that Mexico remains a safe bet for new businesses following the controversial judicial reform that alarmed markets and hit the peso.
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Despite the financial concern, no company has decided to withdraw its investments from Mexico, the official said.
“Honestly, I have not heard of a single company that has left because it is afraid to invest here, not a single one,” he said.
With information from Reuters
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